>The best hedge is to also "invest" in something that has value to you. Like bricks / house.
That makes intuitive sense, but quickly falls apart when you do any rigorous analysis. Buying a house might cover your shelter needs, but you still need to eat, and you can't eat bricks. Moreover if the fear is your portfolio losing value, buying a house doesn't really mitigate that. Sure, you might still have a house at the end of the day, but that's cold comfort if you paid $2M for a bay area house that subsequently saw its value tank (eg. something like Detroit). Even in some sort of apocalypse scenario a house isn't obviously better than stocks, because the whole concept of owning a house relies on some sort of functioning legal system.
On the other hand there are very real problems with investing in "bricks / house". It has historical under-performed stocks. Moreover a single house provides poor diversification compared to a basket of stocks and its performance is tied to the economic health of your local area. If you lose your job, there's a good chance that your house won't fetch a high price. All of this makes for a poor risk adjusted return, and it's unclear how "has value to you" counters this.
That makes intuitive sense, but quickly falls apart when you do any rigorous analysis. Buying a house might cover your shelter needs, but you still need to eat, and you can't eat bricks. Moreover if the fear is your portfolio losing value, buying a house doesn't really mitigate that. Sure, you might still have a house at the end of the day, but that's cold comfort if you paid $2M for a bay area house that subsequently saw its value tank (eg. something like Detroit). Even in some sort of apocalypse scenario a house isn't obviously better than stocks, because the whole concept of owning a house relies on some sort of functioning legal system.
On the other hand there are very real problems with investing in "bricks / house". It has historical under-performed stocks. Moreover a single house provides poor diversification compared to a basket of stocks and its performance is tied to the economic health of your local area. If you lose your job, there's a good chance that your house won't fetch a high price. All of this makes for a poor risk adjusted return, and it's unclear how "has value to you" counters this.