Hard Assets - Some Off-the-Beaten-Path Ideas

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Maddy
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Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Maddy » Sun Nov 29, 2020 11:14 am

Twelve years post-2008, I find myself once again looking at hard assets. In the interest of diversification, I'm wanting to expand my view beyond the obvious choices.

For years, I though a Steinway grand might make a good candidate. Ever checked the prices on those babies, year over year?

Earlier this year, I was looking at a 2005 Kubota tractor. Did you know that the fair market value of a 15-year-old tractor with low hours (approximately $16,500) is actually MORE than what the same model cost brand new?

More recently, I've been looking at buying an ATV with winch and snow blade. I found the same thing: Ten-year-old models in good condition are oftentimes going for about the same price as they sold for brand new. Meanwhile, the cost of both pieces of equipment bought new today has skyrocketed.

These are two offhand examples of hard assets that not only hold their value, they provide useful service that, in a pinch, could be used to generate income. Three examples, if you happen to play the piano.

Has anyone else given thought to what other, less typical, hard assets might make a good investment?
Last edited by Maddy on Mon Nov 30, 2020 7:02 am, edited 2 times in total.
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Re: Hard Assets - Some Off-the-Beaten Path Ideas

Post by vnatale » Sun Nov 29, 2020 11:31 am

Maddy wrote:
Sun Nov 29, 2020 11:14 am
Twelve years post-2007, I find myself once again looking at hard assets. In the interest of diversification, I'm wanting to expand my view beyond the obvious choices.

For years, I though a Steinway grand might make a good candidate. Ever checked the prices on those babies, year over year?

Earlier this year, I was looking at a 2005 Kubota tractor. Did you know that the fair market value of a 15-year-old tractor with low hours is actually MORE than what it cost brand new? More recently, I've been looking at buying an ATV with winch and snow blade. I found the same thing: Ten-year-old models in good condition are oftentimes going for about the same price as they were brand new.

These are two offhand examples of hard assets that not only hold their value, they provide useful service that, in a pinch, could be used to generate income.

Has anyone else given thought to what other, less typical, hard assets might make a good investment?
I will confess that from 1988 to 1991 I went all in and invested in sports cards (mostly baseball card). About $30,000! During the 1991 recession the value of all cards went down 50% and they have never really recovered. On top of that there was the advent of eBay which told all of us what the true value was of our cards. Almost universally much lower than what those price guides told us. Then there were all the revelations of how the card companies absolutely flooded the market so that cards we had thought were rare and, thus, valuable were not so rare and, thus, not so valuable.

I have many times stated that when I invested in sports cards I was (with great hindsight) investing in a mania, a bubble. I came in at the tail end and I was one those "Greater Fools" who kept it going.

Getting closer to what you describe above and comparing it to an equity investment in a public company.

For the equity investment in a public company:

Liquidity - extremely high

Size of market - worldwide

Transaction costs both in terms of $$ you are charged and your time involved in effecting the sale - practically none

Known value of the asset - Completely transparent

Condition of asset - not applicable

Annual maintenance costs - None

Now let's look at the same for what you describe above.

They are all extremely illiquid. You cannot decide impulsively today to sell one of them and make a sale of one....unless you know someone who has already told you that that someone is willing to buy it at a set price whenever you are willing to sell it.

Size of market - Shipping costs are going to be high. Therefore, that is going to limit your market to those willing to come to your location of sale. That will reduce the ultimate value of your item having only a limited market.

Transaction costs - You need to place some ads. Of course, Craigslist is free. For me the $$$$ costs would be secondary. The time costs here would be primary. Time spent on either phone calls or electronic form messages communicating about the item. Time having to be home for the prospective buyers to come to look at. Time wasted when the buyer never shows up. This whole dealing with potential buyers would be a tremendous annoyance to my personality.

Known value of the asset - Completely un-transparent. Ultimately it is only going to be worth what you can find a buyer to pay you.

Condition of asset - EXTREMELY important

Annual maintenance costs - Because condition is so important you will need to both spend money to keep it in the best condition plus you will have to allocate space to store it.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Hard Assets - Some Off-the-Beaten Path Ideas

Post by Mountaineer » Sun Nov 29, 2020 11:40 am

High quality firearms, ammunition. Always useful too in case the market tanks. O0
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Re: Hard Assets - Some Off-the-Beaten Path Ideas

Post by Smith1776 » Sun Nov 29, 2020 11:50 am

I'm personally quite partial to the idea of fine art as being a great alternative hard asset. A second one would be a wine portfolio.

These two investment classes are enough off the beaten path that they won't be subject to the same market forces as traditional investments. However, they are bought frequently enough for investment purposes that there are true secondary and tertiary markets for them.

I have listened to several podcasts and have read an article or two on wine investing. Returns on a good wine portfolio can reach into the double digits from what I can tell. The most visible proponent in recent memory regarding fine art has certainly been James Rickards (I know, I know). However, there's a big enough art investment community that I think it's a truly viable path. There's a few private funds out there you can pool your money into. They obviously won't be as liquid as a mutual fund, but they're probably better than an amateur staking it out on his own.

These ideas happen to interest me greatly. I think a lite version of an alternative hard asset portfolio (or a way to ease into the idea) would be to start taking sector or infrastructure bets in the VP. The iShares Global Water Index ETF (CWW) comes to mind.
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Re: Hard Assets - Some Off-the-Beaten Path Ideas

Post by Smith1776 » Sun Nov 29, 2020 12:03 pm

OH, and of course, who can forget: antiques.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by WiseOne » Mon Nov 30, 2020 6:13 pm

I'd buy a high quality centuries-old violin. They appreciate just like fine art. And, if goon squads barge in to try to find hidden assets, I can practice scales to my hearts' content while they poke around my Corningware. Always hide things in plain sight!

I also may have just made a purchase that will eventually depreciate but for quite a few years will add value to my home: A subzero refrigerator. Long story, starting with the contractor making a mistake in building my kitchen cabinets. Once again, I'll simply offer the goons a drink of cold water and they'll never look twice at where it came from.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Mark Leavy » Mon Nov 30, 2020 6:21 pm

Rare stamps in your desk drawer with the other stationery. A nod to WiseOne’s purloined letter. Hidden in plain sight.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Hal » Mon Nov 30, 2020 6:31 pm

Hi Maddy,

Have a look at the right side of the link for some hard asset ideas (including pianos)
http://pricedingold.com/pianos/

First thing that came to mind was wheat. Can store onsite or pay a fee at the local silo.
Farmers from the Great Depression told me this. People will always want to eat 8)

http://www.hesilos.com.au/products/bulk ... e-storage/
http://siloarttrail.com/home/ (make sure you mouse over images!)
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Kriegsspiel » Mon Nov 30, 2020 7:00 pm

It's more of a hobby/business than an asset, but I think it could be a fun project to learn how to repair motorcycles (or cars, but motorcycles are simpler). I suspect that the repair parts for classic motorcycles, classic car parts, guitar pickups, or that kind of thing, would hold their value. If you have the space to store big farm equipment, you could store a lot of repair parts.

And ammunition, my best investment of 2020.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Vil » Tue Dec 01, 2020 12:38 am

Postage stamps. Back then, my father ignited the spark in me about how passionate a philatelist can be. You can research a lot about its pros/cons as investment vehicle, but at the end it is all about passion (and that can pretty much describe its biggest + and -). Now, as decades ago, contemplating the details of Mongolian stamps has the same effect on me. Amazing.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Maddy » Tue Dec 01, 2020 5:26 am

I had never heard of a sub-zero refrigerator before. (My initial question was, "How's that different than a freezer?") That's a pretty high-end piece of equipment! How are you liking it, WiseOne?
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Kriegsspiel » Tue Dec 01, 2020 6:01 am

WiseOne already acknowledged it, and I suspect she's right; it's unlikely that consumer appliances like refrigerators hold their value.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by WiseOne » Tue Dec 01, 2020 10:44 am

Maddy wrote:
Tue Dec 01, 2020 5:26 am
I had never heard of a sub-zero refrigerator before. (My initial question was, "How's that different than a freezer?") That's a pretty high-end piece of equipment! How are you liking it, WiseOne?
Ask me in 8-12 weeks when it gets here. It's on backorder.

The Subzero is unique in that it is designed to last more than 20 years and it's considered a significant positive for home value. And it is famous for keeping food fresh for weeks longer than a regular fridge - saving on food waste. So it's not exactly a hard asset but you do have to look at it as an investment. I could care less about status symbols, but this is about buying technology.

Anyway the idea is that one form of "hard asset" investing that can fly under the government's radar is to buy carefully selected high quality equipment, furniture etc that will maintain value and/or save you money in the long run. Mark said something about this already.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Vil » Tue Dec 01, 2020 4:39 pm

Will it be able to store the new fancy Pfizer vaccine .. ;D
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by vnatale » Tue Dec 01, 2020 4:52 pm

My full size kitchen refrigerator that I bought in 1994 (I believe) was not a high end one. I am still using it although I have to admit that most people living a conventional lifestyle would have replaced it years ago.

When I finally do get sufficiently motivated to find a replacement I will be replacing it. But after 26 years of work, it certainly does not owe me anything. Just like all the other assets I have used many years past when most people would have replaced them.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Maddy » Tue Dec 01, 2020 5:22 pm

A poor-man's option for a refrigerator that will last a long time is one made out of a converted chest freezer. I don't know how to do the thermostat modification myself, but I've come across articles that describe it many times, and for someone with the least bit of mechanical savvy, it's supposed to be very easy.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by vnatale » Tue Dec 01, 2020 5:29 pm

tomfoolery wrote:
Tue Dec 01, 2020 5:17 pm
MangoMan wrote:
Tue Dec 01, 2020 5:07 pm
tomfoolery wrote:
Tue Dec 01, 2020 5:01 pm


The idea being that if I can buy a refrigerator that will last 40 years (maybe it's not possible), even if it costs 4x what one that will last 10 years would cost, then I've future proofed inflation because I will always need a refigerator.
The only problem with this logic is that technology improves over 40 years and you may want the new features but are stuck with your expensive appliance that you now don't want to replace.
Very true. I'm more concerned about energy efficiency updates. Technology features, I'm kind of meh on. For example:

Microwaves now beep every 30 seconds when the food is done. Every 30 seconds until you take it out. If I put something frozen in the microwave and take a shower, I get to listen to obnxious beeping until I get out of the shower.

Smart Internet of Things devices now send data about you back to the manufacturer and anyone who cares enough to hack it. It's massive effort to disable this functionality. And it will be even more effort, if not impossible in the future to disable it. Because control modules become shared as time progresses and tech advances, so you can't disable X module without the whole thing not working.

Smart features with sensors tend to break more often or simply not work well. I use a washer/dryer at a relative's house on occasion that is supposed to smart sense the load. It rarely does properly and it's a top of the line unit.

Can I just have a microwave that heats up my food based on the time and temperature I set, and beeps a single time? And doesn't send a report back to GE about how often I'm using it and what foods I'm warming up in it? Within a decade there could be a mini gas spectrometer put into the Smart Microwave that tells GE exactly what I'm eating and when, so they can sell it to marketing companies.

Smart TVs are sold at a loss. An actual loss. You can buy them for less than they cost to make and ship to you. They make money by selling your data to marketing companies about what you're watching, how many people are in the room with you, etc.

I just want dumb appliances that are heavy duty and won't break but when they do are easy to repair.
Do not overlook used items. I am unhappy when I cannot buy something used but can only buy it new.

To me, in many cases, used represents far better value than new. All that depreciation.

I bought my house on April 30, 1982. I think during all that time I've only owned two or three washing machines, all bought used.

Full disclosure: I only average one load a week. These days I don't even come close to filling up the tub.

I bought it used on 2/1/03 for $155.25, a Kenmore. Therefore it could actually be 25-30 years old.

3/27/14 I paid $110,00 to have it repaired.

Then another $119.22 in June 2017.

Seems like that kind of appliance would somewhat fit your criteria?

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Kriegsspiel » Tue Dec 01, 2020 6:33 pm

Well, there are smart purchases, like used washing machines or fridges that are great values when you buy them or own them for a short time, but they don't store value. Things that store value can be sold for what you bought them for, or more. As far as I can see that means classics, or quality versions of mature technologies; things like revolvers, wood stoves, classic motorcycles/cars, furniture, hand tools.

Maybe the things to look for are high quality + low tech.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Smith1776 » Tue Dec 01, 2020 10:23 pm

No smarter hard asset investment than an M1 powered MacBook.

Buy it. Buy it. Buy it. ^-^
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Mark Leavy » Tue Dec 01, 2020 10:56 pm

Maddy wrote:
Tue Dec 01, 2020 5:22 pm
A poor-man's option for a refrigerator that will last a long time is one made out of a converted chest freezer. I don't know how to do the thermostat modification myself, but I've come across articles that describe it many times, and for someone with the least bit of mechanical savvy, it's supposed to be very easy.
That's solid gold right there. Great idea, Maddy. Never heard it before.

Without doing any research, I would posit that a cheap ass temperature controller between the freezer and the outlet with the probe dropped into the freezer would be all you needed.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by WiseOne » Thu Dec 03, 2020 2:26 am

This is why this forum is so invaluable. I had no idea about smart TV privacy issues. I expect the combination of a dumb TV, Apple TV and a MacBook on airplay would function the same way.

Kitchen appliances have upgraded their looks and connectivity, but not their basic functions in many years. If you don’t care about the first two there is no reason to upgrade unless you are redoing your kitchen and need a different form factor.

Forever appliances are: subzero fridge, Wolf or Thermador dual fuel ranges. You could make a case for GE profile ranges but doubt the new ones are as durable as they used to be.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Vil » Thu Dec 03, 2020 5:04 am

WiseOne wrote:
Thu Dec 03, 2020 2:26 am
I had no idea about smart TV privacy issues. I expect the combination of a dumb TV, Apple TV and a MacBook on airplay would function the same way
Here it goes:
https://www.theguardian.com/technology/ ... e-facebook

Many of the existing AV programs have inbuilt modules especially for camera and mic protection, but nothing can protect like a hardware switch ... or good old tape. Better be slightly paranoid, than to suffer. :D
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Xan » Thu Dec 03, 2020 9:05 am

Vil wrote:
Thu Dec 03, 2020 5:04 am
WiseOne wrote:
Thu Dec 03, 2020 2:26 am
I had no idea about smart TV privacy issues. I expect the combination of a dumb TV, Apple TV and a MacBook on airplay would function the same way
Here it goes:
https://www.theguardian.com/technology/ ... e-facebook

Many of the existing AV programs have inbuilt modules especially for camera and mic protection, but nothing can protect like a hardware switch ... or good old tape. Better be slightly paranoid, than to suffer. :D
Even better than a hardware switch is not having the microphone or camera in the first place.
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by vnatale » Thu Dec 03, 2020 9:40 am

Xan wrote:
Thu Dec 03, 2020 9:05 am
Vil wrote:
Thu Dec 03, 2020 5:04 am
WiseOne wrote:
Thu Dec 03, 2020 2:26 am
I had no idea about smart TV privacy issues. I expect the combination of a dumb TV, Apple TV and a MacBook on airplay would function the same way
Here it goes:
https://www.theguardian.com/technology/ ... e-facebook

Many of the existing AV programs have inbuilt modules especially for camera and mic protection, but nothing can protect like a hardware switch ... or good old tape. Better be slightly paranoid, than to suffer. :D
Even better than a hardware switch is not having the microphone or camera in the first place.
As one of the last adults in the world to activate a cell phone (June 2018) the no microphone or camera still describes me.

I've had many Zoom business meetings but I have found no need to be looking at anyone in the meeting or for them to be looking at me. Hearing one another's voices always works for me, just as it has for many decades prior to these enhanced technologies.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Hard Assets - Some Off-the-Beaten-Path Ideas

Post by Kriegsspiel » Thu Dec 03, 2020 11:41 am

WiseOne wrote:
Thu Dec 03, 2020 2:26 am
Kitchen appliances have upgraded their looks and connectivity, but not their basic functions in many years. If you don’t care about the first two there is no reason to upgrade unless you are redoing your kitchen and need a different form factor.
Well, depending on how old your appliances are, they might have gotten a lot more efficient and you could quickly start saving money that way.

Speaking of things that aren't exactly stores of value, but improve your resource flow, insulation is a big one.
You there, Ephialtes. May you live forever.
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