Entering 2026, there’s no shortage of risks on the table. From asset bubbles to geopolitical instability, here are the threats I see—and how I’m protecting against them.
Asset Bubbles
A few months ago, I wrote about how nearly every asset type appeared at risk of a bubble. And in fact, one of those asset classes (cryptocurrencies) did in fact collapse.
Stock valuations still look frothy, and I’m certainly not the only investor raising concerns about artificial intelligence (AI) bubble risk. Gold and silver keep pushing to record prices, leading many to wonder if a crash is coming.
Home prices continue hovering around record highs nationwide. That said, they look likely to flatten out in most markets where they’ve been dropping. But housing markets have spent the last 18 months softening in many markets, and may continue to do so.
The one asset that is clearly not in a bubble is multifamily real estate. How do we know? Because it was in a bubble in 2021-2022, and that bubble burst. Multifamily property values fell 25%-30% before bottoming out and starting to rise again in late 2024-2025.
I plan to keep investing $5,000 each month through my co-investing club, as a form of dollar-cost averaging.
A Softening Labor Market and AI Job Cannibalization
The job markets steadily weakened through 2025, with the latest (November) jobs report from the BLS clocking the unemployment rate at 4.6%. That’s up from 4.2% a year earlier.
It may, in fact, be worse than that. After the White House fired the previous BLS Commissioner because they weren’t satisfied with the numbers, more analysts fear the current data coming out of the BLS may not be accurate.
Then there’s the problem of AI taking over entry-level jobs. A Harvard study found that entry-level job openings fell 22% over the last two years among firms that adopted AI, but saw virtually no change in job openings for senior-level positions.
You can feel the recession jitters among many working- and middle-class households, as the slowing job market and sustained inflation keep eating into their purchasing power.
Recession Risk
The December Wolters Kluwer Blue Chip Economic Indicators survey shows that economists foresee a 35% chance of recession in the next 12 months. That’s more than two bullets in a six-round revolver, if you’re playing economic Russian roulette.
You’ve heard the term “K-shaped economy” thrown around by pundits and economists. The top 10% of earners in the U.S. (earning over $251,000) accounted for nearly half of all consumer spending as 2025 progressed. That’s a record-high percentage, and shows the economy has become more fragile and dependent on a small minority of consumers.
How am I investing to protect against recession risk? With recession-resilient real estate investments, of course. In our co-investing club, we’ve gone out of our way to look for investments that can weather a recession well. Examples include rent-protected affordable housing, industrial seller-leaseback deals with an order backlog of several years into the future, mobile home parks (with tenant-owned homes, which are expensive for tenants to move), and more.
Inflation
Inflation is not tamed. The most recent BLS reading for November shows a CPI rate of 2.7%, far higher than the Federal Reserve’s target of 2%. And that’s if we can even trust the BLS numbers (see above).
The tariff situation keeps changing week to week, and future inflation just looks too murky for comfort.
For anyone who thinks inflation risk is all just hyperbole, look no further than the price of gold. You don’t have to believe pundits, but investment money doesn’t lie. Gold exploded 66.68% in value over the last year, largely due to inflation fears and geopolitical instability.
Geopolitical Instability
Wars, invasion threats, and capture raids on other countries’ heads of state. Everyone has their own opinion on any given geopolitical issue. That’s fine.
But what we can all agree on is that this is not a stable or predictable moment in modern history. Again, investors fleeing to a safe-haven investment like gold speaks volumes.
Political and Regulatory Whiplash
The speed of regulatory change in Washington has left many investors’ heads spinning. President Trump’s HUD Secretary Scott Turner referred to the pace of regulatory change as “lightning-speed.”
Investors want stability and predictability as they contemplate tying up their money for years into the future. Whether you’re for or against any single regulatory change is beside the point. The less predictable the regulatory environment, the more risk for investors.
How I’m Investing
I already mentioned I practice dollar-cost averaging in my real estate investments, investing $5,000 a month no matter what. I also dollar-cost average my stock investments into index funds.
I’ve always liked real estate for its passive income, growth, leveragability, and hedge against inflation. And I also think it can hedge against geopolitical risks in a way that stocks don’t. People need housing. They don’t need to hold their money in stocks.
Some real estate protects against recession risk more than others. I’ll continue looking for downside risk protection as I look at investments. This means properties:
- With strong existing cash flow and low competing supply.
- That don’t rely on appreciation (forced or natural) to deliver returns.
- With tax abatements or wait lists as affordable housing or other protections against a job market collapse.
The world is changing in unprecedented ways. I want to put my money in places that will keep performing well, no matter which way the political or economic winds blow.
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