I don't know about you, but my index funds are purchased through contributions to my tax-free savings account. I can contribute up to $5500 per year and I pay no taxes whatsoever on any capital gains from the equities in the account.

What do you do after you reach the $5500 contribution limit? For many here, that's probably before the calendar turns to February.

You diversify. And real estate may not provide the greatest returns in many circumstances, but it is a diversification, and it has some excellent tax benefits.

if RE market craps out around the time the stock market craps out, its not much diversification in the face of downside risks…

If.

You can’t protect yourself against a global calamity where everything suddenly correlates.

But look at what happened during the crash of 2000 where stocks and housing market went opposite ways for a nice example to the contrary.

Ah yes, and then less than a decade later, if you were lucky enough to still be paying off your multi-decade mortgage, they went down together and those ill-liquid paper gains were wiped out and then some (along with people loosing "their" homes, or now paying a mortgage on house whose value had declined). With our global debt fueled recovery, if turns out be when.

Being in cash, short the market, or UST's would have been better.

Nobody ever said that the RE and the stock market are always decorrelated. But it's undeniable that they sometimes are decorrelated.

That makes the RE market a way to diversify your investments. Nothing more, nothing less.

There's no silver bullet that will protect you under all circumstances.

IOW: I have no idea what kind of point you're trying to make.

My point is that, sure, RE market is a way to diversify ones investments, but it is no longer a good way like everyone has blindly assumed it is because of the underlying conditions influencing risk assets in markets.

If people think de-correlated upside, and correlated long tail downside is a suitable portfolio strategy, then I can't help but take the other-side of that trade… enjoy the slight premium while it lasts, because I'll take it back and then some when it blows up in your face.

So put the multiplier adjusted cash on long positions on index futures and set it to roll contracts over from the front month x time before expiry?