BoA: The Case For Real Assets Has Never Been Stronger

BoA: The Case For Real Assets Has Never Been Stronger

It is widely believed that equities are one of the best investments around. Over the past few hundred years, equities have achieved a steady average high single digit return every year despite numerous wars economic depressions and the changing business environment. The world’s most famous investor, Warren Buffett who is viewed as one of the most astute business minds ever, believes that equities are by far the best way to generate wealth over the long-term.

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However, according to a research note from Bank of America Merrill Lynch’s Chief Investment Strategist Michael Harnett, while equity returns may be highly desirable, today real assets are trading at their lowest valuations in comparison to financial assets since 1929.

The Case For Real Assets Has Never Been Stronger

Real assets are defined as tangible assets with intrinsic value, typically far less liquid than financial assets. Bank of America tracks three broad categories of  these assets: real estate (US/UK residential property and farmland); commodities (precious metals, industrial metals, oil, agricultural commodities); collectibles (wine, art, diamonds, cars). Data on these assets and their prices relative to financial assets such as stocks and bonds goes back 100 years.