Stocks are historically expensive on most traditional valuation measures such as the Schiller P/E ratio. "Expensive" or "cheap" in financial analysis usually refers to some kind of multiple analysis, like if apartment buildings in New York City are yielding a 2.5% net income to their owners, and historically they have yielded more like 5% on average (made up numbers), then we might say that they are "expensive." It's a descriptive, rather than a predictive statement, but it's also a fact that the returns for the next [arbitrary period of time] tend to be lower when multiples are higher today, and they tend to be higher when multiples are lower today - on AVERAGE. So I'm not saying stocks or bonds are necessarily going to perform poorly over the next 3 years or anything like that, I'm just saying that, the Schiller P/E has only been this high twice before - in 2007 and in 1929. And we all know how the market performed after that . . . So perhaps it's prudent to have a little money in cash.

Yes, real assets like cars, boats, horses, apartment buildings, whatever, tend to wear out, get old, require maintenance, die. Real estate doesn't, it tends to go up in value over time. Precious metals are a mixed bag. My point was more that there are other stores of value besides financial assets, and to be truly diversified you want some of those in your portfolio, too. If you're worth $2m, and you like Rembrandt, buying a beautiful Rembrandt etching for $25k and hanging it up in your living room is not a bad way to diversify your assets a little bit, nor is buying a classic car that you will enjoy using from time to time, or wine, or nice mahogany furniture - assuming you know what the fuck you're doing of course. You get use value out of these things, in extremes they can be sold, and sometimes their value goes up.