Not everyone is a fan of massive government spending.
Sen. Mitt Romney (R-Utah), for instance, told Fox News late last year that the Democrats were “pretty desperate” to pass President Joe Biden’s multi-trillion-dollar spending bill.
Even back then, Romney worried that inflation could rise to unmanageable levels.
But when it comes to government spending, the question on many investors’ minds is a simple one: “How do I make money from it?”
And in that context, Romney had some interesting things to say.
After all, Romney made much of his fortune through private equity firm Bain Capital, whose funds own shares in companies like Amazon and Alphabet.
But he didn’t mention tech stocks.
Instead, Romney talked about how Biden’s proposed tax on billionaires — to help pay for trillions in spending — would boost demand for a specific asset class: fine art.
Romney mentioned paintings, which might be a little tough to understand.
Companies make profits. But what can fine art deliver?
Well, it provides the one thing that matters most to investors: market-thumping returns.
Contemporary art has outperformed the S&P 500 by 131% for the past 26 years, and it has a near zero correlation to stocks according to Citi. Having a low correlation to stocks makes art a useful hedge against market volatility.
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 consistent historical performance.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich, like Romney. Now a platform with a $1 billion unicorn valuation called Masterworks is revolutionizing art investing and bringing this asset class to your portfolio for the first time.
Instead of buying a single painting for millions of dollars, you can now invest in shares of individual works. All you have to do is select which shares you want to buy and Masterworks will handle the rest.
The bottom line
Whether you agree with Romney or not on artwork, inflation is happening.
The prices of numerous goods and services have exploded over the past year. Meanwhile, the labor shortage could make things even worse.
For savers, it could lead to the serious deterioration of purchasing power.
So invest wisely.