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s my stock portfolio recovers, I find comfort in knowing that my real estate investments continue to thrive amidst the chaos. With government personnel cuts, new tariffs, and escalating trade tensions between the US, Canada, Mexico, and China, economic uncertainty is on the rise. While stocks tend to dislike uncertainty, real estate investors may find opportunities in this turmoil.

    The recent trade disputes highlight the interconnectedness of global economies. In 2023, Canada sent 76% of its exports to the US, accounting for 19% of its GDP. Mexico's exports to the US made up 38% of its GDP in 2024. Conversely, US exports to both countries combined account for only about 2.7% of US GDP. This imbalance suggests that Canada and Mexico will need to make concessions to avoid economic recession.

    I expect swift negotiations among these four nations, which is why I'm buying the stock market dip. Real estate, on the other hand, offers a hedge against uncertainty and potential outperformance this year and next. When stocks tumble, investors flock to Treasury bonds and hard assets like real estate and gold, which tend to hold their value better.

    The current trade tensions are reminiscent of the 2018-2019 trade war, during which Goldman Sachs found that top-performing sectors included utilities, real estate, telecom services, consumer staples, and energy. Real estate's outperformance during turmoil isn't surprising, as investors seek safety and tangible assets in times of uncertainty.

    With interest rates inching lower, demand for real estate is increasing. I assign a 70% probability that real estate will outperform equities this year. Stocks are at risk of sharp corrections due to expensive valuations and policy uncertainty, while real estate provides stable, low-volatility returns that investors crave in turbulent times.

    I lean towards laggard value plays over frothy stocks. Some of the best times to buy stocks were when the Economic Uncertainty Index was at similarly elevated levels, like in 2009 and 2020. Hence, it may be wise to dollar-cost average into both assets.

    The past two years have been exceptional for stocks, delivering returns that felt like winning the lottery. However, long-term returns tend to normalize. Goldman Sachs, JP Morgan, and Vanguard all forecast subdued 10-year S&P 500 returns. If valuations mean-revert to a historical forward P/E of 18x, upside potential is limited.

    Once you've made substantial gains, capital preservation should be your priority. The first rule of financial independence is not losing money. A 4%–8% steady return in real estate beats the wild swings of a stock market that could erase wealth overnight.

    As 2025 unfolds, don't underestimate real estate's role as a hedge against uncertainty. If the world comes crumbling down, the most precious asset you will own is your home. Don't take it for granted.