Many investors say they “own stocks” but rarely follow that sentence to its logical end: ownership. A share is not a lottery ticket or a line of code divorced from reality. It is a legal claim on a company’s net profits and, indirectly, the assets and cash flows that produce them. When you hold an index fund of large cap U.S. equities, you own slivers of businesses that sell groceries, process payments, refine energy, and ship products. You also own pricing power that can adjust to inflation far better than a fixed coupon can. That matters in a world where currency debasement ebbs and flows through long cycles. Prices adjust, revenues adjust, and—over time—profits tend to follow. The lesson is not that equities go straight up, but that they align your wealth with productive enterprise rather than fixed dollars.
Large cap U.S. companies earn their place in portfolios for three reasons: scale, resilience, and breadth. First, scale confers advantages: cheaper capital, supply chain leverage, and the ability to acquire innovation rather than invent it from scratch. Second, resilience shows up in diversified revenue streams, sophisticated risk management, and durable brands that can nudge prices without losing customers. Third, breadth comes from the global footprint of U.S. multinationals; roughly half of S&P 500 revenue is sourced abroad, which imports global growth while you keep your assets priced in dollars. That structure helps dampen idiosyncratic shocks, even though it cannot eliminate drawdowns. The tradeoff is familiar: tighter expectation bands and steady compounding versus lottery-ticket volatility.
Skeptics often argue that stocks are intangible while real estate is “real.” Yet many public companies hold prime real estate on their balance sheets or control long-term leases with economic value. Consider McDonald’s land portfolio or the logistics networks of retailers. If real estate rents rise with inflation, so can the operating income of businesses that own or control those properties. The mental model is the same as a rental: revenue in, expenses out, net profit to owners. The key difference is diversification and liability. Owning a broad equity fund spreads tenant risk across millions of daily transactions, and limited liability shields your personal balance sheet from lawsuits that hit the company. In practice, equity ownership delivers the economic logic of real assets plus the liquidity of public markets.
Comparing bonds and stocks clarifies the inflation problem. A bond is a contract to receive fixed dollars on fixed dates. That can be ideal for short-term planning or liability matching, but it is fragile when dollars lose purchasing power. A business, by contrast, can change prices, redesign products, automate workflows, and renegotiate with suppliers. Pricing power is the equity investor’s shield. It is imperfect and lumpy—unions, regulation, and competition all matter—but over long horizons, profits tend to reflect the general price level. That is why equities have historically outpaced inflation, even if they deliver a bumpy ride along the way. The equity risk premium is the compensation for stomaching those bumps.
Currency risk adds another layer. U.S. investors live and spend in dollars, yet the world runs on cross-border flows where even European and Asian contracts often settle in USD. That dynamic can make international allocations a two-key puzzle: you must be right about the company and right about the currency. Large cap U.S. exposure sidesteps part of that by letting multinationals perform the foreign exchange heavy lifting inside their operations. You still own global growth, but you read your statement in a single currency. That does not make the dollar “good,” it makes it dominant. In a world of fiat debasement, the cleanest dirty shirt still matters.
None of this suggests concentration is wise. Overreliance on large cap U.S. equities amplifies drawdowns and leaves you exposed to regime shifts. A sturdier plan blends complementary assets that respond differently to shocks: precious metals as a currency hedge, real estate for income and collateral, selective liquid alternatives for diversification, and, for some, a prudent slice of Bitcoin as a high-volatility debasement hedge. The point is coherence, not complexity. Build around your time horizon, cash flow needs, and risk tolerance. Let equities do what they do best—harness human enterprise—while other assets mute the noise when the cycle turns.