Betting (on) the farm

Gates’ purchase of farmland in North Dakota initially raised concerns because of a Depression-era law that prohibits corporations and limited liability companies from owning farmland in the region.

North Dakota’s Agriculture Commissioner Doug Goehring previously told KFYR-TV — a television station in Bismarck, North Dakota — that many people weren’t thrilled about the news.

“I’ve gotten a big earful on this from clear across the state, it’s not even from that neighborhood. Those people are upset, but there are others that are just livid about this,” Geohring said.

However, the anti-corporate farming law does allow individual trusts to own farmland if it is leased to farmers — and that’s what Gates’ firm plans to do.

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A recession-resistant asset

You don’t need an MBA to see the appeal of farmland.

Markets can go up or down, but no matter what happens, people still need to eat.

That makes farmland intrinsically valuable.

And it just so happens that Gates’ good pal Warren Buffett also likes the asset.

In fact, Buffett bought a 400-acre farm in Nebraska back in 1986. “I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside,” Buffett later wrote.

No need to be a billionaire

While the ultra-rich have been acquiring farmland, you don’t need to be a billionaire to get a piece of the action.

Publicly traded real estate investment trusts — that specialize in owning farms — allow you to do it with as little money as you’re willing to spend.

If you are looking for options outside the stock market, there are investing services that allow you to invest in farmland by taking a stake in a farm of your choice. You’ll earn cash income from the leasing fees and crop sales — and any long-term appreciation on top of that.

While commercial real estate to has always been reserved for a few elite investors, outperforming the S&P 500 over a 25-year period, First National Realty Partners allows you to access institutional-quality commercial real estate investments — without the leg work of finding deals yourself.

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Hoarding real assets

Farmland isn’t the only thing that billionaires have been loading up on. They are also buying up fine art.

Unlike farmland, art isn’t a very productive asset. However, it does produce the one thing that matters most to investors: market-thumping returns.

Contemporary artwork has already outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

Artwork has become an increasingly popular way for investors to diversify because it's a "real" physical asset with very little correlation to the stock market — much like precious metals and real estate.

In fact, the correlation factor between contemporary art and the S&P 500 was just -0.08 over the past 25 years. In other words, art zigs when stocks zag.

Earlier this year, Bank of America’s investment chief Michael Harnett even singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

It’s true that investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich.

But with a new investing platform called Masterworks, you can invest in iconic artworks too, just like Jeff Bezos and Peggy Guggenheim do.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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