Coronavirus, the Stock Market & Why Diversification Matters

This week, Allianz Chief Economic Advisor Mohamed El-Erian joined Squawk Box to talk about challenges the global economy and markets will face as a result of the coronavirus outbreak. The respected economist and businessman warned investors not to "buy the dip" during the coronavirus sell-off as many have done in the past, citing the major toll the outbreak is expected to take on the Chinese economy and global market growth.

Coronavirus Stock Market Impact on Economy

"For a long time, I thought the market sentiment was so strong that we could overcome a mounting list of economic uncertainty", El-Erian said on Squawk Box. "But the coronavirus is different. It is big. It’s going to paralyze China and cascade throughout the global economy".

Last month, Bridgewater Associates founder Ray Dalio echoed this sentiment, advising investors that the value of hard currency would also be eroded in the coming months by a weaker dollar and growing money supply. The solution, according to Dalio, is for investors to build a globally diversified financial portfolio that will protect your assets from ongoing stock market volatility.

"Cash is trash", Dalio told Squawk Box recently at the World Economic Forum in Davos, Switzerland. "Get out of cash. Investors [should] build a globally diversified portfolio [instead]".

Why Portfolio Diversification Matters

Regardless of whatever today’s leading financial experts might believe about what will happen in the future, we can all agree that every investor should have a well-diversified portfolio that includes assets not directly tied to the stock market. Real estate continues to lead the field of alternative investments, in part because it offers a proven hedge against inflation and the opportunity to earn secure ongoing income. Real estate is also a tangible asset that cannot totally disappear overnight, like we have seen happen to the value of stocks, bonds, mutual funds and other alternative investments.

If owning property directly is not an appealing option for you, consider buying shares of an international real estate fund like the KASA Investment Fund instead. Presented by the KASA Hotel Collection - which is also a member of Small Luxury Hotels of the World - the Fund is currently inviting investors to come partner with KASA in a 100% secure international real estate investment that is traditionally only available to high-net-worth individuals and financial institutions. The KASA Investment Fund provides Shareholders with a unique opportunity to earn ongoing income for retirement with a diverse portfolio of luxury beachfront hotels located throughout the Caribbean and the Americas, giving average investors exposure to the robust travel and tourism real estate market.

If you are not a beginner, this might interest you.