Physical assets — commodities, real estate, infrastructure, and natural resources — whose value is linked to physical supply/demand rather than financial claims, providing inflation protection.
Deeper Explanation
Real assets protect purchasing power when fiat money loses value through inflation. Commodities (gold, oil, agricultural products) respond to physical supply and demand, not monetary conditions — when central banks print money, commodity prices rise in nominal terms. Real estate provides both rental income and asset price inflation protection. Infrastructure assets (toll roads, pipelines, ports) often have inflation-linked revenue contracts. Dalio's All Weather portfolio includes real assets specifically because they perform well in the high-inflation quadrant where both equities and bonds typically underperform. The allocation to real assets is the key difference between traditional balanced portfolios and true all-environment diversification.
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Go deeper into the Macro school — frameworks, case studies, and decision systems.