Every industry has its own terms. Words and phrases you need to know to understand the nitty-gritty of what’s going on.
And to save time (instead of explaining a concept in depth each time).
That’s as true in the unconventional investing world as anywhere else.
Which is why, now and again, we like to run a glossary for our readers. To go over any terms that might be unfamiliar — and to serve as a reference for anything you might run into going forward.
You can find the first one right here.
The second installment — that starts below these words. With a particular focus on some unconventional sectors.
Collectibles are exactly what you think they are — items people like to collect.
However, when we refer to collectibles in these pages, we’re looking at a narrower subset of the category.
Specifically, we’re almost always talking about collectibles that have value — and gain in value over time.
Some people collect bottle caps… They’re pretty much worthless — we won’t be referring to them when we talk about collectibles.
Some people like to collect Hard Rock Cafe pins from around the world (I actually know someone who does this)… Not much value there — outside of sentiment and proof of a lot of travel.
Some people like to collect stamps… Which — if you get the right ones — have averaged around 10% gains over the past half century-plus.
That’s the kind of collectible we’re talking about when you see the word in UCW.
When we talk about liquid assets in these pages, it’s not in reference to assets that are easy to buy and sell (the traditional financial meaning of a liquid asset).
And we aren’t referring to oil, water or another common aqueous commodity.
No — in the world of UCW, liquid assets will almost always refer to alcohol.
Specifically, to wine, whiskey and other spirits that people collect — that gain in value over time.
There will be the occasional exception — but rest assured, we’ll make it very clear when we stray from our usual meaning.
This is a common financial term — but one that matters a lot for unconventional investing.
Negative correlation basically means when two things will predictably go in opposite directions.
For instance — when the stock market falls, precious metals usually rise (and vice versa).
When interest rates go up, home buys usually go down (because mortgages get more expensive).
The reason we want to highlight this term? A number of unconventional investments are negatively correlated to the stock market.
Gold and silver are the most obvious ones… but plenty of other unconventional assets do well in bad markets as people flock to safety.
This is especially true for rare tangible assets — which are defined below.
Rare Tangible Asset
There are all kinds of assets. Real estate. Precious metals. Stocks. Tax liens.
Basically, anything you can buy and sell — that’s an asset.
A tangible asset, however, is something physical. Something you can hold in your hand (or lay your hand on, if it’s too big or heavy like a house).
And rare tangible assets are the best kind. These are physical assets, existing in the real world, that are very rare.
That rarity is much of what gives a rare tangible asset its value. We talk about rare tangible assets often in these pages — as they’re some of the best unconventional investments out there.
When you’re dealing with rare objects — especially one-of-a-kind objects, like pieces of art — provenance is all important.
Provenance is basically a paper trail of ownership. It shows how a work of art, for instance, went from artist to owner and so on, until eventually winding up where it is now.
Provenance is important because, without it, a piece could easily be a fake.
Even if it isn’t a fake, a broken trail might mean a piece was illegally obtained — it could have been stolen from a museum or plundered during war.
Indeed, provenance is so important that one artist recently declared the certificate of provenance to be what was truly sold, when a piece of perishable art — a banana taped to a wall — was purchased. As long as that certificate was held, any banana could be put in place of the original.
And sometimes, an item is valued higher because of who has owned it — especially if that person is rich, famous or a member of a royal family.
Have you caught us using any words or phrases you don’t recognize that aren’t listed here? Let us know at firstname.lastname@example.org and we’ll cover them in a later article.
We’ll continue to run these glossaries until we’ve defined the entire unconventional investing dictionary.
Editor-in-chief, Unconventional Wealth
P.S. Want to own a negatively correlated tangible asset to protect yourself in case this longest-ever bull market shows its age anytime soon? Precious metals continue to be the titleholder for best protection against crashes. And through our partners at Hard Assets Alliance, you can own your own physical gold, silver or other metal for less than you’d ever have thought possible. Check it out here.
Ryan Cole is the editor-in-chief of Unconventional Wealth. He’s been covering the alternative investment space for nearly a decade and writing about finance and investment for almost 20 years.
Ryan has walked the walk for years, living a very unconventional life. He’s led snowmobile tours through the mountains of Colorado, settled in Japan for five...