Hard asset
Hard Assets are investments with intrinsic value such as oil, natural gas, gold, farmland,natural colored diamonds and commercial real estate. Typically hard assets are an excellent inflation hedge.[1][2][3] In general, commodities/hard assets are negatively correlated to both stocks and bonds. In other words, when stocks and bonds decline, commodities tend to appreciate.[4][5] In addition, during periods of high inflation/negative real interest rates equities and bonds do poorly (see 20% total return over 11 years from 1970 to 1981 for the S&P 500 [6] v. 1,100% increase in oil prices[7][8][9][10] and 550% increase in western Canada farmland prices during same period)[11][12][13] while commodity/hard assets appreciate in value.
See also
References
- ^ Commodity Prices and Inflation, What's the Connection? - http://mises.org/story/3018
- ^ Marotta Aset Management - http://www.emarotta.com/article.php?ID=234
- ^ Agcapita Farmland Investment Partnership - Farmland and Inflation http://www.farmlandinvestmentpartnership.com/pdfs/FIP%20Financial%20Characteristics.pdf
- ^ Hard Asset Investor - http://www.hardassetsinvestor.com/component/content/article/9/434.html
- ^ Fields of Gold - http://www.thestar.com/News/Ideas/article/475036
- ^ Yahoo Finance - http://finance.yahoo.com/q/hp?s=%5EGSPC
- ^ Enquirica Research Inc. - China Oil Demand Report & Model, July 2010
- ^ Petrocapita Income Trust - Energy Price Trends, Feb 2010
- ^ WRTG - http://www.wtrg.com/prices.htm
- ^ Petrocapita Income Trust (Oil Production Assets as an Inflation Hedge) - http://www.petrocapita.com
- ^ Stats Canada
- ^ Agcapita Farmland Investment Partnership - S&P versus Farmland and Oil in the 1970s http://www.farmlandinvestmentpartnership.com/pdfs/Agcapita_Newsletter_-_July_18_2008.pdf
- ^ Alpha, Beta, and Commodities: Can a Commodities Investment be Both a High Risk-Adjusted Return Source and a Portfolio Hedge? http://www.hardassetsinvestor.com/component/content/article/34/50.html?Itemid=4
External links
- [1] Enquirica Research - Hard Asset Investing
- [2] Reuters News on Natural Colored Diamond Investing