...Without going overboard — in which case I would recommend canned goods and ammunition as my top investment choices in 2008 — I think there is a place for real assets in your clients' portfolios.

In an inflationary environment, or more difficult times, financial assets can become worthless pieces of paper. Even if financial assets continue to do well and economic Armageddon isn't around the corner, the appeal of real assets remains.


When financial assets disappear, real assets still have real value. You can eat food and live in a house.

Growing populations, rising standards of living and a finite planet argue for resource prices to rise.

Chinese demand for meat, which requires the input of much more vegetable matter than the equivalent calorie value in noodles, almost requires wheat prices to increase — and they are increasing. Whether peak oil is with us now or in 20 years, the oil supply is finite and demand continues to grow. Water, the ultimate in inelastic demand goods, is also finite — and getting scarcer.