The video expects profitable businesses, cash, Bitcoin, well-located property, consumer staples, index funds, gold, energy and stronger foreign currencies to hold up best in a year it describes as a deepening recession. 2024 is an election year, the video notes, so there is hope that governments won’t let the economy go down the drain. Still, it says everyone agrees the year won’t be easy, with the recession deepening, but not all asset classes are created equal.
This is the creators’ opinion at the start of 2024, not financial advice. The 15 items below are the sectors they expected to perform, with the reasoning given for each.
Watch the full video here, or skip to the breakdown below.
The 15 asset classes at a glance
- Profit First: business equity (0:30)
- Cash (1:17)
- Bitcoin (1:58)
- Strategic real estate (2:41)
- Art (3:22)
- Abroad investments (4:54)
- Consumer staples (5:41)
- Financial indexes or ETFs you feel you understand (6:21)
- Drugs, big pharma and health-centered subscriptions (7:11)
- Do-it-yourself services focused on saving or making money (7:46)
- Precious metals (9:04)
- Gas and oil (9:41)
- Solar and energy (10:06)
- International currencies (10:37)
- Cheap labor and immigrant human capital (11:12)
- Bonus: luxury products are stalling, even in secondary markets
1. Profit First: business equity
Profitable businesses are the new gold mines, the video says. A company that spends less each month than it makes is now the standard of financial success, and private equity firms have been scooping them up. Boring businesses have become a trending topic among financial influencers.
Owning one, or part of one, lets you sleep a little better, but operating it gets harder as suppliers raise prices and costs of goods rise, putting pressure on salaries. As long as your employees generate more value than they are paid, you’re good.
2. Cash
Cash is an incredibly valuable asset right now. The golden rule here is: don’t buy stupid stuff. Hold on to your cash, because very few people will have any when an opportunity shows up.
Don’t be afraid to be aggressive with offers. Since cash is scarce, people will give preferential terms and better deals. Inflation looked under control for the time being, so if you have the powder, the video says to keep it dry for 6 to 18 months and you might strike gold.
3. Bitcoin
Cash and Bitcoin on the same list may sound crazy. The video points out that Bitcoin was one of last year’s best-performing assets, rising from 17k to 44k in 12 months, and that another halving was due, in which miner rewards are cut in half and every new coin becomes more expensive to create.
Historically, prices have risen around halvings. Some say the move is already priced in and are calling it the end, while others see it as the only asset left. The creators say they haven’t touched their stash, which sits in cold storage.
4. Strategic real estate
Not all properties are equal. Great commercial properties should keep cash flowing for landlords, since businesses cut costs and relocating to a cheaper office is often the first lever pulled. Mid-range, non-competitive commercial property should struggle badly.
Location and closeness to the center help. Most Airbnbs, the video expects, will take a hit: as people travel less, money flows to the top 10 percent of listings and everyone else struggles to find guests.
5. Art
There is a saying among the wealthy that recessions are for the middle class. The economy around rich people thrives regardless, and in art a downturn at most pushes unique pieces to market as owners raise cash.
Alux cites Sotheby’s saying the number of collectors bidding on art worth 20 to 50 million dollars rose 60 percent in a year, and that over 56 percent of these bidders favored contemporary art. It says buying fractional shares in blue-chip art has made the market more accessible. This part of the video was a sponsored segment, so treat the claims as the sponsor’s framing.
6. Abroad investments
If you live somewhere prices have gone crazy and nothing seems worth the price, the video names Canada and the United Kingdom, and suggests looking abroad. Spain and Portugal are the hot tickets in Europe: an apartment near the sea for around 100,000 dollars, or a house with decent land for under 200,000, which is hard to find in the West.
It adds that 15 years ago the strike-gold spots were Thailand or Indonesia, 10 years ago Dubai, Vietnam or Croatia, and now it looks like Colombia, Ecuador and other parts of South America. A two-bedroom in Cartagena, it says, can go for under 50k.
7. Consumer staples
No matter how hard a recession hits, people still need to buy essentials, so stock in those companies tends to do well. In fact, the video says consumer staples crush it in recessions.
It cites a Business Insider look at 2015 that found staples beat the S&P 500 by 49 percent over 25 years, with most of the outperformance coming from three recessions. If you want to make plays in the market, it calls this probably your best bet.
8. Financial indexes or ETFs you feel you understand
The creators say they are big on indexes. With only a little money, you may do better putting it all into one or two stocks you really believe in, and if you’re right you may see 40 percent returns or more.
The team names a few funds as examples, including a large-cap Vanguard ETF, an Avantis international equity ETF and an emerging markets China ETF, and says a fixed-income ETF lets you know at least what you’ll earn. Do your own searching. The creators dollar-cost average every quarter and double down during true recessions.
9. Drugs, big pharma and health-centered subscriptions
From Ozempic to people taking pills by the dozen to an obsession with life extension among those who can afford it, health is having a moment, with money flowing in at an record pace.
Wegovy and Ozempic changed how people think about weight loss and became category-defining products. In recessions, the video adds, people tend to eat lower-quality food, leading to more health problems and more pills.
10. Do-it-yourself services focused on saving or making money
Additional income has become the norm. Beyond food delivery and driving, the video expects companies that supplement an individual’s income to do very well, especially those that save the user money. It wouldn’t be shocked to see Groupon reinvented or a cheaper version of Airbnb or Booking.
The second focus is getting your life together. Most people have been overspending and lack a basic understanding of finances or how to build wealth. They don’t live paycheck to paycheck but, as the video puts it, holiday to tooth surgery, which ends the same way: no money at the end of the month. Taking control means learning how money moves and which actions to take.
11. Precious metals
If you want to go basic, the video says to buy gold. It matched the S&P 500 last year and will likely do the same this year unless things go badly wrong. In recessions gold outperforms the stock market by 20 to 40 percent, so it frames gold as a way of hedging your bets.
You can also buy gold bars and hold them, unlike stocks, and most trading platforms offer buy-and-hold the way they do with stocks.
12. Gas and oil
The sector’s volatility kept the creators away, but traders they know made a killing last year and are optimistic about 2024. Most energy still comes from gas and oil, and war is usually good for the sector, with no sign of quiet on the eastern front.
13. Solar and energy
As a sector it is slowly trending up, and the video calls it one of the few safe bets for the next 20 to 30 years. On the retail side, those who can afford it are paying upfront for solar panels and a home battery to cut long-term costs.
For businesses, it is all about the carbon tax and the benefits of the shift to electric.
14. International currencies
You might think the dollar is doing well, but the video says since it has been printed in large amounts, it is slowly falling behind other currencies. At the time it quotes one Swiss franc at 1.18 US dollars, one British pound at 1.27 and one euro at 1.1.
Holding savings in several currencies, or in more stable ones, can act as a hedge against the money printer going BRRRR.
15. Cheap labor and immigrant human capital
Someone is always happy to do your job for half the pay because they come from less. Economic migration to be one of the sectors most often in the news, as the boring businesses mentioned earlier need skilled workers willing to work at the rate the market, and not the government, values them.
They will work in your country and send money home.
Bonus: luxury products are stalling, even in secondary markets
The creators have long treated the luxury market as a canary in the coal mine, with the secondary market a good indicator of how people with a little money are doing. When even discounted luxury goods don’t sell, the rich are contracting and holding cash.
That, the video says, is happening now: watches that sold for 18 to 20 thousand dollars early last year are going for as low as 9 to 12 thousand. It jokes that watches might be NFTs for adults.
Read the list as a map, not a tip sheet
The narrator repeats a theme through the list: cash and patience, boring cash-flowing businesses and things people can’t stop buying. It is the creators’ view of 2024, shared with the caveat that no one gets forecasts right all the time.
They close by asking viewers what they’re seeing in their own industry and what 2024 feels like where they live.
FAQ
Which asset classes does the video expect to do well in 2024?
It lists profitable business equity, cash, Bitcoin, strategic real estate, art, foreign property, consumer staples, index funds, health, DIY money services, precious metals, oil and gas, solar, stronger foreign currencies and cheap labor.
Why does the video say cash is valuable in a downturn?
Because few people will have cash when opportunities arise, and sellers give better terms to those who do. Alux suggests keeping cash dry for 6 to 18 months.
Why are consumer staples a recession play?
People still buy essentials in a recession. The team cites a look at consumer staples that found they beat the S&P 500 by 49 percent over 25 years, mostly through three recessions.
What does the video say about gold?
It says gold matched the S&P 500 last year and in recessions outperforms stocks by 20 to 40 percent, making it a hedge.
Is this financial advice?
No. It is the creators’ opinion at the start of 2024, and the video’s own point is that you should only buy index funds or assets you feel you understand.
Keep reading
- Services You Get As You Get Richer
- 15 Things High Performers Do To Get Ahead
- Where should you invest next?
