Crypto And Gold Vs Wall Street: Is Now The Best Time To Invest?

BlackRock Buys Up Real Estate

BlackRock, the biggest asset management company (AMC) in the world, reported a better-than-anticipated profit for the quarter this week. The company saw more investors buy in recently, and now its assets are now at a record $9.42 trillion. Last year, it was $7.32 trillion.

BlackRock has been buying up real estate in cash well over the asking price, outbidding individual buyers. The question is, why are they diversifying aggressively? Are they are trying to hedge against inflation that the Fed claims is not happening?

The price of an American home has skyrocketed 28% over the past two years. Pandemic demand and demographic changes also boost prices today. Additionally, you might need to worry about Wall Street pension funds now.

Analysts today suggest that new demand from Wall Street is not yet a major problem for average consumers. The amount of homes that mega-investors are buying is not enough to significantly impact the market in most of the US. That being said, these firms have a major structural advantage, which will continue to grow.

Normally, people take out a mortgage to help pay for their homes. This mortgage comes along with an interest rate between 2-4%. However, pension funds can buy homes and enjoy lower interest rates of around 1.5%. So, they can easily outbid the average consumer by tacking on thousands of dollars to the asking price. They then buy the house at the same cost that an average homeowner would, but with extra cash upfront and lower interest rates in the long term.

Offering in cash gives AMCs the most competitive advantage against average would-be homeowners. In turn, these pension funds can then rent out these homes and pay back their loans in about eight years, thanks to the low-interest rates.

US Debt and GDP

With the pandemic, the Fed has become notorious for increasing its balance sheet and increasing the money supply. Prices are now beginning to respond to the money supply, and many are looking for places to secure the buying power of their dollar.

Building up portfolios with more liquid assets could be a red flag that major companies are trying to hedge now. Although the Fed continues to mandate that inflation is not yet a concern, it seems that major companies are looking to majorly diversify and protect their holdings.

(Click on image to enlarge)

So if you cannot turn to real estate without being outbid by an AMC, where else is there to go?

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Disclaimer: This article is not meant to serve as professional economic advice. Any action you take upon the information from this article and website is strictly at your own risk.

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Comments

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Almoni33 3 months ago Member's comment

total clutter

Alexis Renault 3 months ago Member's comment

How so?

Almoni33 3 months ago Member's comment

obviously - no trading plans or graphical analysis, just dust in the eyes and fog and muddy water to go with it