'I Don't Believe Them For A Second' – Real Estate Guru Grant Cardone Blasts The Government For Denying A Recession. Here Are 3 Shockproof Assets To Help You Survive The Storm

With robust labor market growth, you don’t hear politicians talking about recession that much these days. But according to real estate mogul Grant Cardone, the “R word” is happening for real.

“The government continues to deny a recession, I don’t believe them for a second,” he tells Benzinga. “Advertising is off and I believe the explosive job numbers reported this month are for part-time jobs not full-time.”

Running his real estate investment firm Cardone Capital, Cardone saw the storm coming, especially after the U.S. central bank turned hawkish in early 2022.

“We are in a recession and I have been planning for this since 2008 and started preparing this in February of last year when the Fed started raising rates,” he says.

In response, Cardone has sold “anything that had gone from an asset and became a liability.”

It’s no surprise. With rising interest rates, you don’t want to carry too much liability.

“My plan for 2023 – reduce my liabilities and grow my assets,” he adds.

Of course, not all assets are the same. Here’s a look at three that tend to remain resilient even during recessionary periods – one of which is a Cardone favorite.

Utilities

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Utility companies provide electricity, water, and natural gas services, which are necessities for most people. Therefore the business is largely shockproof.

Come what may, people will still need to heat their homes in the winter and turn the lights on at night.

The sector is also known for its high barriers to entry. It takes significant capital investments to build and maintain infrastructure such as pipelines, power plants, and transmission lines. Additionally, the industry is highly regulated by the government.

The result is that large, well-established utility companies often enjoy economies of scale and a stable customer base.

Investors can tap into the sector through ETFs like the Utilities Select Sector SPDR Fund (XLU) and the Vanguard Utilities ETF (VPU). Companies included in these funds could also provide a starting point for further research.

Consumer Staples

Consumer staples are basic goods like food, beverages, household items and hygiene products. We buy these products on a regular basis, regardless of economic conditions.

That means companies making these products can thrive through thick and thin.

You can also see their resilience through the amount of cash they are returning to shareholders.

For instance, beverage giant Coca-Cola (KO) has raised its dividend for 61 consecutive years. Meanwhile, Procter & Gamble (PG), the parent company of well-known brands like Gillette, Tide and Bounty, has just announced its 67th consecutive annual dividend increase.

Investors can also gain exposure to the group through ETFs like the Consumer Staples Select Sector SPDR Fund (XLP).

Multifamily Real Estate

Real estate has its cycles. But even in a recession, people still need a place to live.

Moreover, with elevated home prices and high mortgage rates, owning a home has become less feasible. And when people can’t afford to buy a home, renting is the only option.

The stable demand for rental properties is one of the reasons why multifamily real estate could be worth considering. It also helps that on a per-unit basis, operating costs in multifamily properties tend to be lower than those for single-family homes. 

Of course, an apartment complex is also a lot more expensive than a single house. But these days, you don’t have to be an ultra-high net worth individual to get a piece of the action.

There are real estate investment trusts (REITs) that focus on multifamily properties. There are also crowdfunding platforms that allow retail investors to buy shares of multifamily properties for as little as $1,000.