Has the air already gone out of the stock market or is there still room for 10% up and 100% down?

The stock market is exciting but risky

Recently, the stock market has begun to rise again after having been shot down as a result of the corona crisis. Many have therefore some days seen increases in the national and global indices of 5-8% over a few days, but at the same time also seen how the stock market can fall again the very next day.
But here at the end of April 2020, it (perhaps) seems that the air has already gone out of the stock market, as prices seem to stagnate - Should you then just wait, hope / believe that the stock market rises more during the year, accept that there is no increase in the value of your wealth or take greater risks to achieve a return.

The exciting thing about the stock market is that - in certain periods and with certain stocks - you can experience large increases in a short period of time. What is less exciting is that you can also experience large falls in a short period of time.
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"10% up and 100% down in the same day" is a saying that basically just illustrates that the stock market can rise and fall a lot in a very short time

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If a share falls 50% in value, it must subsequently rise 100% to return to the same price. If a share falls 20% in value, it must subsequently rise 25% to be back at the same price. Both scenarios do not happen very often.
Perhaps this is why many people leave their stock investments to professional managers, so that the risk of making the wrong choice (presumably) is reduced - however, there are also some - often high - costs associated with this.

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Construction finance is boring, but with known returns

Investing in construction finance via FundBricks.com does not allow for large price increases/returns from week to week. On the other hand, it is free, does not require active management and it is an investment form where the return (read: interest rate) is fixed in advance.
If there is turmoil in the stock markets, it does not affect the return on an investment in construction financing via FundBricks.com, and you do not risk having to accept "10% up and 100% down" in a few days or that the air has gone out of the stock market.

In connection with the approval of a real estate project, the construction project is qualified by an external independent construction expert, and an appropriate buffer is always included.
One way in which we limit the risk of a real estate project is by requiring that the construction budget shows that there is an excess coverage of min. 20% (incl. all construction and financing costs and buffer) and by having a well-defined process for both approval of real estate projects and process management(Read about the process here).
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To date, the average overcrowding rate is around 43% for real estate projects on FundBricks.com‍

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The 20% overcollateralization - which is an absolute minimum requirement at Fundbrics.com - is a safety buffer and means in practice that the individual real estate project can be reduced in price by 16% before it starts to affect the return to investors. And for the current projects on Fundbricks.com, where the overcollateralization is much higher, the price can be reduced even further without affecting investors' returns.
‍Bycomparison, investors in the stock market will also experience a loss of 16% if a share is reduced in price by 16%.

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So what can affect the return on investment when investing in construction finance for a real estate project via FundBricks.com?

For example, ifthe real estate project gets very delayed, if the real estate developer goes bankrupt(read in our FAQ how to deal with it) or if the contractor goes bankrupt(read in our FAQ how to deal with it), the costs may increase or the sales process may be delayed.
However, for investors to start experiencing losses, the total costs of the real estate project would have to increase by as much as 20% - this would require an even greater percentage increase in construction costs, as there are a large number of costs in a real estate project that are fixed.

The absolute worst case scenario could be that the sale price of the real estate project is lower than the principal amount of the loans held by the project company. In such a case, there will not be enough money for the project company to pay back the full loans (and interest) to the investors - Here the investors will thus receive less back than they originally lent to the project company, and the investors may thus experience a loss.
But - unlike the stock market - a property "always" represents a certain value and it will be highly unlikely that a real estate project falls so much in value or becomes so much more expensive that the investors experience a loss of 100%.

In our view, investing in construction finance is a more stable, more boring - but much less time-consuming - investment compared to the stock market. And at the very least, it helps investors to achieve a better risk diversification of their investments.
Investing in the stock market is to some extent speculation in relation to an unknown future - via FundBricks.com, the return is known in advance - we call it getting more out of your wealth.