The best investments are often those that nobody thinks of as investments at the time. For example, if, circa 1960, you suddenly announced to your family, friends and coworkers that you were going to sink every last penny you had into California beachfront real estate, the news would most likely have been poorly received. The skeptics would clamor around you saying things like, “What’s wrong with good old fashioned bank CDs?” or “Why don’t you consider a safe treasury bond, instead?”
Someone may even suggest that, if gambling is your game, you could always take a chance in the high risk stock market. After all, the leading newspapers and respected periodicals of the day didn’t have any articles about the investment merits of California beachfront real estate, so almost anything else would have to be a better investment! Right?
But of course the traditional wisdom was wrong. And not just a little wrong either, but utterly, laughably wrong. A well chosen parcel of unimproved California beachfront property that could have been purchased for a few thousand dollars in the 1950s and 1960s would today be highly desirable prime real estate that would easily sell for a few million dollars.
That is a nominal increase in price by a factor of approximately 100 over the last five or six decades. This gives our hypothetical California beachfront property a return of over 13% per annum versus around 10% for U.S. stocks and 6.5% for U.S. treasury bonds during the same time period.
In today’s investment landscape all the traditional asset classes have been bid up. Neither stocks, nor bonds, nor cash are going to have very impressive returns over the next couple of decades. But many investment grade artworks and antiques still trade for eminently reasonable prices.
So that vintage 1962 solid 14 karat gold Hamilton Thinline mechanical wristwatch for sale on Etsy for $525? It has a very good chance of outperforming most of the stocks and bonds that are currently stuffed into your various retirement accounts right now. And if you are smart enough to defy traditional wisdom and buy the handsome timepiece in question, an obvious question will haunt you 20 or 30 years down the road: “Why didn’t I buy a few more vintage wristwatches (or other investment grade antiques) for next to nothing when I had the chance?”
