There’s a pretty long history and a wealth of examples of a brave investor making money in a choppy economy.
In fact, Warren Buffet and others made most of their wealth during economic downturns. They invested wisely and to age old rules of investment, and more often than not it meant a solid and healthy return.
Thinking back to Buffet, he often advocates for investors to be brave during these more uncertain times or what might be referred to as a ‘bear market’. Investopedia defines a bear market as ‘often associated with declines in an overall market or index like the S&P 500, but individual securities or commodities can also be considered to be in a bear market if they experience a decline of 20% or more over a sustained period of time—typically two months or more. Bear markets also may accompany general economic downturns such as a recession.’
One of Buffett’s most famous quotes is ‘You make most of your money in a bear market, you just don’t realize it at the time.’
So is this year set to be the year of the brave investor?
The brave investor and UK property investment
UK property investment certainly couldn’t be categorised as a bear market in and of itself, but operating in a wider economic context of a downturn.
A cost of living crisis, fuel price rises, war in Europe and post-pandemic bills are all converging to ensure tough times for many, and this has meant that those looking to protect wealth are now very much turning to more traditional methods of battling rising inflation.
Gold, for example, is currently rising in price thanks to more inward demand, and the same could be said for UK property and buy-to-let. Whilst there isn’t much expectation that the market will continue to rise in price by the average 10% that we’ve seen over the last 2 years (demand looks set to drop), it is still quite widely understood that prices will rise this year, and perhaps by more than inflation.
Andrew Assam, mortgage director for Lloyds banking group wrote recently, ‘Back in May 2020, the Bank of England warned that house prices could fall by as much as 16% as a result of the coronavirus pandemic. Following this news, home owners – already navigating their way through an unprecedented situation – braced themselves for even more uncertainty.
However, according to the latest figures from our Halifax House Price Index, the housing market is continuing to defy expectations. In fact, despite the impact the pandemic has had on the UK economy, average property prices were up 9.8% in 2021, an increase of over £24,500 – the largest annual cash rise since March 2003.’
So the message here is simple: if you want to be able to make good money through tougher economic times then not only does it require bravery, but also sense and foresight. Looking forward, the conditions causing uncertainty could clear up before the autumn, or they could continue through to next year and beyond.
One thing remains certain, however, and that is the UK housing market. If you’re looking to invest then you might just be making your bravest and smartest move yet, get in touch with us today to get the ball rolling!
