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in this video we're going to talk about kathy wood's market crash predictions before starting the video please do like it and subscribe to the channel for future updates kathy wood is a top stock picker and the founder of arc invest ark a hedge fund manager that manages tens of billions of dollars and invests mostly in cutting-edge technology businesses like tesla tsla teledoc t-doc and even coinbase coin she rose to prominence in 2020 after providing huge returns to investors during the pandemic however her recent record has been underwhelming prompting many investors to doubt her stock picking talents in her defense she is a thematic portfolio manager and her industry has experienced unprecedented selling i believe we have over hyped her in 2020 but we have also placed far too much blame on her today after all short-term market results are impossible to predict and no one is immune to a market meltdown regardless of your feelings about her stock picks it's worth paying attention to what she has to say about the economy because she has access to some of the best resources in the industry when you manage such a large sum of money you just have more knowledge than the typical joe and so what is she saying right now she says that we're in the midst of a worldwide recession she points out that there's worrying data coming out of china and europe that could hurl the beginnings of a downturn the latest gdp statistic in the united states confirms this with a dip of 1.4 percent in the first quarter significantly below predictions of course there are various reasons to assume we are in a downturn high inflation supply chain issues a lingering epidemic a tremendous geopolitical uncertainty are all putting a damper on gdp this is particularly troubling given that we are only at the beginning to see a raise in interest rates and we're already talking about a recession the fed recently lifted rates by 50 base points the greatest rise in 22 years while the rate remains in the 0.75 to 1 range we're in a predicament because we all have to choose between having high inflation or a recession raising rates significantly would surely alleviate inflationary pressures but it would also throw the country into a recession as they retake control of inflation jerome powell just reiterated this by stressing that he can't promise a smooth landing it may appear like we're in for more pain in either case which is why the market has been so volatile recently what changes should investors make to their portfolios in light of the unusual situation kathy wood believes that now is the time to invest in new digital companies that can develop despite inflation or a downturn after the recent sell-off i agree that there were some chances in this space however i continue to invest the majority of my money in real estate investment trusts or reits for short vnq because many of them provided exactly what you need in today's market inflation protection and recession resistance i'll highlight two top picks that i'm currently accumulating in the following paragraphs bsr read otcpk bsrtfhom.u apartment reits were a popular investment for much of the last year and it's easy to see why because everyone needs a roof over their head and rents are rising at the quickest rate in 15 years they provide inflation protection and recession resistance that's not all though the fact that these reits are able to get fixed rate loans at relatively low rates and with long maturities adds to their appeal because the debt is now being inflated away while the value of their assets continues to rise this provides extra security against inflation and rising rates furthermore rising interest rates benefit these reits since home ownership is becoming more expensive increasing demand for flats while new building projects become less profitable reducing new supply as a result of these factors we should expect these reits to have solid fundamentals in the coming years thanks to part in rising inflation and interest rates despite this some apartment reits are now surprisingly affordable bsr reit otc pk bsrtfhom.u is one of my favorite instances because it owns mostly assets in fast rising texan cities like austin houston and dallas i prefer bsr to most other large apartment reits like equity residential eqr or essex ess many people and businesses are migrating there now to decrease their living costs and taxes and i don't see this trend slowing down anytime soon rent hikes of 20 or more in cap rate compression boosted the portfolio's worth significantly last year its net asset value increased by 61 to about 20 dollars per share all of this happened in a single year in 2022 growth will likely be slower but it will still occur because bsr hasn't yet bumped all of its leases bsr has initially valued at 22 dollars per share which made reasonable given its promising potential but as the market fell bsr fell back to 16.50 per share for highly coveted inflation and recession resistant assets that's a 15 percent discount to nav i anticipate that if bsr continues to record significant rent increase for the next quarters its nav will reach 22 to 25 by the end of the year resulting in a 30 to 50 percent gain from today's share price while you wait you'll get a 3.2 percent monthly dividend yield that's steadily increasing is bsr the most profitable reit in our holdings no it's not however it offers important inflation and recession protection and it's currently at its lowest price in a long time vichy properties vici beachy properties is the largest casino reit and while this may come as no surprise it's also one of the strongest inflation and recession hedges available today many people believe that casinos are very cyclical however this is not the case gambling like many other crimes is resistant to cycles because it provides people with an escape beachy on the other hand is recession proof because it is a triple net landlord this implies it rents its properties to tenants for a long period of time and the tenants are responsible for all the property expenses including maintenance the leases are for a term of 15 years or more and the rent is preset for that duration with automatic annual rate increases as a result whether or not we enter a recession bt can count on constant cash flow from its rent checks if you're still skeptical remember that during the pandemic beachy did not miss a single rent payment and was able to increase its dividend by 11 in 2020 and another 9 in 2021.
even the worst case scenario for vichy the pandemic could not derail its revenues in addition beechy's leases include cpi adjustments which give further security in the event of high inflation for example it's caesar's czr lease which accounts for more than 40 percent of its rent roll will increase by the greater of 2 percent or the change in cpi with no cap on the growth in cpi ensuring that the revenue stream is inflation protected the idea here is that vichy may expect high rent increase during periods of inflation and because it's not liable for any property expenses this is a genuine growth that goes right to the bottom line in today's context such a quickly rising inflation and recession-resistant reit would be expected to trade at a high valuation but because it is mistakenly seen as a risky casino investment it is now priced at just 12.5 x ffo and delivers a well covered 5.3 percent dividend yield you can anticipate to make 12 annual returns only from the yield and growth and once vg returns to fair value i expect another 30 percent increase from the present share price what is the driving force in the near future beachy is projected to be included in the s p 500 spy closing note the major problem for today's investors is to select investments that can safeguard them against both a recession and inflation the fed is obligated to raise rates in order to bring inflation under control yet doing so will almost certainly lead to a recession we feel that inflation and recession resistant reits like bsr and beachy offer the best risk to reward in today's market and this is where we currently put the majority of our cash so what do you think about today's video let us know in the comment box below and please do like the video and subscribe to our channel for future updates
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