Pralay! Did you think the end of the world was near when you heard crude oil was valued in negative last month?
Oil has been, after all, the reason for several wars that the American and European powers have waged against the Gulf countries and Latin American countries like Venezuela. Millions of people have died in the name of oil, geopolitics of the 20th century have been shaped by it. And most importantly, oil vested power in the Global North while colonizing the Global South. So, if the value of such a coveted resource can fall off the cliff, the value of anything can be reduced to zero. There is a misconception that a particular asset will always appreciate in value. All asset class – oil, real estate, gold, equity, currency – can depreciate in value significantly. And they have.
Let’s take real estate as an example. Nothing can happen to the real estate market, goes the belief. Well, I think you will see some drastic changes in the near future. Yes, Mark Twain did say “buy land, they’re not making it anymore”. But, you will not be securing your future if you only buy land. It is a question of one government policy or a change in tax regime that can render real estate value depreciated. Take the example of Japanese real estate market. It crashed in 1990s and has still not recovered!
So, a simple thumb rule of investment is diversify. And do not put all eggs in one basket.
Everything is perishable. This came as a crude shock to me, when I stopped being an asset in the marriage market after I wed my wife. In that situation, my value went bust but I ended up gaining an asset for life.