Hope you had a great and profitable weekend.
Today, I want to talk to you about how different financial markets affect real estate.
In order to become a successful real estate investor and to become financially literate, you need to understand that nothing happens in a vacuum.
Let me explain.
All of our markets are interconnected, whether it’s stocks, bonds, currencies or whatever…
Let’s start with the almighty dollar.
The US Dollar is the default world currency, which means that whether it’s strong or weak affects a lot of different markets.
For example when the Dollar is STRONG, the US stock market tends to go up as it assures foreign investors that there is money to be made in a strong currency.
On the other hand, when the Dollar is weak as it has been for most of this year, the price of stocks goes down and the price of commodities like gold and oil go up.
How does this affect real estate you ask?
Pretty similarly, when the dollar is strong foreign investors flood the market because real estate especially in cities like Los Angeles, New York and San Francisco is a great place to park their money and get a guaranteed return in dollars as opposed to pesos or rubles.
How do you tell if the dollar is strengthening or weakening?
The easiest way is to check what’s known as a currency exchange traded fund (ETF).
A currency ETF is a pooled investment that provides investors with exposure to foreign exchange (forex) or currencies.
Or in simple terms it allows you to see how the dollar is performing against various currencies like the Euro or Krona.
And as you can see from the ETF chart below the dollar has begun to climb upwards once again.
So while the dollar strengthening is good for the fight against inflation that we have discussed here a few times, it’s also going to bring foreign investors into the market as well as the hedge funds and remote workers fleeing expensive cities.
You can track the dollar in a variety of ETFs but I prefer the UUP basket above.
I’d add checking that ETF to your daily real estate checklist of things to watch so you can see when you’re competing with foreign dollars and when you’re not.
Next week, I’ll tell you how the prices of commodities like wood, oil and steel influence real estate as well.
But remember, nothing happens in a vacuum.
From The Training Vault:
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* As always, be sure to consult a lawyer in your local area before using any contracts. I’m not a lawyer and this is NOT legal advice.
This week’s recommended reading is “Winning: The Unforgiving Race to Greatness” by Tim Grover.
Grover originally gained prominence in the 90s as Michael Jordan’s personal trainer.
After Grover helped Jordan gain 20lbs between the 1990 1991 seasons, Jordan won his first NBA title and Grover became the “go-to” personal trainer to NBA stars like Kobe Bryant and Dewayne Wade.
In “Winning”, Grover zeroes in on the mindset that makes champions in sports, business and life and distills that mindset down to 13 crucial principles for achieving unbelievable winning.
If you’re ready to start winning more, pick up “Winning” wherever fine books are sold.
Student Success Story:
This week’s testimonial comes from Dave Knight who closed his first deal for a 6-figure fee!
Check it out:
That’s gonna wrap it up for this week’s Clever Investor Newsletter.