 I recently had the pleasure of presenting to a large group of real estate investors in Dallas at the annual 506 Group Investor Forum. As a participant in a panel about late cycle investing, it was apparent that this subject is top of mind for many investors. Most investors have benefited from a ten-year bull run after the longest uninterrupted economic expansion in U.S. history. Many are now looking across the U.S. economy and globally at frothy prices in many asset classes and questioning how to position themselves and their portfolios for what is to come. In this article we will frame the stages of the business cycle, attempt to ascertain where the U.S. economy is in that cycle, and ultimately discuss things to consider when positioning one’s portfolio for late cycle investing and beyond. (1) I will make the case that though we are “late cycle,” we are not “end cycle.” As such, portfolio positioning should start to contemplate recession resilience, yet not let the hangover of the Great Recession drive us to fear-based investing, in particular when it comes to real estate.
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