Why diamonds are not forever. Lessons from two decades of zero returns.

livemint.com:

De Beers' 1947 slogan, “A diamond is forever", revolutionized the industry. The ad campaign established diamonds as the most romantic purchase, and the status is still paying off. 

However, what about their value as investments? Are diamonds really forever? Mint asked experts to share investing lessons from diamonds' two-decade-long price stagnation and whether modern-day assets like cryptocurrencies will meet the same fate.  

The key thing is that some asset classes can structurally be in decline and not deliver returns for over 20 years. Commodities are a clear example of this. Their prices depend heavily on supply and demand, and there’s no inherent reason for them to grow over time.

For instance, the diamond market has been disrupted by lab-grown diamonds, which have reduced demand and impacted the value of natural diamonds. This shows how changes in market dynamics or technological advancements can lead to prolonged price stagnation or even decline.

Unlike equities, commodities don’t have a natural growth trajectory. They are not «LONG-ONLY» asset classes because they don’t create value through advancement or profits. Equities, on the other hand, are different. In a growing economy, companies drive growth through innovation, expansion, and productivity. This creates long-term value for shareholders, making equities more reliable for wealth creation over time.

While commodities can have a role in a portfolio for diversification or as a short-term hedge against inflation, they are unlikely to deliver steady, long-term growth. Investors should be cautious and understand the limitations of commodities. Relying on them as the primary driver of wealth may lead to disappointing results.

To achieve long-term financial