Lazy Luck

Ryan Litfin & Dale Creed Francis Deliver Message on Lazy Luck

Boomers in their 60s approaching retirement could not have timed it better. For most of the last 10 years or so, broadly allocated stock portfolios gained value with little investor effort. We call that Lazy Luck. And to be sure: About the time investors nestle all snug in their easy chairs with visions of capital gains dancing in their heads, the stock market will rear its ugly side. It will descend like a thief in the night. We believe these circumstances compel thoughtful allocations to non-correlated assets while capitalizing on a profound demographic trend revealed below.

Non-correlated assets are believed to help protect portfolio value, yet they can still offer growth potential. Their prices often don’t change at the same time or in the same direction as stocks and other portfolio assets. Non-correlated assets create broader diversification. Even though they don’t always climb rapidly with the stock market, we believe non-correlated assets can help preserve portfolio value when stocks dive. Then, when stocks recover, portfolios with non-correlated assets can resume their climb from a higher starting point.

In our opinion, a profound demographic trend reinforces the utility of non-correlated assets such as bonds and commercial real estate. According to the U.S. Census Bureau*, by 2030 retirement-aged Americans will represent one-fifth of the population; all Boomers will be over 65. Five years later, older adults will outnumber children. This trend is important partly because older investors shift aggregate investor demand toward income-producing and price-stable assets. We believe bonds and commercial real estate can produce higher, more stable income and often preserve value better than common stocks.

However, in our opinion not all bond and real estate investment media capitalize well on the current demographic trend. In particular, bond and real estate fund ownership is different from bond and real estate ownership. Bond fund owners own shares, they do not actually own a bond. They miss opportunities individual bonds afford to use certain maturities, coupon rates, yields, and other properties to optimize positions. Similarly, real estate investment trusts (REIT’s) and real estate fund owners miss opportunities to capitalize on certain regions and markets. Instead of using REITs and funds, we believe qualified investors can use direct participation programs to position themselves precisely in real estate markets poised to benefit from the demographic trend. In fact, demand for senior and memory care communities exceeds supply in some regions. Seniors sign on to waiting lists. Some have called it a crisis, as senior housing construction advances at a hurried pace. This market offers investment growth potential using non-correlated assets.

We can’t count on Lazy Luck for investment success. But we believe we can capitalize on trends to preserve and grow wealth. We need to weigh the cons and pros, to use non-correlated assets to help manage risk, and to capitalize on opportunities the demographic trend presents.


*U.S. Census Bureau. (2018, March). Demographic Turning Points for the United States: Population Projections for 2020 to 2060 (Report No. P25-1144). Retrieved from


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