Warren Buffett predicted America's 'incredible period' was coming to an end. Here's why 2024 might still cause investors to 'panic' — and what you can do about it right now
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According to the world’s most famous investor, the “incredible period” for the U.S. economy has been coming to an end in recent months. And even his own company, Berkshire Hathaway, isn’t immune.
“The majority of our businesses will report lower earnings this year than last year,” Buffett cautioned at Berkshire’s annual meeting in May of last year.
That’s a somewhat surprising statement from a man who has famously been ultra-bullish on the U.S. economy.
But persistently high inflation and interest rates and the ongoing banking crisis have all made Buffett much more concerned about investment gains in the year ahead. His late business partner, Charlie Munger, echoed this sentiment at the time.
“Get used to making less,” Munger said.
But what about this year? J.P. Morgan anticipates slow growth for investors .
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In J.P Morgan's global market outlook for 2024 report, Marko Kolanovic, Chief Global Markets Strategist and Global Co-Head of Research at J.P. Morgan, said "we think the decline in inflation and economic activity we forecast for 2024 will at some point make investors worry or perhaps even panic."
Investors should probably heed the Oracle of Omaha’s warning, but that doesn’t mean completely retreating from the market is the right strategy.
Instead, there are a couple ways to diversify your portfolio enough to withstand these downward forces.
Portfolio shockproofing
Some service sectors are relatively detached from the rest of the economy. Usually, these businesses are backed by a trove of hard, recession-resistant assets that retain their value through inflationary waves.
When it comes to shockproof investments, commercial real estate is a great option that has long been touted for its inflation-hedging benefits.
First National Realty Partners makes this asset easily accessible through their online platform, giving everyday investors the opportunity to invest in institutional-quality, grocery-anchored commercial real estate.
Since the properties are all anchored by major grocery chains like Walmart and Whole Foods, they generate steady monthly income regardless of economic circumstances.
If you're keen on other kinds of real estate, like rentals, Arrived is the platform for you. Through Arrived, you can easily invest in rental homes and vacation rentals without having to play landlord. Arrived offers a low minimum investment of $100, so getting started is accessible
You could also take advantage of real estate through REITs with Fundrise— an easy-to-use investment app that helps you gain access to private assets without the high-end price tag. REITs provide income, diversification and protection from inflation, making them a solid choice for your retirement savings.
When it comes to actually managing your portfolio, you don't have to go it alone with Wealthfront Brokerage. Wealthfront Brokerage is a stock trading platform available to help you gain some familiarity with the market. Wealthfront’s easy-to-use platform offers customizable portfolios and guides clients in identifying, tracking and achieving their financial goals.
Fine art is another recession-resistant asset that can help pad your portfolio. And thanks to a platform called Masterworks, you can now invest in art without having to drop millions at auction on a single painting.
With Masterworks, you can buy shares of iconic artworks the same way you’d buy stocks. It only takes a few minutes to sign up and start investing in paintings by celebrity artists like Banksy and Basquiat, right from your home — no formal-wear required.
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International stocks
While fears of a recession have cooled for 2024, there are still lingering fears that the U.S. economy could shrink over the course of the year.
But developing markets are far less vulnerable to a recession. In fact, the International Monetary Fund points to economies like Brazil, India and Southeast Asia showing accelerated growth. Put simply, investors could safeguard their wealth by investing in foreign stocks.
With Robinhood — a commission-free investing app — you have access to over 650 global stocks through American Depository Receipts (ADRs).
Robinhood offers a range of account types with no account minimums, making it easy for anyone to start investing in the global stock market, regardless of how much (or how little) they have to spend.
Acorns is another platform that makes international stocks accessible to everyday investors. The Acorns app rounds up every purchase you make on a connected debit or credit card to the nearest dollar, then puts that spare change into a diversified investment portfolio. Acorns’ portfolios offer a mix of both domestic and international stocks, and it takes less than five minutes to sign up.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
