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The DFY Blog

Did Recession Fears Cause the Dow to Tumble?

Posted by Kevin Clayson Tuesday, 20 August, 2019

News outlets across the country are talking about the massive 800 point tumble of the Dow Jones Industrial Average the other day. So, what happened and what does it mean?

Fox Business released an article today with the title, “Dow plummets 800 points on worsening global recession fears,” and here’s what it tells us:

This 800 point tumble is the fourth largest daily point drop on record and the worst this year. Interest rates on Treasury notes seem to indicate that a recession is on the way.

Conversely, and maybe most importantly for me and you, is that physical assets (such as gold) finished at their highest level in more than six years.

Using physical assets, such as real estate, to guard against market volatility is something we have been talking about for over a decade. The economy will do what it does, the market will increase and will decrease, and it will be determined by factors completely out of our control. Real estate in the right markets with the right strategy, such as Florida, is seeing tremendous increases and is benefitting from the national and global economic fears.

As we know, real estate can be affected by market conditions, but is not affected the same way traditional market strategies can be. Real estate is not dependent on one single profit center, therefore it can act as an insulator against some of the market volatility we are seeing in the stock market and the bond market.

Appreciation, cash flow, tax benefits, leverage, and inflation hedges are all built in to real estate.

To read more on the global economic situation and on the Dow’s historic tumble today: