Saturday, August 2, 2014
Why Hard Assets?
Why Hard Assets?
It is so obvious to those who have been investing in hard assets that an astonishing bull market has been underway for the last 15 years, that it's difficult to understand why this market has yet to even be discovered by the global financial community.
What is a hard asset? It is anything with INTRINSIC VALUE that can be OWNED and STORED by an INDIVIDUAL.
Intrinsic Value derives from "Artistic Beauty" and "Historical Importance." Both these qualities are obviously impossible to quantify. But they clearly overlap. Things with intrinsic value must be established as such over enough of human history so that a consensus is firmly ensconced. You might hate Picasso, but his artwork will forever be considered important. Not so with Jeff Koons. Not enough time has passed. His artwork may well have no value in ten years. Nobody knows. You might think the Declaration of Independence is a document that had no real effect on history. Doesn't matter. Enough time has passed that original copies of this document will always have high value. The beauty of the document lies in the language and the ideas expressed therein,
Hard Assets can include jewels, (valued for their beauty over thousands of years), coins, medals, art, classic cars, documents, books, antiquities, items personally associated with important historical figures, furniture, etc.
Hard Assets do not include paper which bets on hard assets: futures, Reits, options, funds, etc.
The bull market in hard assets is so powerful that dealers in these markets can ask almost any price for truly rare and important objects. How do you price an original copy of the Magna Carta? You can't. The trick for dealers is acquiring top material in a markets where prices are continually rising.
But the impossibility of quantification is seen as an enormous barrier of entry to the market by Wall Street Financial advisers. How do you quantify percentage gains for items that change hands a few times per decade - if that?
Wall Street will not get involved in these markets because they do not have the tools to quantify them. These tools do not and can not exist. This is why Wall Street is not even sure this bull market exists. And if it does, they don't care, because if you can't quantify it, then it can't exploited it through supercomputers and dark pools. So Wall Street has no edge.
The edge in Hard Assets is derived through years of hard study and depth of understanding. This is why this is the greatest stealth bull market the modern world has ever seen.
The super wealthy however are fully involved. And as in everything these days, they will be the primary beneficiaries because they don't give a damn what Wall Street brokers think about anything. And they have the time to study and develop understanding. Whereas the vast middle class, which is currently drowning, has not begun to get involved.
Don't be a sap. It doesn't matter what the hard asset is. Choose something you have an affinity for. Make time. Study it. Get involved. Before it's too late.
When the vast paper edifice controlled by the Wall Street Banks collapses - as it always has throughout the history of the world - your hard assets will be all you have that retain value.