Feb 7, 20212 min read

Co-Investing and 2020 Asset Class Performance

Happy Saturday, investors!

Last week I was extremely busy. I delivered a webinar on Thursday night, titled “Real Estate Investing Made Simple: How to Shop Deals like Shopping at Trader Joe’s?”. In this webinar, I described the challenge every single investor faces: how to invest in uncertain market. I listed all the options and their pros and cons:

Option A: do nothing

Option B: do something. But where to find deal flow? How to tell the good deals from the bad ones? How to get a guaranteed access into good deals without committing more capital than you are comfortable with.

For each challenge, I provided solutions which require different amount of time and effort. But if you want to get all the benefit without doing all these work, there is an ultimate solution for you: co-investing. Co-invseting in real estate is like shopping at Trader Joe’s:

· You trust their vigorous product testing process to provide you quality foods

· You like their informative signage to help your understanding of the products you never tasted and help you make shopping decision

· You can access to global “exotic” foods that you can’t find elsewhere and you don’t have to fly there

· You get all diversified products in one shopping trip and at great price

· You like being a member of a community of shoppers who care about their well-being and you become a frequent-shopper

Co-investing group can be your Trader Joe’s in Real Estate Investing. Find out how by watching the replay here: https://youtu.be/QtVYS1Y-IQQ/#t=3m11s

If you are interested in co-investing, you can schedule a30-min call with me: https://calendly.com/sharpeinvestorgroup/quick-call?back=1&month=2021-02

Alright, enough for the update of my latest status. Now let’s turn to our weekly newsletter, it’s all about data and trends.

I found the following 2020 performance by asset class chart amazing.

So much information is contained in this chart:

1. The light blue and light green is the annual returns from 1/1/2020 to 12/31/2020. Light blue is negative return, while light green is positive return. The numbers themselves are less important, as they are much smaller than the dark blue and dark green. So what are dark blue and dark green?

2. Dark blue is the loss from 1/1/2020 to the lowest points. Just eyeball the numbers: 40% drawdowns or more are not uncommon.

3. The dark green is the gain from the lowest points to 12/31/2020.

What’s the implication to investing?

1. Even though the scaled of returns from 1/1 to 12/31 seem small, look at the dark blue and dark green. it’s like riding a roller coaster. Question is, can you stomach the volatility?

2. These roller coaster patterns are observed in most of the assets, but they may not happen at the same time: when one asset class was at the trough, the other might be at the peak. It tells you the importance of diversification.