Inflation is wreaking havoc on the markets, with Wall Street experiencing volatility not seen since the early days of COVID or the Great Recession. And it doesn’t look like the Fed’s extreme rate-hiking approach will end soon.
Guggenheim’s Minerd Says Fed Won’t Stop Raising Rates Until Something ‘Breaks’” -bnnbloomberg.com.
“IMF chief economist: ‘Worst is yet to come for the global economy.'”
-finance.yahoo.com.
Like an army flushing out the enemy in a forest by burning it down, that’s what the Fed’s strategy is starting to look like as it deals with inflation. It now seems more important for the Fed to take down inflation than to preserve the economy’s health. And it doesn’t appear the Fed will ease back the reins any time soon as inflation hit 8.2% in September, above the 8.1% estimated by the experts.
The result of inflation and the Fed’s hike of interest rates has been extreme stock market volatility and significant investor losses. Year-to-date, the Dow is down more than 18%. So, what have some of the “experts” advocated to deal with volatility? Fixed-income.
“How to earn 5% risk-free while you wait for the market to recover, according to Blackrock’s CIO of fixed income.” -businessinsider.com.
So investors have two options:
- To invest in a volatile downward trending stock market; or
- Invest in fixed income that fails to keep pace with inflation.
Black Rock, one of the world’s biggest hedge funds, recommends fixed income because they make money from fees, no matter the economy. The system is broken when your two investment options in this inflationary and borderline recessionary economy are to lose money or not to lose as much money.
What’s the solution for investors not comfortable with either option?
Smart investors refuse to invest in a broken system. Instead, they turn to assets insulated from the Wall Street machine that chews up and spits out investors. Instead of giving up control of their portfolios and the value of their assets to random market forces, smart investors take control of their own financial destinies by turning to private alternative assets.
While Wall Street is constantly pushed and pulled by the latest market triggers and non-economic forces affecting the stock market in our digital age, like social media, private investments are largely insulated by crowd behavior that causes extreme market volatility.
The avoidance of market volatility isn’t the only reason smart investors gravitate towards private markets and private assets. These assets also offer additional benefits ideal for hedging against inflation and recession.
HNW investors have always been attracted to taking ownership stakes in private companies (private equity) for a variety of factors:
Leverage Human Capital.
The most common way smart investors invest in private assets is through investments in private companies. By investing in private assets like real estate through private companies, investors can leverage the experience, knowledge, and track record of experts in their fields and geographic locations without the steep learning curve of familiarizing themselves with a particular asset segment or geographic location.
Cash Flow.
Cash-flowing private assets allow for the reinvestment of profits to create multiple income streams – accelerating the path to financial independence. Besides building wealth, passive income also provides peace of mind during uncertain economic times, where passive cash flow can compensate for any job loss or reduction.
Tax Benefits.
Passive private investments structured as partnerships offer significant tax benefits not offered by other investment forms, including pass-through deductions, tax deferral, and exemption from self-employment taxes.
True Diversification.
Wall Street diversification won’t help investors in a market downturn, but diversification in the private markets offers protection Wall Street can’t provide. True diversification in the private markets can be accomplished across multiple asset segments, geographic locations, and investment structures to provide insulated and uninterrupted cash flow and appreciation.
For investors, there are alternatives to the broken Wall Street system. You don’t have to settle for only two options:
- Stick with volatile stocks; or
- Turn to fixed income swallowed up by inflation.
For smart investors, the choice has always been to turn to private alternatives that buffer portfolios from market madness, inflation, and recession and provide added benefits, including consistent cash flow, growth, and tax benefits.
Investing in private companies guided by experienced and knowledgeable experts can tap these benefits.
Here at Four Peaks, we offer investors the opportunity to avoid the broken Wall Street system and invest in a private company with a solid track record. We offer fixed returns of 12% and 14% that far exceed inflation and are not speculative or hypothetical. These are real, straightforward, easy-to-understand returns based on history and performance.
Disclaimer
Four Peaks is not a registered broker, dealer, investment advisor, investment manager, or registered funding portal. Any securities offerings made by Four Peaks are available only to Accredited Investors. The securities are offered in the United States in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended.
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