Todd Polke explains how to choose your next investment. Start by deciding what you need it to do: hedge risk, protect capital, generate cash flow, or fund buying opportunities. Let that purpose guide which asset class you research.
What type of asset class should I be thinking about most or should I be focusing on researching the most? The answer is it really actually does depend. It depends on what is the purpose that that asset class is there to serve in your portfolio. So you may be thinking about right now, in an economic downturn, what do I need to be considering? Do I need to be considering the economic risk which is happening at this point in time? And do I need to be thinking about, well, how can I help protect myself a little bit more? So when you're asking about what I should be focusing on in the economy right now, You've got to come back is what is the purpose I want that asset to serve in the portfolio? Is it a hedge? Is it protection? Is it to generate cash flow? Is it to buy things that are on sale at this point in time? Is it to be able to add value? When you are clear on that first, allow the strategy to lead you towards the right asset class because right now there are definitely assets that are going to be on sale and other assets are going to perform well at any different marketplace.
