But now could be the time to make up for it. Now could be the time to invest in stocks to compliment your real estate portfolio.
If you’re anything like us, you started investing in stocks before you bought real estate.
Then your stock position was demolished in the 2008 market crash, or you had some similar kind of horrifying experience and you swore off the stock market forever.
Yeah, we did too.
But we’re a little sore that we didn’t keep at least some of our investments in stocks back then.
We left a lot of money on the table. It hurts thinking about it.
So let’s dive in and look at how the stock market performed vs. real estate since it started its recovery in 2009.
Why it was a bad idea to invest in stocks in 2008
Because in 2008, stocks were still dropping.
In a 17 month period, the S&P 500 lost more than 50% of its value. That’s scary stuff.
So investors ran from the stock market. Many of us became real estate investors. Smart move. It’s what we did.
In 2008, Erwin was invested heavily in small caps. The market crash wiped out 40% of his portfolio. But his rentals did just fine
Cherry’s first investments were Lululemon and then Blackberry.
We all know what happened to Blackberry. And when Cherry invested, Lululemon dropped nearly 50% as well. So she sold at a loss.
Canada was fortunate through the 2008 Recession. We didn’t see the housing crash that the Americans saw. Our property values held strong, which looks really good when your stock portfolio just lost half of its value.
But where we lost out was in 2009, when the stock market started the longest bull run it’s seen in history.
The most incredible wealth generating machine of our time
Between March 2009 and May 2022 the S&P 500 returned 463%.
And that’s including the correction we’re in right now.
Let’s compare that to Toronto and Hamilton real estate (where we invest) during the same period.
Toronto Housing Values
2009 – $395,234
2021 – $1,095,380
That’s an average 277% return.
Source: https://trreb.ca/files/market-stats/market-watch/historic.pdf
Hamilton Housing
2009 – $290,184
2022 – $807,788
Average return 278%
Source: https://hamilton.listing.ca/real-estate-price-history.htm
Now, this doesn’t account for cash flow. These are averages. Some neighbourhoods performed much better than others. The same can be said for stocks. Some stocks have outperformed the market since 2009.
On average, the S&P 500 outperformed real estate by more than 190%!
Now do you see why we wish we had bought the dip back in 2009?
We’re extremely grateful for our real estate portfolio though. Real estate gives you one massive advantage that stocks don’t: refinancing.
Thanks to refinancing, we’ve been able to multiply our cash flowing investments, accelerating the growth of our net worth.
And as we’ve seen through recent history, real estate is generally more stable than stocks. But there could be opportunities knocking in the stock market now.
Is now a good time to invest in stocks?
Right at this moment? Maybe not.
We’re seeing a serious correction in the market right now. And we don’t know how long it will last. So patience is in order.
However, when the stock market starts to show consistent signs of recovery, it could be an opportunity similar to that of March 2009.
What do I do with this information?
This is an excellent time to start paying attention to the market. Learn and educate yourself. Then, when the market is firmly in recovery mode, you’ll be ready to take advantage of the opportunity.
And if you want the best bang for your buck, learn how to use stock options to your advantage. Start with our Options for beginners series. It’s an introduction to stock options that’s meant to kick start your education journey.
Also, subscribe to the Stock Hacker Report. It’s a weekly newsletter we send out exclusively to subscribers with more education and analysis like this. It’s written so the absolute newbie can understand it.
That’s all for now.
Happy trading,
Your fellow Stock Hackers,
🍒Cherry & Erwin
P.S. If you’re struggling to find cash flow in real estate, then this is for you: “How Real Estate Investors Find Cash Flow in the Stock Market.” This new, FREE report collects stories from 5 real estate investors and entrepreneurs about how they compliment their rental portfolio with stock hacking. Click here to get your free copy!
