This Investment Trend Is Washington-Proof – And I Want In
I often tell my Top Stock Advisor premium readers to try to not let their own biases affect their investment decisions. And that goes double when it comes to politics and how it affects the market.
Now that we’ve got the contentious presidential election behind us, I thought it would be worthwhile to address this.
We all know that the 2020 election was one for the history books… We had a controversial sitting president running for reelection, deep divisions across both parties, a global health pandemic, an economic crisis, I could go on…
Leading up to the election, investors were terrified of what might happen to their portfolios should the opposing party win. We had record voter turnout, and it came down to the wire. But now that the dust has settled, it doesn’t mean nerves have settled as well.
There’s a lot of anxiety about how a Joe Biden administration will affect certain stocks. I get it. We’ve already seen early in the game how the White House’s “green” energy agenda has affected the energy industry, for example.
But rather than worry about what you can’t control, I want you to focus on what you can. You see, while some policies could change under his leadership, there are a few trends that won’t miss a single step regardless of what happens in Washington.
I’ll give you an example.
A Residential Real Estate Boom
Right now, we have the largest current generation — the Millennials, at more than 72 million strong — beginning to (finally) purchase their first home. And with the sudden shift towards a work-from-home environment, they are snagging houses all over the country. Plus, record-low interest rates puts the cherry on top for homebuyers. It’s making homes even more affordable than ever before.
According to the S&P/Case-Shiller U.S. National Home Price Index, home prices bottomed in 2012 and have been in growth mode ever since — growing at a compound annual rate of 7.4%, and much higher in certain parts of the country.
Despite this robust growth, home builders have been reluctant to ramp up production, which is part of the reason why we’ve seen rapid gains in home prices. The demand is outpacing supply. Homebuilders simply can’t build homes fast enough.
To take advantage of the housing disconnect we can buy shares of one of the homebuilders. There are even several exchange-traded funds out there that will help you gain broad exposure to this trend.
But of all the homebuilders out there, I would take a look at NVR, Inc. (NYSE: NVR) — one of the nation’s largest — and best — homebuilders.
NVR operates in 14 states and Washington, D.C.. The company primarily does business in the eastern part of the country. Its focus is on the construction and sale of single-family detached homes, townhomes, and condominium buildings, all of which are primarily constructed on a pre-sold basis (a key to its continued success). Here’s what that means…
Unlike most homebuilders, NVR doesn’t purchase and develop the land on which it builds its homes. Instead, it purchases options from land developers, paying them a small deposit upfront to hold the lots. It pays the rest only when it’s ready to start building homes… which are mostly already pre-sold. As a result, NVR doesn’t have the financial requirements and risks associated with direct land ownership and development.
NVR’s strategy allows it to maintain profitability even during tough times. When stacked up next to its peers it doesn’t even come close.
Action To Take
I could run you through a list of metrics, but the larger point here is that there are plenty of options for investors to take control of their portfolios. This is just one trend among several that a Biden administration (or any other for that matter) is going to have a hard time disrupting.
Some trends are just so powerful that the tailwinds are too strong for the politicians to mess up. That’s where I want to have my money. And if that’s true for you, then I recommend checking out my report of investment predictions for 2021…
My latest report is full of research that challenges the conventional wisdom. And while we don’t have a crystal ball, many of our past predictions have come true, allowing investors the chance to rake in gains of 622%, 823%, and even 993%.
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