Longtime readers of my newsletter know that I am an advocate of comparing your portfolio to your wardrobe. When the market offers you a discount, you shouldn’t see your wardrobe/portfolio as losing value. Instead, you should see this as an opportunity to add to your collection of clothing items/investments.

I also like to explain that in your retirement, your well-being will depend not on past prices, but on the number of durable assets you own. Some of you might ask: 

What is a durable asset?

In my mind, a durable asset is an asset that grows with humanity, independent of technology and politics. 

A prime example of this is the global stock index fund. It includes nearly all traded stocks in both the US and international markets. It represents the total business value of humanity. As long as humanity exists and demands higher living standards, the total business value of humanity will increase. 

Is an outstanding stock like AAPL a durable asset?

It may be much more durable than the typical stock, but in my opinion it’s not a durable asset. IBM, GE, and Boeing are all stocks that once seemed invincible, they lost their edge over the years due to technological, economic, and political changes. The same could happen to Apple in the next thirty years. For this reason,  I consider all individual stocks, no matter how impressive they are, speculative assets.

It’s exciting to invest in speculative assets, but the vast majority of your investment should be in durable assets.

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