I have been reading articles lately how determining value is becoming an art form. How do you appraise an asset today when so many economic variables effect its value tomorrow? New appraisal repositories are entering the field of reference. A once easy task is becoming a sophisticated venture. When it comes to financial assets (houses, boats, cars, stocks, cash, gold) which is the best to hold when most hard assets are in decline?
As the economy contracts so does the value of most hard assets. Some will reduce in value greater than others. The most expensive of financial assets would be real estate. One of the main contributors to the housing decline (besides supply increasing and tight lending) is that most homes needs to be acquired through obtaining a loan. In a down economy shouldering excessive debt can make life challenging. The affordable homes market is not as affected (less debt) than the expensive home market (more debt) and therefore is selling easier. Other assets such as boats, autos, art, and jewelry have had a significant decline in value as well. Most investors at this time would rather hold cash that any of the above mentioned assets. In down economies cash is king.
We should also mention gold. It has been said that gold is the best asset to hold in a down economy. With declining value in cash and exchange rates of foreign currencies, investors are selling cash and buying gold. There has been a huge run on gold as investors sell other "cash like" assets such as commercial paper, bonds, stocks, and Cd's. In down economies gold has always been the counter-cyclical assets of choice. It is easy to sell and looks pretty on your finger.
So what is the most valuable of assets? It would be your health! Having good health will save you thousands of dollars on prescription medication, keep your medical insurance premium low, reduce sick days from work and generally make you a more pleasant person to be around. Health is the #1 asset to hold in any economy. So be a smart investor and take your vitamins, get on that treadmill, floss your teeth and cut back on the ice cream. The return on investment will last a life time!