As we enter 2026, there is no shortage of risks on the table. From asset bubbles to geopolitical instability, these are the threats I see – and how I protect against them.
Asset bubbles
A few months ago I wrote about how almost every asset type seemed to be at risk of a bubble. And in fact, one of those asset classes (cryptocurrencies) has indeed collapsed.
Stock valuations still look frothy, and I’m certainly not the only investor concerned about the risk of an artificial intelligence (AI) bubble. Gold and silver continue to reach record prices, leaving many to wonder if a crash is coming.
House prices continue to fluctuate around record highs nationwide. That said, it looks like they are likely to level off in most markets where they have fallen. But the housing markets do spent the past 18 months softening in many markets, and may continue to do so.
The only plus that is clear not is in a bubble multi-family property. How do we know that? Because it was in a bubble in 2021-2022, and that bubble burst. Multifamily property values fell 25%-30% before bottoming out starts to rise again in late 2024-2025.
I plan to continue investing $5,000 each month through my co-investment club, as a form of the dollar cost average.
A softening labor market and AI job cannibalization
Labor markets have steadily weakened through 2025, with the latest (November) jobs report from the BLS bringing the unemployment rate to 4.6%. That is an increase compared to 4.2% a year earlier.
It could even be worse than that. After the White House fired the previous BLS commissioner because they were unhappy with the numbers, more analysts arrived afraid of the current data coming from the BLS may not be accurate.
Then there’s the problem of AI taking over entry-level jobs. A Harvard study found that the number of entry-level job openings has fallen 22% over the past two years among companies adopting AI, But saw virtually no change in vacancies for senior level positions.
You can feel the recession jitters among many working- and middle-class households as the slowing labor market and persistent inflation continue to erode their purchasing power.
Recession risk
The December Wolters Kluwer Blue Chip economic indicators Research shows that economists predict a 35% chance of a recession in the next twelve months. That’s more than two bullets in a six-round revolver, if you’re playing economical Russian roulette.
You’ve heard the term ‘K-shaped economy’ used by experts and economists. The top 10% of US earners (those making more than $251,000) accounted for almost half of all consumer spending as 2025 progressed. That is a record high percentage and shows that the economy has become more vulnerable and dependent on a small minority of consumers.
How do I invest to protect myself against recession risk? Of recession-proof real estate investmentsNaturally. In our co-investor club we have done our utmost to search for investments that can withstand a recession Good. Examples include rent-controlled affordable housing and industrial seller leaseback deals with multi-year backlogs in the futuremobile home parks (with tenants’ homes, which one are expensive for renters to move) and more.
Inflation
Inflation yes not tamed. The most recent BLS reading for November shows a CPI rate of 2.7%, much higher than the Federal Reserve’s target of 2%. And that’s if we can even trust the BLS numbers (see above).
The rate situation continues to change from week to week, as does future inflation just now looks too dark for comfort.
For anyone who thinks inflation risk is just an exaggeration, look no further than the price of gold. You don’t have to believe experts, but investment money doesn’t lie. Gold exploded 66.68% in terms of value the past year, largely due to fears of inflation and geopolitical instability.
Geopolitical instability
Wars, invasion threatsAnd catch raids other countries heads of state. Everyone has their own opinion on a particular geopolitical issue. That’s fine.
But What we all agree is up that this is not a stable or predictable moment in modern history. Once again, investors fleeing to a safe haven like gold speaks volumes.
Political and regulatory whiplash
The pace of regulatory change in Washington has left many investors’ heads spinning. President Trump’s HUD Secretary Scott Turner called the pace of regulatory change “lightning fast.”
Investors, like her, want stability and predictability overthink tying up their money for years in the future. Whether you are for or against a single regulatory change is immaterial. The less predictable the regulatory environment, the better more risk for investors.
How I invest
I’ve already mentioned that I use dollar-cost averaging in my real estate investing, investing $5,000 per month anyway. I also average my stock investments in index funds at dollar cost.
I have always loved real estate for its passive income, growth, leverageAnd hedge against inflation. And I also think it can hedge against geopolitical risks in a way that stocks can’t. People need housing. They don’t have to keep their money in stocks.
Some real estate protects against recession risk more than others. I’ll continue looking for protection against downside risk as I look at investments. This means properties:
- With a strong existing cash flow and low competitive supply.
- You don’t trust that valuation (forced or natural) to achieve returns.
- With tax cuts or waiting lists as affordable housing or other protection against a collapse in the labor market.
The world is changing in unprecedented ways. I want to invest my money in places that will continue to perform well, regardless of which way the political or economic wind blows.
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