I apologize in advance if this question seems unethical as you may think I'm trying to profit from people's losses. I'm just trying to protect my investments.

So here's my question: if I'm betting that the Canadian real estate will crash, where should I invest my money to minimize losses, and if possible, maximize gains?

For example, I shouldn't invest my money in REITs if I'm betting that the value of real estate will decrease. If a real estate crash does occur, I assume there will be job losses and debt will be accumulated. I assume companies that deal with debt will have more business and therefore profit more. Should I invest my money in these types of companies?

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    When you say crash, do you mean prices dropping, massive defaults on mortgages or both? Elaborate on what exactly are you calling a crash here, please. – JB King Oct 2 '14 at 3:36
  • US stocks? Global stocks? There's not a lot that will profit if there's a major crash in Canada. Even debt collection/etc. will have some issues as collection rates will drop significantly. Maybe 'staple' producers (food, beer, etc.)? – Joe Oct 2 '14 at 15:00
  • Debt collection companies? – DJClayworth Oct 2 '14 at 16:29
  • @JBKing When I say crash, I generally mean a drop in price of real estate. I would assume a massive default would create an oversupply in real estate which would cause real estate prices to crash. I'm not sure if this answers your question. – burnt1ce Oct 2 '14 at 20:08
  • @Joe: Your suggestions are all "long" positions, but maybe you could profit more easily by being short something else. – Nate Eldredge Oct 2 '14 at 22:31

If you believe you can time the crash, then

  • “invest” in cash
  • keep a good credit rating
  • and buy some property just after the crash that cashflows well enough to pay the mortgage for a long time

We all know what comes after a crash… just as we know what comes after the doom, we just don’t know when….

| improve this answer | |
  • This assumes you believe the market is going to go back up after the crash. I'm not sure that the asker believes that. – Nate Eldredge Oct 2 '14 at 22:29
  • Timing the right time to buy in the US market was very tricky, and plenty bought well too early. This is okay if you can afford a risky strategy, but for your average investor seems dangerous. – Joe Oct 2 '14 at 22:36
  • @NateEldredge, that way I said "cashflows well", so that there will never be a need to sell. – Ian Oct 2 '14 at 22:48
  • @Joe, is is not that risky, if you don't need the money for 20 years and the cashflow works. – Ian Oct 2 '14 at 22:49

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