Elon Musk's Recommendation To Invest In 'Physical Things' May Be His Best Advice Yet

Tesla Inc. TSLA CEO Elon Musk posted in a thread on Twitter earlier this year advising his followers to own “physical things” when inflation is high. The post came shortly after inflation hit its first 40-year high in March. 

In the tweet, Musk said, “As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.”

“I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw.”

Musk’s message points out that physical assets are generally the safest investment during times of high inflation. This message coming from the “Dogefather” himself should speak volumes.

The stock market started its major decline shortly after Musk’s March 14 tweet. The S&P 500 is down 15.33% since April 1, and Tesla stock is down 38.52%. 

The cryptocurrencies Musk said he wouldn’t sell have fallen even harder in price. Bitcoin BTC/USD is down 57.57% since April 1, Ethereum ETH/USD is down 59%, and Dogecoin DOGE/USD is down 56.85%.

So how have physical assets performed during that time?

Real Estate

Recent headlines about real estate values would have many people believing that an investment in this asset class during the first half of 2022 would have been a mistake. According to data from Redfin, the U.S. median sale price has fallen roughly 4.4% since the beginning of April but has mostly leveled out over the past two months.

What that data doesn’t account for is the cash flow generated by investment properties. Investors on the fractional rental property investment platform Arrived Homes are earning a 4.8% median annualized return just from rental income. 

Another important point to remember is that not all U.S. markets are experiencing the same decline in property values. One market that Arrived Homes began acquiring properties in this year is Cincinnati, which has actually seen a 2% increase in its median sale price since the beginning of April. 

Real estate has also become more accessible than it’s ever been. Arrived Homes, which is backed by Amazon.com Inc. AMZN founder Jeff Bezos, allows retail investors to buy shares of long-term and short-term rental properties with as little as $100. 

The Arrived Homes platform currently has seven rental property investments available. 

Other options like CalTier allow individuals to invest in an entire portfolio of multifamily properties with as little as $500. 

Wine and Spirits

Potent potables have become an extremely popular investment option for retail investors, which is no surprise considering the Liv-ex Fine Wine 1000 index is up 10.3% since April 1 and 14.1% year-to-date. 

The Rare Whisky Apex 1000 index is also performing well this year, up 4.9% since April and 10.4% year-to-date. 

Investors on the fractions wine and spirits investing platform Vint recently made out quite well on an investment in the platform’s Bowmore Cask Collection, which provided a net annualized return of 35.49%. Investors were able to purchase shares of the collection for just $47 each. 

The Vint platform currently has two Bordeaux collections available for investment. 

Collectibles 

Buying and selling shares of assets like sports memorabilia, fine art and even classic cars has become as easy as trading stocks. The popular investing platform Public recently added collectibles to its suite of investment options. Investors can now trade stocks, crypto, non-fungible tokens (NFTs) and collectibles on the same platform. 

Trading cards have remained relatively stable this year. The PWCC 2500 index, which tracks the investment performance of professionally graded trading cards, is up about 1% since April and roughly 8.3% year-to-date. 

Photo by Daniel Oberhaus on Flickr