How To Find Non-Correlated Investments (Part 7)

In a past edition of Litigation Investing Mastery, we introduced non-correlated alternative investments that do not rise and fall on similar market cycles, and explained their importance for a recession-resistant portfolio, highlighting our upcomingDiversified Litigation Portfolio.

In this post, we’ll discuss the current market conditions, the likelihood of a downturn, and when to prepare your portfolio for volatility.

We’ll also compare the correlation of traditional and alternative investments against the steady resilience and non-correlation of legal services.

Additionally, we’ll explain what litigation funding is and how you can invest in this stable asset class through our Diversified Litigation Portfolio.

When Should You Prepare for Market Volatility?

Focusing on a portfolio with resilience to market downturns is always important but even more so in today’s economy.

To date, there have been 14 FED rate hike cycles, and 11 landed in a recession.

How to Find Uncorrelated Investments

Alternative investments often involve industries that show a low correlation to traditional asset classes like housing, energy, rising/falling interest rates, etc. Some examples include:

• Healthcare: People still get sick in recessions.
  
• Education: Continuous need for upskilling/reskilling.
  
• Utilities: Consistent demand regardless of the economy.
  
• Legal Services: Companies still need representation in recessions.

Volatility of Broader Markets

Economic conditions can affect certain assets more than others.

• The graph below shows the dramatic volatility present in common investments.
• Legal Services (green) shows steady growth and non-correlation to those trends

Resilience of Legal Services

The chart below illustrates a consistent and steady growth trend in the legal services market, characterized by minimal volatility.

The underlying fundamentals, including hours worked, hours billed, and amounts collected, have shown remarkable stability, indicating a robust and predictable performance within the industry.

This steady trajectory underscores the market’s resilience and the reliability of its core operational metrics.

What Is a Litigation Portfolio?

Now that you can see how stable legal services compared to other asset classes, you may be wondering how you can invest in legal services.

A Litigation Portfolio invests in litigating law firms to fund:

• Marketing efforts to find harmed individuals, known as claimants
• Costs and fees to take cases through the legal system

Once the case goes through the legal process and the claimant(s) are awarded a monetary settlement by the party that wronged them, the Portfolio receives returns derived from the settlements.

Getting Started

Our Diversified Litigation Portfolio invests in late-stage lawsuits. For example, you’ve likely heard of a few of the big ones, like the contaminated water at Camp Lejeune, causing terminal illnesses, or RoundUp, which caused farmers to develop cancer.

Have Questions?

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