“How to Invest During The Pandemic.” With Jason Hartman & Chris Rawley

Investments into companies that facilitate virtual presence and transactions, such as remote learning, communications, and FINTECH companies, seem like a pretty safe bet in a post-COVID-19 world. The world was moving in this direction for the most part anyway, but it’s amazing that some industries that can be done completely online — banking in particular […]

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Investments into companies that facilitate virtual presence and transactions, such as remote learning, communications, and FINTECH companies, seem like a pretty safe bet in a post-COVID-19 world. The world was moving in this direction for the most part anyway, but it’s amazing that some industries that can be done completely online — banking in particular — still think it is a good idea to open up brick and mortar branches.

As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Chris Rawley.

Chris is the founder and CEO of Harvest Returns, an online marketplace for investing in agriculture. The company provides specialty farmers and agribusinesses with agile sources of equity and debt funding, while providing investors with streamlined access to curated farming offerings. Rawley has a diverse career as a Navy Captain, tech manager, and professional investor.

Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

I’ve had a passion for investing since my teenage years and have invested in basically every asset class you could imagine. After traveling throughout the world during my time in the Navy, I started to realize that outside the United States, people had a much greater appreciation for farming and food systems than we have. In parts of the world where food can be scarce, people are much more in touch with how, where, and who is producing it. We are very fortunate here that even during times of crisis, only a small percentage of the American population is food insecure, so we tend to take agriculture and farmers for granted. Several years ago, I decided that I wanted to take advantage of this newfound appreciation by investing in a farm. As it turns out, this is a pretty challenging thing to do, taking more capital and knowledge than held by the average investor. We started Harvest Returns as a way to bring farmers and investors closer together.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

Much of my investment career and understanding of risk management has been informed by my military experience. Sometimes hubris, confidence, and even competency can get in the way of understanding risk, and investors can lose money because of this. This lesson was revealed to me first hand in 2013 when I was deployed in East Africa with a special operations task force during an operation to evacuate American citizens from a civil war in South Sudan. Hasty decisions were made based on political pressure that ignored very clear risk indicators. Subsequently, three CV-22 Osprey aircraft came under enemy fire and four operators were wounded — one critically. The incident came very close to costing the lives of more than 20 Americans. Hindsight is 20/20, but warnings to perform the operation in a different manner were not heeded by senior decision makers who ignored differing opinions of the risks involved.

Are you working on any exciting new projects now? How do you think that will help people?

We are excited about our Sustainable Agriculture Opportunity Zone Fund. In addition to providing investors with tax-advantaged returns in sustainable farming projects, it will bring much-needed jobs to economically disadvantaged areas and rural communities. Our first investment is in a controlled environment agriculture project in Omaha, Nebraska. Indoor agriculture is changing the way we grow food in the country by bringing production closer to consumers, mitigating risk of the elements, and conserving water and energy.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

My father was a real estate entrepreneur, and one of the pioneers to bringing self-storage facilities to Texas in the 1970s. He’s given me a great respect for risk takers and small businesses that employ the majority of people throughout the country. Small businesses are the lifeblood of the American economy and I learned that lesson early on working for my dad. I am proud to follow in his footsteps as a job creator and innovator.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

Being optimistic in a time of crisis is important and it’s critical to not panic, no matter how bad things get. One thing I’ve learned experiencing numerous life or death situations and crisis events during my career in the Navy is that inserting negative emotions when things go wrong makes the situation worse, not better. Worrying about things you can’t control is counter-productive. Remember, this too shall pass.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

Cash is always king in times of a market correction, though too much dry powder in times of hyperinflation can be detrimental to a portfolio’s growth. I am a proponent of extreme diversification, meaning investments both in and out of the stock market. I personally feel the stock market is too volatile to commit to now, even after such a radical correction.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

Investments into companies that facilitate virtual presence and transactions, such as remote learning, communications, and FINTECH companies, seem like a pretty safe bet in a post-COVID-19 world. The world was moving in this direction for the most part anyway, but it’s amazing that some industries that can be done completely online — banking in particular — still think it is a good idea to open up brick and mortar branches.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

Skilled investors and traders will always make money in up or down markets by riding the momentum. As a retail investor, it’s hard to keep up with or bet against these professional traders, which is why private placements outside the stock market are a good idea. Crowdfunding platforms enable you to find these offerings that can be immune to market chaos.

Are there alternative investments that you think more people should look more deeply at?

Obviously, I am biased, but investing in agriculture and the food system seems like a natural choice. Assets that will increase during times of inflation or that are not correlated with equity and bond markets are important with so much uncertainty in the air.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

Equity crowdfunding sites allow investors to put $10,000 or less to work in a variety of different asset classes, like real estate or agriculture. These offerings are private placements, so they are not correlated to stock market fluctuations. Platforms that allow investors to diversify outside the stock market are a good way to hedge portfolios.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

1. Don’t invest in concepts you don’t understand. Like a lot of people in the late 1990s, I invested in Enron because they seemed to be a really innovative company with strong earnings, but I didn’t completely understand their business. They had a variety of complex revenue streams and were doing complex things, like securitizing HVAC components in office buildings. Turns out they were just crooks. Point being, their “innovative” businesses were simply shell games to cover up for their management misdeeds.

2. Don’t invest without understanding the risks. To manage their risk, a company has to understand risk. That sounds intuitive, but so many organizations get into trouble with overly-optimistic financial projections and a failure to understand their market (external) or execution (internal) risk.

3. Invest in companies that serve a wide audience. Industries such as consumer goods, online merchandisers, and FINTECH companies are scalable and can do well in times of prosperity or recession.

4. Diversify across asset classes and investment vehicles. A portfolio with a variety of stocks or indexes is considered to be a diversified portfolio. The same goes true with bonds. The reality is that publicly-traded equities tend to rise and fall together. Investing outside public markets takes advantage of market illiquidity and negative correlation.

5. Follow your heart… as long as it follows the math. It can be very tempting to invest in something because you genuinely want it to do well. That doesn’t necessarily mean it will. “Impact Investing” continues to grow in popularity; just make sure you select an asset or company that will “successfully” have a meaningful impact, and not just one with good intentions.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

In a discussion of World War I, Theodore Roosevelt said, “If I must choose between righteousness and peace, I choose righteousness.” I have always tried to choose to do the right thing and speak truth to power, even if it causes discontent. That said, one thing I’ve learned over the years is to choose my battles wisely. Sometimes, it’s just not worth “winning,” even if you may be right.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

Take care of one another — your family, your coworkers or employees, your friends, and community all benefit from what you have to offer. Giving them your time and energy will pay dividends. But before you do that, you must take care of yourself!

Thank you for the interview. We wish you only continued success!

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