Hedging Your Assets in Times of Economic Uncertainty

In today’s volatile market, with economic cycles and market corrections inevitable, the key to financial longevity is preserving and protecting what you’ve already built. 

And, if you ensure that your money not only grows but works for you whether the market is soaring or in a downturn, then you can buy back your time.

The Skill of Making Money vs. the Art of Preservation

Making money is a skill—a skill most of us develop through formal education, training, and hard work. Whether you build a career with a company, create your own business, or run a professional practice, the journey of creating income and stability has been at the heart of the American dream.

But the other side of the coin is just as important: Preserving what you’ve made and figuring out how to keep your hard-earned income safe in an ever-changing landscape.

Preservation is more critical today than it has been in at least 15 years. After a significant bull run in the markets, driven largely by stimulus, low-interest rates, and rising debt, many people—particularly those in the wealthier 20% of society who own assets like real estate, businesses, or financial investments—have seen substantial returns. But here's the reality: this upward trend is unsustainable.

The Inevitable Market Correction

No market can grow indefinitely without eventually correcting. There’s a principle in finance called “reversion to the mean.” When markets go up sharply—particularly in a parabolic manner—the correction back down is often just as steep, if not steeper. A significant market pullback is inevitable, even if no one can predict the exact timing.

We’ve seen it before: the 2008 financial crisis, the dot-com bubble of the early 2000s, and countless other instances where market exuberance led to crashes.

Many of today’s younger investors may not have experienced these corrections firsthand, and even those who lived through them often forget the lessons learned in the aftermath. But history has shown us time and time again that the markets will correct, and those who haven’t properly prepared will pay the price.

When to Take Chips Off the Table

While we should take advantage of the market’s upward momentum when it’s available, there comes a point when it’s wise to harvest gains.

It’s easy to get caught up in the euphoria of strong returns, seeing your net worth on paper climbing higher and higher. But net worth is only as valuable as it is in your hands—and the true value lies in what that net worth can produce for you.

The key question becomes: How do you convert those paper gains into more secure, hedged, and predictable income that will allow you to buy back time? Because that’s what true financial freedom is about—not just accumulating wealth, but having more control over how you spend your time.

The Real Estate Advantage: A Proven Strategy for Hedging

For over 40 years, I’ve been actively involved in real estate investments. I started out as a hands-on investor, building up a portfolio of equity and income-producing assets that gave me the freedom of time to step away from my dental practice when I needed to.

This model worked because, even during times of market volatility, real estate provided a more stable income stream and less volatility compared to equities or stock-based investments.

However, in today’s market, I no longer want to be as hands-on. Time is the most valuable resource I have, and I prefer to leverage other people’s expertise to manage investments.

But the question remains: Where do you put the capital you’ve accumulated? The temptation is to ride the wave and keep your capital in the market, hoping the upward trend continues. But this is risky.

The reality is, markets will correct, and those paper gains can vanish in a matter of months. Timing the market is impossible, but hedging your risks is not. This is where private credit comes into play.

Moving to Safer, More Predictable Investments: The Private Credit Model

At this point in the cycle, I’ve shifted much of my focus to private credit, also known as being the bank.

In traditional real estate deals, I would typically invest in equity—taking ownership in the property or business, and sharing in both the upside and the risk. But with the current uncertainty in the market, I prefer to take a more conservative approach.

Instead of equity, I’ve started lending money to operators—people who are actively managing real estate deals or other businesses. As a private lender, I earn a contractual return on my investment, which means I’m guaranteed to get my money back before the operator receives theirs. This significantly reduces my risk, especially when the market is unpredictable.

The Trade-Off: Risk vs. Return

It’s important to recognize that every investment involves a trade-off between risk and return. While equities can offer substantial growth, they come with higher risks, especially in times of market volatility.

On the other hand, private credit offers more predictable returns with lower risk, which is why I’ve chosen to allocate more capital to this area right now.

Warren Buffett, one of the world’s most successful investors, is sitting on more cash than ever before, keeping a substantial portion in short-term treasuries. Why? Because he sees that the markets, particularly equities, are overvalued and due for a correction.

As an experienced investor, Buffett is choosing to stay liquid and reduce his exposure to higher-risk assets until the market stabilizes.

Navigating Volatility and Market Cycles

As we look ahead, it’s clear that volatility is here to stay. The days of long, uninterrupted market growth are over. Instead, we’re likely to see markets that go up and down in a much more unpredictable manner, with sharp corrections along the way.

That’s why it’s so important to focus on building passive income through alternative assets like private credit, real estate, and other low-risk investments.

This strategy isn’t just for those at the peak of their careers—it’s for anyone who wants to ensure long-term financial stability, wealth preservation, and time freedom.

Ultimately, making smart investment choices in these uncertain times requires discernment, education, and the ability to leverage a strong network of experienced professionals.

Many people rely on traditional financial advisors who are incentivized to push standard products like index funds or annuities—but these are rarely the best vehicles for true wealth-building and wealth preservation.

At Freedom Founders, we focus on educating our members about alternative investments and helping them build portfolios that are diversified, sustainable, and capable of providing steady, reliable income no matter what the broader market is doing.

Protecting Your Future and Your Time

As we face an increasingly volatile market, it’s essential to hedge your assets, protect your wealth, and buy back your time by creating passive income streams that don’t rely on the stock market or the latest market trends.

By shifting some of your assets into more stable, income-producing investments like private credit and real estate, you can take control of your financial future, preserve your wealth, and gain the freedom of choice that allows you to live life on your own terms.