By Jonathan Basofin, Principal

As I watched recent financial markets’ rapid fluctuations, I was struck by how interconnected many investments are to overly complex, intertwined influences, most of which are beyond any one person’s control. And as I tried to understand the reasons for these particular swings (and what may happen next) I was reminded why I like commercial real estate and believe in Cloverleaf’s approach to investment decisions.

When the markets were tanking the first week of August, observers pointed to an array of causes. For example, many noted the impact of Japan raising interest rates and the resulting domino effect on yen-based “carry trades.” I’ll admit that I hadn’t been paying attention to yen, but the explanation made some sense. Others put more blame on a weak US jobs report. But then some said the jobs report wasn’t that bad actually and argued that the Fed simply blew it by keeping interest rates too high for too long.

There were more explanations, but as I was digesting them, the markets began to rebound.

While part of our job at Cloverleaf is to keep an eye on macro trends (and, of course, interest rates), a far weightier component involves choosing real estate that 1) is likely to thrive across a range of externalities and 2) can be dramatically bettered by people working hard to execute a good plan. Commercial real estate is of course impacted by the world around it just like other asset classes, but we can hedge against some of that risk via mechanisms within our control.

There are other commercial real estate professionals with whom Cloverleaf shares this “hands-on” investment philosophy, who we believe are excellent at executing their particular value-add strategy. As discussed in the article below, we look forward to selectively collaborating with some of these groups to bring additional compelling opportunities to our investors.