The stock market is trading at dizzying heights right now.
According to a new study from Goldman Sachs, it’s at the most expensive levels in history.
Scared about a bubble? Terrified of a crash? Based on Goldman’s data, you should be.
Your natural reaction might be to bury your head in the sand. But as you’ll learn today, if you take one simple step, not only can you protect your portfolio — but you can even grow it dramatically.
It all comes down to a little bit of knowledge…
And one tiny tweak.
The Power of Non-Correlated Assets
To kick things off, let me explain the benefits of investing in what’s called non-correlated assets.
Non-correlated assets are investments that zig when the stock market zags.
With non-correlated assets in your portfolio, even if the stock market plummets, your overall portfolio can weather the storm. It could even soar.
Could the stock market plummet in the near future?
Well, according to the Goldman study I mentioned earlier, stocks today are trading at the 100th Percentile. And that’s based on standard indicators including U.S. Market Cap versus GDP, Cash Flow Yield, and Price to Book.
In other words, the market today is the most expensive it’s been in history.
This is creating a crisis scenario where the market could crash at any moment. So the time to start paying attention to non-correlated assets is now.
A good place to start is seeing how non-correlated assets work in the real world…
Startups Offer “Consistently Superior Returns” — Even During Bad Times
The CFA Institute is a global association of investment professionals.
Mainly, it aims to improve investment outcomes for investors like you.
The Institute has done an enormous amount of research on how various investments perform during financial crises.
For example, in a study called “Private Equity Throughout the Financial Crisis,” it looked at how private equity (“PE”) investments like private startups performed during the financial crisis of 2007/2008.
Here are a few of its findings:
- There are many benefits to investing in private startups, “particularly in an adverse and volatile investment environment.”
- Relative to the stock market, “Private equity [startup] returns are favorable, persistent, and risk reducing.”
- Throughout the financial crisis, private equity substantially outperformed the stock market. In fact, it achieved “consistently superior returns.”
On top of all this, this report uncovered another important benefit of investing in private equity during a market downturn:
Not only did it hand investors higher returns, but it also offered less volatility.
And for investors like you, less volatility means less anxiety.
26 Years of Uninterrupted Profits
You see, private equity investments have managed to deliver steady, uninterrupted profits for decades on end.
For example, the CFA Institute reported that, since 1994, annual PE returns haven’t been negative once. That compares to four down years for the S&P 500.
And as you can see in the below chart from FactorResearch, not only is private equity nearly 50% less volatile than the S&P 500…
But it’s even less volatile than the 10-year U.S. bond!
This explains why the CFA Institute believes “private equity’s appeal is obvious.”
In fact, based on its high returns and low volatility, private equity is now the most popular non-correlated asset class for institutional investors, according to Preqin’s 2019 Investor Outlook for Alternative Assets.
These professionals are allocating roughly 10% of their portfolio to PE.
But here’s the thing:
To get the benefits of this asset class, you don’t need to allocate nearly that much…
Protect Yourself — And Multiply Your Returns Many Times Over
Perhaps surprisingly, just a few hundred dollars here and there could turn into a seven-figure nest egg.
The “secret” here is simple: Historically, early-stage private investing has been the single-most profitable long-term asset class.
On average, for the past 20 years, through good times and bad, these investments have returned roughly 55% per year. At 55% per year, in just 20 years, you could turn a $250 investment into more than $1.6 million.
So even if you took just a tiny piece of your portfolio and put it into the private markets, you could multiply your total returns many times over.
Which is why, if you’re looking to remove volatility from your portfolio — and earn market-beating returns — the time to get started in the private markets is now.
And if you’re joining our “Forget Stocks” Investor Training session this afternoon, you’ll learn exactly how.
We’re looking forward to seeing you there!