Reply #50: The Daily Reckoning: Buy Tangible Assets, Not Paper

[mojavekid]

http://www.dailyreckoning.com.au/tangible-assets/2007/04/16/

Only in the investment game does rock ever beat paper. Normally, if you throw down a flat palm in an old-fashioned game of Paper, Scissors, Rock, paper wins, smothering the rock. But in investment markets, if we take rock to represent “stuff” and paper to represent “paper assets” then “rock” is on a roll. Rock on.

By rock, we also mean, “tangible assets and resources” as opposed to say, mortgage-backed securities and credit derivatives. Part of what you’re seeing this week is the steady migration out of paper-backed assets and into tangible assets. Roughly, generally, and simplistically speaking, this is bad for America and its dollar, but good for Australia and its dollar.

Granted, we should note that a share in a resource company, even a great one like BHP, is a paper claim on real wealth. You are still one step removed from actual ownership of a tangible asset. You don’t own red iron ore from the Pilbara itself. You own BHP common.

more at link...