Myths of Investing: A Real-Asset-Based Perspective on Portfolios

Since Markowitz, modern portfolio theory has distinguished between diversifiable idiosyncratic risk and non-diversifiable systematic market risk. While the former can be reduced through diversification, the latter is commonly regarded as an unavoidable consequence of market participation. This conclusion, however, is inseparably linked to the reference frame in which risk is defined and measured: a currency-based metric that elevates nominal value fluctuations to the central criterion. This paper argues that this reference frame rests on an assumption that has received little explicit scrutiny. Money is not merely used as a unit of account, but implicitly treated as a stable measure of value, despite having no intrinsic value of its own and deriving its worth solely from its exchange relationship with real assets. Nominal value changes therefore reflect not only shifts within the real asset system, but also changes in the measuring rod itself. Against this background, the paper proposes a change in perspective: away from individual currencies and toward global wealth as the reference measure. Within the logic of classical portfolio theory, the fully diversified market portfolio already occupies a special position as an implicit benchmark of relative valuation. Under a real-asset-based reference frame, this insight is carried to its logical conclusion. A portfolio held in proportion to global wealth constitutes a neutral analytical benchmark, whose value is measured as a relative share of the overall economic system. Shifting the reference system not only removes the implicit dependence on nominal measures, but also enables a reinterpretation of what has traditionally been considered the fundamental problem of the non-diversifiability of systematic risk. The contribution of this paper thus lies in the consistent extension of classical portfolio theory under an explicit real-asset-based reference frame. In doing so, it sharpens the concepts of neutrality, risk, and diversification over long horizons and places them within a coherent analytical framework.