Image Source: 401(K) 2012 August 2015 saw some of the most severe stock market declines on record. Economics expert Robert Shiller warns that it is far from over. What do Canadian investors need to know about the stock market and economy now? Escaping Insane Volatility Every type of investment is subject to some type of volatility. This is even true of cash under the mattress. Yet, stocks prove to be more volatile than dynamite and considering the returns compared to real estate, that risk is really hard to justify. In a single day in August 2015 the stock market evaporated $1.4T in wealth. At least one uber- wealthy Asian investor lost almost $4B in that one day. The Monday following this, saw an equal amount of losses. Yet, very few can afford this risk. New Economics What is encouraging is that the stock market has become increasingly distanced from reality. We may now still have a stock market that is over 60 percent overvalued. Many stocks may be trading ridiculously high given their earnings and net profits. It's really hard to justify continued capital raises by firms that continue to lose millions and are not breaking even. This is especially true when you compare the stock market to investment real estate that is delivering positive cash flow. The changing business world has also created a big disconnect between stocks and the data that drives them, and what is really going on at a street level. Jobs and unemployment stats are the perfect example of this. Old indexes and barometers don't really make sense given how many people now work as independent contractors and no longer need jobs'. This means fundamentals for housing, multifamily rentals, and retail properties are probably far better than some news media lets on. The Bank of Canada agrees, recently heralding that while Canadian household debt and mortgages had grown a series of balances and new rules that have been instituted over the past few years have Summary It's clear that most Canadian investors are overexposed to the stock market. Canadian real estate is far more appealing in comparison. Yet, the above also applies to how you invest in property. Real estate stocks and publicly traded REITs are going to be exposed to the same issues of other types of stocks. Instead investigate direct investment, or smaller partnerships alongside other accredited investors for the optimal combination of performance and security.