March Market Moves

Would you pay $150 for a cup of coffee? Some people do. The world’s rarest coffee, Kopi Luwak, comes from beans eaten, digested, and… let’s say, “processed” by civet cats before being brewed into a luxurious cup of joe. Yes, really.

Apparently, scarcity and a good backstory can make anything wildly expensive - including everyday essentials. And in today’s economy, inflation is turning more than just coffee into a luxury. From eggs to gas, prices remain stubbornly high, and clients are feeling it more and more. March is already off to a wild start….

In today’s email:

• Real Estate Reality Check – Why your clients’ properties might be riskier than they think (and how to fix it).

• Trump, Ukraine & Crypto – A minerals deal gone wrong and a bold move into digital assets—what it means for markets.

• Mortgage Gridlock – The housing market is stuck. Here’s how advisors can help clients break free.

Let’s dive in!

Why Your Clients’ Real Estate Portfolios Are More Risky Than They Think

Real estate, the golden child of wealth-building. Clients love it, advisors respect it, and markets keep proving its long-term value. But here’s the catch: most investors don’t see the risks hiding in plain sight.

Your clients might think their properties are bulletproof, but are they prepared for liquidity traps, tax landmines, and sudden market shifts? Let’s break down these blind spots before they turn into real problems.

The Hidden Risks in Real Estate Portfolios

Liquidity Illusions:

Real estate feels like a stable asset, but when clients need quick cash, selling property can be slow and costly. Unlike stocks, properties can’t be liquidated instantly, and market downturns can trap investors in unwanted holdings.

Overexposure to One Market:

Many clients concentrate their investments in a single location or property type (e.g., short-term rentals). If that market cools, their entire portfolio suffers - no diversification means no safety net.

Underestimating Tax Inefficiencies:

Real estate investments come with various tax advantages, which can be optimized by holding a diverse mix of properties.

• 1031 Exchanges – Great for deferring taxes, but mismanagement can trigger hefty liabilities.

• Depreciation Strategies – Often underutilized, leading to missed tax benefits.

• Estate Planning Pitfalls – Many clients don’t structure ownership properly, leaving heirs with unnecessary tax burdens.

Debt Risk in a High-Rate World:

Clients who leveraged cheap debt in 2020-2021 may be in for a shock when refinancing. Can they handle higher rates and lower cash flow? If not, their returns could turn negative fast.

The Fix: How Advisors Can Help Clients Stress-Test Their Real Estate Holdings

Liquidity Planning:

Ensure clients maintain a healthy balance of liquid assets, such as cash reserves, REITs, or marketable securities, to handle short-term needs without selling properties at a loss. Investing in good insurance policies for all properties can also provide significant cash payouts in case of unforeseen events, helping to maintain liquidity.

Diversification Strategy:

Guide clients toward a mix of property types, locations, and investment structures (direct ownership vs. REITs or real estate funds) to hedge against localized downturns. Diversifying by asset type helps avoid the risk of over-concentration in one particular category of property.

Tax Optimization:

Collaborate with tax professionals to utilize cost segregation, depreciation strategies, and entity structuring to minimize tax liabilities and enhance after-tax returns. Real estate investments come with various tax advantages, which can be optimized by holding a diverse mix of properties.

Interest Rate Stress Test:

Model different interest rate scenarios to determine whether clients can sustain higher financing costs, declining rental yields, or market downturns without jeopardizing their financial security. Understanding these risks is vital for any real estate investor, as low liquidity can pose significant challenges, especially during economic downturns.

Trump, Ukraine, and Crypto Reserves: What Advisors Need to Know

Trump-Zelenskyy: The Minerals Deal That Almost Was

On February 28, 2025, President Trump met with Ukrainian President Volodymyr Zelenskyy to discuss a minerals agreement that could have strengthened U.S.-Ukraine economic ties. The deal, centered on Ukraine’s rich deposits of lithium and rare earth minerals, was poised to benefit both economies - until diplomacy took a nosedive.

What Actually Happened:

Instead of a smooth negotiation, the meeting turned into a verbal showdown. Trump, alongside VP J.D. Vance, accused Zelenskyy of being "ungrateful" for U.S. military and economic aid. Trump later blasted Zelenskyy on social media, calling him "not ready for peace" and signaling frustration with Ukraine’s stance in its ongoing war.

What’s Happening Now:

U.S.-Ukraine relations have cooled. The minerals agreement is on life support, and Trump’s rhetoric suggests he may scale back U.S. aid if Ukraine doesn’t align with his expectations. Without a deal, global commodities markets could feel the impact. Ukraine’s minerals are crucial for tech and defense industries. Disruptions could mean price swings in lithium, cobalt, and other key materials. Defense stocks may see volatility. If Trump pulls back support, geopolitical instability could rise, affecting companies with exposure to military contracts and Eastern Europe.

What It Means for Advisors:

🔹Keep an eye on commodity-linked investments—lithium, rare earths, and metals critical to EVs and tech.
🔹 Monitor defense and aerospace stocks, as Trump’s shifting stance could impact military spending and contractor revenues.
🔹 Clients with international exposure should be briefed on Eastern European geopolitical risk—it’s back in play.

The U.S. Crypto Reserve: A Game-Changer?

Days later, Trump announced something no U.S. president has done before: the creation of a strategic national cryptocurrency reserve. The reserve includes Bitcoin, Ethereum, XRP, Solana, and Cardano, marking a major shift in the U.S. government's stance on digital assets.

What Actually Happened:

Trump compared the reserve to a digital gold stockpile, signaling a move to legitimize crypto as part of the nation’s financial arsenal. The government plans to acquire crypto through purchases, policy incentives, and seized assets.

What’s Happening Now:

Markets are reacting fast. Bitcoin and Ethereum saw price swings as investors weighed the implications of U.S. government backing. Institutional adoption could accelerate. A national crypto reserve adds legitimacy, possibly paving the way for pension funds and sovereign wealth funds to increase their crypto allocations. Regulatory questions loom. Will this lead to friendlier policies toward crypto, or will tighter government control stifle private-sector innovation?

What It Means for Advisors:

🔹 Expect client questions—investors will want to know if this move makes Bitcoin and Ethereum "safer" investments.
🔹 Crypto ETFs and diversification strategies will gain more attention—advisors should be ready to guide clients through potential volatility.
🔹 Volatility isn’t disappearing. While a U.S. reserve adds credibility, crypto remains a speculative asset class with major price swings.

The Mortgage Rate Trap: Why This Matters Now

Homeowners are sitting on ultra-low mortgage rates like they’re golden tickets, and who can blame them? With 65% of homeowners locked into rates below 4%, trading up to a home with a 6%+ mortgage sounds about as appealing as paying $20 for airport coffee. The result? A housing market that’s jammed up, with limited opportunities for buyers, sellers, and investors alike.

Why should you care?
✅ Your clients who want to upgrade are stuck.
✅ Buyers are frustrated with low inventory and high borrowing costs.
✅ Real estate investors are sitting on the sidelines, waiting for better deals.
✅ A massive amount of wealth is trapped in real estate instead of being optimized.

So, what’s an advisor to do? Let’s break it down.

The Mortgage Rate Trap Explained

• Back in 2020-2021, homeowners locked in historically low mortgage rates.

• Now, with rates significantly higher, many are unwilling to sell and lose their low-rate loans.

• The result? A market where sellers are scarce, inventory is tight, and home prices stay high despite affordability challenges.

Buyers can’t buy, sellers won’t sell, and investors aren’t seeing enough opportunities. But that doesn’t mean advisors are out of options.

The Tactical Playbook: 3 Ways to Help Clients Navigate This Market

1️⃣ Unlock Home Equity Without Selling (For Clients Who Want to Move but Feel Stuck)

• Suggest a HELOC or cash-out refinance to tap home equity while keeping a low-rate first mortgage.

• If they must sell, explore seller financing—offering buyers a lower rate while generating passive income.

2️⃣ Creative Buying Solutions for Frustrated Buyers (For Clients Struggling to Buy)

• Help clients find assumable mortgages (FHA & VA loans) that allow them to take over a seller’s low rate.

• Negotiate rate buydowns to lower borrowing costs upfront.

• Suggest adjustable-rate mortgages (ARMs) as a short-term solution with plans to refinance later.

3️⃣ Turn Market Stagnation into Investment Opportunities (For Clients Looking for Real Estate Investments)

• Identify long-term owners with high equity who may be open to seller financing deals.

• Look for distressed properties in areas where buyers are hesitant due to rates.

• Introduce fractional ownership & REITs for clients who want real estate exposure without the landlord headaches.

What Financial Advisors Should Do Now

🔹 Educate Clients – Break down these strategies for them. Many don’t realize they have options beyond “wait it out.”
🔹 Leverage Your Network – Work with lenders, mortgage brokers, and real estate professionals to find solutions.
🔹 Stay Proactive – The market is shifting, and the best advisors are the ones helping clients navigate it now, not waiting for rates to drop.

🚀 Want to learn how to implement these strategies effectively?