ONLY HARD ASSETS ARE STABLE

 

What causes risk?  

Instability

What hedges risk?

Stability

What asset class is most stable?

Hard Assets.

Why?

Because hard assets are hard.  They exist in the real world.  They can not be hacked, recreated, unplugged, overproduced, and are extremely hard to copy in a way the would fool an expert.

Take an original copy of the Guttenberg Bible.  Sure you could make a forgery.  But that would be tough.  I don't think one has ever been made that fooled anybody for very long.  Guttenberg is dead so he won't be making any more.  There are 48 complete copies and the price has only gone up year after year.  I't been a while since one has sold but on the open market one would probably fetch around 40 million dollars.  I doubt in a hundred years it will be worth less.  You can look up the price one sold for 100 years ago.  It's public record.

Now, not everyone can afford a Guttenberg Bible.  But real things, Hard Assets, like Rare Books, Rare Coins, Rare Medals, Rare Paintings, Rare Historical Objects, Rare stones, Rare Gems, Rare Fossils, Rare wristwatches (I don't get that one, but so what, many people do.) Rare sports memorabilia.  ETC

Rare anything that is REAL.  This is what will hedge your risk in times of instability.  Becuase the price of these things are STABLE OVER TIME.

If you can't track the value over many decades, centuries, or preferably millenia, it is not stable.

If you can't lock it in vault and be sure it will be there even if all the plugs are pulled, it's not stable.

Sure can't miss blue chip stocks like RCA, TWA, TransLux and Mammoth Oil, are also tremendously stable investments.  None of them currently trade but at one time they were all can't miss.

You could have also bought something stupid instead of RCA in 1920, like an Ide Mar Denarius of Brutus.  It could have cost maybe a fifty dollars.  Now, in decent bit worn condition it's worth over $100,000.  Same for almost any important ancient coin.  In fact that would hold true back in 1829, or 1720, or 1520.  Try finding any stock - or bond - from 1520 or 1820 or 1920 that has value now.  It's tough to do.  You could have also bought a guttenberg bible in 1920 or 1820.  I don't know what it would have cost, but less than it's worth now.  It would be tough to say the same for any financial instrument.