Why Oil & Commodities Miss the Point — and What Long‑Term Investors Should Own Instead
The Core Concern
“Too much money is being created. Over time, my cash will buy less. How do I protect my purchasing power?”
The worry is legitimate. Money debasement is a slow, systematic increase in the money supply that erodes real buying power over years and decades. It isn’t a sudden crisis—it’s a gradual loss of value that hurts savers and rewards businesses that can raise prices.
Why Oil, Gas, and Raw Commodities Aren’t a Sustainable Hedge
| Issue | Why It Matters for Long‑Term Investors |
|---|---|
| No pricing power | Producers sell at market‑determined prices; they can’t freely raise rates when costs increase. |
| Cyclical earnings | Price spikes trigger over‑investment, which later floods the market, squeezes margins, and flattens returns. |
| Political vulnerability | Governments can impose windfall taxes, price caps, or export bans, instantly cutting profitability. |
These factors make commodities excellent short‑term tactical plays but poor long‑term compounders.
What “Money Debasement” Actually Means
- Gradual increase in the money supply → slow erosion of purchasing power.
- Currencies rarely collapse; they simply lose value over time.
- The challenge is to own assets that benefit from this environment rather than merely survive it.
The real protection is owning businesses with pricing power that quietly benefit from money debasement.
Key Characteristics of Ideal Holdings
- Pricing power – Ability to raise prices without losing demand.
- Global footprint – Revenue in several currencies reduces exposure to any single economy.
- Strong free‑cash‑flow generation – Fuels reinvestment and compounding.
- Durable competitive moats – High switching costs, network effects, or unique IP.
Top Companies to Consider (Tiered by Strength of Moat and Cyclicality)
| Tier | Ticker | Rationale (concise) |
|---|---|---|
| Tier 1 – Core, Low‑Cyclicality | ASML (ASML) | Semiconductor‑equipment monopoly; pricing power from essential lithography tools. |
| Microsoft (MSFT) | Mission‑critical software & cloud services; recurring revenue, global reach. | |
| Mastercard (MA) | Global payments network; fee‑based model scales with transaction volume. | |
| Visa (V) | Parallel to Mastercard – massive network effects, pricing power via interchange fees. | |
| Hermès (RMS.PA) | Ultra‑luxury brand; controlled supply, strong price‑elasticity, global demand. | |
| LVMH (LVMUY) | Diversified luxury conglomerate; ability to raise prices across multiple brands. | |
| Novo Nordisk (NVO) | Diabetes & obesity drugs; high barriers, pricing power in a growing therapeutic area; high barriers via IP, manufacturing scale, and global distribution | |
| Tier 2 – Strong but Slightly More Cyclical / Mixed | Apple (AAPL) | Global brand, ecosystem lock‑in, pricing power across hardware & services. |
| Taiwan Semiconductor Manufacturing (TSM) | Pure‑play foundry; essential to tech supply chain, can command premium pricing. | |
| Alphabet (GOOGL) | Advertising & cloud dominance; network effects and high switching costs. | |
| Meta Platforms (META) | Social‑media network effects; monetization via ads and emerging metaverse initiatives. | |
| Accenture (ACN) | Global consulting & technology services; fee‑based contracts with pricing adjustments. | |
| Amazon (AMZN) | AWS provides high‑margin cloud services with pricing power; retail is lower‑margin but still global. | |
| Tier 3 – Defensive, Still Protective | Coca‑Cola (KO) | Iconic consumer staple; proven ability to pass price hikes to consumers worldwide. |
| S&P Global (SPGI) | Financial data & analytics; high switching costs, subscription model. | |
| Abbott Laboratories (ABT) | Diversified healthcare company with pricing power driven by high-switching-cost diagnostic platforms, regulated medical devices, and globally trusted nutrition brands. | |
| UnitedHealth Group (UNH) | Dominant U.S. healthcare platform with strong cash flow, data scale, and pricing leverage within a regulated system. | |
| Procter & Gamble (PG) | Consumer‑goods giant; pricing power across essential household brands. | |
| PepsiCo (PEP) | Global food & beverage leader; strong brand equity, ability to raise prices, diversified product mix. |
How to Use This Portfolio
- Long‑term ownership – Treat each holding as a core building block, not a trade.
- Periodic rebalancing – Review quarterly or semi‑annually; trim overweight positions and top‑up underweight ones.
- Let compounding work – Reinvest dividends and free cash flow to accelerate growth.
Bottom Line
Money debasement erodes cash, but it helps businesses that can quietly raise prices each year. By concentrating on globally‑scaled, pricing‑power firms, you turn a macro‑level risk into a source of long‑term wealth creation.
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