When someone tells me something is free I always ask them what’s the catch. Nothing’s ever free – like free lunches paid by taxpayers.
Take for instance the government’s $2 trillion economic stimulus package launched in April to help struggling individuals, families, and businesses reeling from the COVID-19 lockdown.
Those checks, loans, and various forms of other aid that went out to struggling individuals and businesses didn’t appear out of thin air – although it sure felt that way. That money came from the sale of bonds by the government to raise that massive sum.
The price to pay will be the interest this generation and future generations will have to pay on all that new debt. At some point, we won’t be able to take in enough taxes to even cover the interest on all our debt obligations.
All that stimulus money brings me to the next discussion – one involving the stock market surge fueled by the massive influx of new retail stock traders.
Upon receiving their $1,200 or more stimulus checks, many individuals – confined to their homes and many without a source of income – decided to give the stock market a whirl hoping to profit from a big bounce by investing at the bottom.
The timing of the stimulus checks following the stock market crash in March, which many individuals started receiving in April, set off a suddenly massive interest in the stock market. Flush with cash, these investors wanted to get in on the rebound action.
This resulted in a massive surge in account signups with online brokers. Charles Schwab, TD Ameritrade, E*TRADE, and Interactive Brokers all saw record new sign ups, while millennial-favored Robinhood, which offers free trading, saw a historic 3 million new accounts in the first four months of 2020.
What these new investors hoping to cash in on a Wall Street bounce didn’t realize was that they were the reason for the bounce.
It took only six months for the stock market to recover from the crash in March. For perspective, it took six years for the market to recover from the 2008 crash that set off the Global Financial Crisis and eight years following the dot-com bubble burst in 2000.
The problem with this quick stock market recovery is it doesn’t track with the underlying economy.
Unemployment is still high (7.9% according to the latest labor report) and GDP was down 31.7% in the second quarter. This stock market recovery is fueled purely by new investors mindlessly pouring money into every kind of stock imaginable including penny stocks and stocks of companies that have filed for bankruptcy.
The stock market is overvalued and is set for a massive correction. Experts predict that reality will set in once Q3 earnings start trickling in and the true toll of COVID-19 on corporate earnings is revealed.
I can’t blame investors for seeking financial relief. Many have lost jobs and income and are desperate enough to gamble and take massive risks in hopes of getting ahead.
Unfortunately; the way I see it, the recent stock market gains are empty calories. They’re short-lived and investors are bound to get hurt.
I propose a better alternative for parking capital in 2021.
Just like after the Global Financial Crisis and every recession before then, the economy will recover. Everybody is looking to cash in on that rebound, but I think they’re looking in the wrong place.
I prefer to cash in on a rebound in an industry or asset with sound economic fundamentals. I believe that rebound will be in tourist destinations like Belize that saw record year-to-year growth before the coronavirus hit and put a halt to travel and by extension the vacation real estate market.
Sure, it hurt short-term, but the long-term prospects of tourism in Belize and the underlying vacation real estate market remained strong.
It was only a matter of reopening travel for Belize’s tourism and real estate upward trajectory to resume.
If you’re an investor looking to cash in on a rebound, look to real estate opportunities in Belize.
Why not park your capital in a stable and quickly developing foreign jurisdiction with laws favorable to foreign investors like Belize? Especially now when real estate bargains can be found.
Looks like the tourism bounce in Belize might happen sooner than expected.
Just last week, it was announced that the “no-sail order” the CDC had wanted to extend through February 2021 was overruled by the White House. Instead, the extension currently in place will run only until the end of October.
That means ports like Miami – the busiest cruise port in the world and estimated to contribute $7 billion annually to the economy – could be up and running again as soon as November 1st.
According to Carnival Corporation CEO, Arnold Donald, cruise companies can have ships ready to welcome passengers again in as quickly as 30 days. This will mean the reopening of Belize tourism and a resumption of the vacation real estate boom there.
Long-term, commercial real estate has been a reliable source of consistent cash flow and appreciation – ideal for building multi-generational wealth.
There may be interruptions in income from unforeseen events like COVID-19 but those are often short-lived and are usually ironed out over time. That’s why smart investors always gravitate towards commercial real estate – in good times and bad.
They know that long-term, nothing provides better risk-adjusted returns. They’re especially drawn to ground-floor jurisdictions like Belize that still offer bargains with still tremendous room for growth.
- Looking for a place to park your capital in 2021?
- Looking to profit from an economic rebound?
Take advantage of the impending tourism bounce from pent-up demand.
Look to an up-coming market like Belize where a stable government and economy offer an oasis to both tourists and investors alike.