Are stocks a store of value? A practical guide

Are stocks a store of value? This guide explains what 'store of value' means, how equities compare with cash, gold, real assets and crypto, the historical evidence, risks, metrics to watch, and pra...

2025-12-24 16:00:00

By Alex Carter

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Are stocks a store of value?

Investors often ask, "are stocks a store of value?" — especially as cryptocurrencies, gold and inflation debates reshape portfolio thinking. This article explains the meaning of a store of value, defines stocks, compares equities to cash, precious metals, real assets and crypto, reviews historical evidence on inflation protection and volatility, and gives practical, neutral guidance for portfolio construction. Read on to understand when equities can preserve purchasing power, when they cannot, and how stocks fit alongside other store-of-value candidates in a diversified plan.

Definition — "Store of value" and "stocks"

A "store of value" in economics is any asset that preserves purchasing power over time. Common criteria include durability (it lasts), liquidity (it can be exchanged), relative scarcity (supply constraints), stable or predictable demand, and low likelihood of permanent loss of real value.

Stocks (equities) are financial instruments representing ownership claims on a corporation's assets and future cash flows, including dividends and retained earnings that can generate capital appreciation. Unlike a purely physical commodity, stocks are claims on productive activity and corporate governance. Asking "are stocks a store of value" is therefore asking whether those ownership claims reliably preserve purchasing power over time compared with other assets.

Theoretical foundations

Stocks as claims on productive assets

Equities represent residual claims on a company's earnings after creditors and taxes are paid. In aggregate, broad-stock indices represent claims on the future productive output of many firms — factories, technology, brands, employees and intangible capital. This productive element distinguishes stocks from non-productive stores (like cash) or scarce physical stores (like gold). Because equities participate in real economic growth, they can, in theory, grow ahead of inflation.

Store-of-value criteria applied to stocks

Applying standard criteria:

Durability: Stocks (as recorded claims) are durable in that ownership records persist; however, individual companies can go bankrupt, which destroys value for shareholders.
Liquidity: Public equities are generally liquid, with deep markets for major indices and blue-chip names.
Limited supply: Share counts can increase (share issuance) or decrease (buybacks); supply is not inherently capped across the market.
Stable demand: Demand varies with sentiment, interest rates and macro conditions; not inherently stable.
Low volatility: Stocks are relatively volatile compared with bonds and cash.

On balance, equities score well on liquidity and potential for real return because of productivity, but less well on scarcity and short-term stability. Whether "are stocks a store of value" has an affirmative answer depends heavily on horizon and diversification.

Historical and empirical evidence

Long-term returns and inflation protection

Historically, broad equity indices in developed markets have delivered positive real (inflation-adjusted) returns over long periods. For example, long-run U.S. large-cap indices and total-market series have shown average real returns materially above zero across multi-decade horizons. That historical outperformance reflects companies’ ability to grow earnings and pass some of that growth to shareholders.

Key empirical patterns:

Over rolling 20- to 30-year windows, diversified equity portfolios in many developed markets have tended to outpace consumer price inflation, restoring purchasing power.
During some extended valuation regimes (e.g., Japan after the 1990s), equities can underperform for decades in real terms.

These facts imply that equities can function as an effective store of value for long-horizon investors, but outcomes are path-dependent and sensitive to valuations at the starting point.

Volatility, drawdowns and short-term risk

Stocks can experience substantial short- and medium-term drawdowns (e.g., 30–60% declines during large bear markets). Volatility means that even if long-run expected real returns are positive, investors with short horizons can suffer real purchasing-power losses if forced to sell during downturns.

Important empirical metrics:

Standard deviation of annual returns for equities is much higher than for cash or investment-grade bonds.
Maximum drawdown statistics for major indices show multi-year recovery periods after severe crises.

Therefore, asking "are stocks a store of value" must be qualified by time horizon — the longer the horizon, the more likely equities preserve purchasing power, historically.

Dividend income and compounding

Dividends are a concrete mechanism through which equities deliver real income. Dividend yields plus reinvestment can compound over time and offset inflation. Dividend-paying companies — especially those with growing dividends — have historically provided a steady portion of total return and can help preserve purchasing power for investors who rely on income rather than selling principal.

Comparisons with other stores of value

Stocks vs cash / fiat currency

Cash: Very low volatility and high liquidity but exposed to inflation (loss of purchasing power over time). Suitable for short-term needs and liquidity buffers.
Stocks: Higher volatility but historically higher nominal and real returns. Better long-term hedge against inflation due to participation in real economic growth.

Bottom line: For short-term capital preservation, cash (or short-term inflation-protected instruments) is superior. For long-term purchasing-power preservation, diversified equities are often superior.

Stocks vs precious metals (gold/silver)

Gold and silver: Limited inherent yield, scarce supply (especially gold), widely seen as non-productive stores of purchasing power and hedges in crises. They can act as insurance when fiat confidence falls.
Stocks: Productive assets that generate earnings and dividends. Historically, equities have outpaced gold over long periods, but gold can outperform during specific stress periods.

Compare on volatility, income and correlation: gold typically has no yield and can be volatile, but low or negative correlation with equities at times. Stocks provide income and growth potential but can fall sharply during certain macro episodes.

Stocks vs real assets (real estate, commodities)

Real estate: Tangible, can generate rental income, and often acts as an inflation hedge through rental-indexed contracts. Liquidity is lower and transaction costs higher compared with stocks.
Commodities: Real assets with direct link to prices of goods; can hedge specific inflation components but do not produce cash flows like equities.

Stocks vs real assets: equities are more liquid, easier to diversify, and can be accessed via ETFs; real assets can offer stronger local or sectoral inflation correlation but bring concentration and liquidity trade-offs.

Stocks vs cryptocurrencies (e.g., Bitcoin)

The crypto debate has reframed store-of-value discussions. Key contrasts:

Scarcity: Bitcoin has a capped supply (21 million coins), a focal point for the "digital gold" narrative. Stocks have no fixed aggregate cap and equity supply evolves.
Productivity: Equities are claims on productive output; Bitcoin is non-productive but may act as a scarce digital asset.
Volatility & adoption: Bitcoin and many cryptocurrencies have exhibited higher volatility and adoption risk; regulatory and technological risks (e.g., quantum computing threats) are unique to crypto.

As of January 16, 2026, Bloomberg reported that Jefferies strategist Christopher Wood removed Bitcoin from a model portfolio citing quantum computing concerns and reallocated the position into gold and gold-mining stocks. That institutional move illustrates how long-term security and technological risk factors influence store-of-value assessments for crypto.

(Reporting note: As of January 16, 2026, Bloomberg reported the Jefferies change.)

Arguments in favor of stocks as a store of value

Long-run capital appreciation: Over long horizons and broad diversification, equities have historically outpaced inflation.
Dividend income: Cash flows to shareholders provide income that can preserve actual purchasing power when reinvested or used.
Liquidity and market depth: Major equity markets provide deep liquidity for large investors.
Diversification across productive sectors: Owning broad indices reduces idiosyncratic risk compared with single stocks.
Adaptability to inflation: Companies can raise prices, raise wages, and invest in productivity improvements that allow earnings to grow with the economy.

These strengths support the view that, for many investors with long horizons, "are stocks a store of value" can be answered positively.

Arguments against stocks as a store of value

Volatility and sequence-of-returns risk: Short- and medium-term declines can permanently impair purchasing power for those who sell during downturns.
Not intrinsically scarce: Aggregate share counts can increase; equities are claims rather than finite physical goods.
Valuation risk: High starting valuations can compress future real returns for extended periods.
Company-level failure risk: Individual firms can go bankrupt, wiping out shareholder value.
Dependence on investor expectations: Prices reflect sentiment; expectations can change, leading to prolonged flat or negative real returns.

Because of these factors, the answer to "are stocks a store of value" must include the investor’s horizon, diversification and capacity to withstand volatility.

Conceptual critiques and alternative framings

Some commentators resist the "store of value" framing entirely for productive assets, arguing that purchasing power is not literally "stored" but must be actively maintained by choosing productive investments that compound real wealth. Others argue the label suits non-productive scarce items (like gold) better. Monetary-theory critiques point out that inflation and monetary regimes are central drivers of what preserves purchasing power — no asset is immune to macro shocks.

The nuanced takeaway: calling stocks a store of value is defensible for diversified, long-term investors, but it misleads if taken to imply short-term safety or intrinsic scarcity.

Practical implications for investors

Time horizon and intended use

Short horizon / liquidity needs: Prioritize cash, short-term bonds, or inflation-protected instruments to avoid selling equities during drawdowns.
Long horizon / wealth preservation: Equities are a primary growth engine and can preserve purchasing power over multi-decade horizons when diversified.

Portfolio role and allocation

Growth engine: Equities often serve as the growth leg of a portfolio that seeks to outpace inflation and build real wealth.
Store-of-value component: Investors who require a conservative store can complement equities with bonds, short-duration TIPS, gold, and, where suitable, crypto exposures sized for risk tolerance.
Rebalancing: Systematic rebalancing enforces buy-low sell-high and can improve risk-adjusted outcomes.

Implementation choices

Practical vehicles and strategies include:

Broad-market index funds and ETFs for low-cost diversification.
Dividend-focused funds or dividend aristocrats for income-oriented preservation of purchasing power.
Blue-chip equities with long cash-flow histories for stability relative to small caps.
REITs as a mix of equity-like exposure to real assets with income potential.

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Tax, liquidity and account considerations

Taxes: Dividends and capital gains are taxed differently across jurisdictions; tax-efficient account wrappers (IRAs, ISAs, tax-deferred accounts) can materially affect after-tax real returns.

Liquidity: Equity markets provide intraday liquidity for major names; smaller stocks and some international equities can be less liquid.

Custody & safety: For direct stock ownership, custody is typically with broker-dealers and custodians governed by securities regulators. For crypto assets that are sometimes compared to stores of value, hardware wallets and institutional custody options (including Bitget Wallet) should be evaluated for security, insurance coverage and operational controls.

Measuring whether stocks preserve purchasing power

Useful metrics and indicators:

Real return (CPI-adjusted): Compare index returns net of inflation over rolling windows (10, 20, 30 years).
Rolling multi-year returns: Examine distribution of rolling horizons to assess worst-case multi-decade returns.
Volatility and maximum drawdown: Key for understanding sequence-of-returns risk.
Inflation correlation: How closely equity returns track or lag inflation spikes.
Income yield: Dividend yield and dividend growth over time.
Valuation metrics: P/E, CAPE (cyclically adjusted P/E) to gauge future expected returns given starting valuations.

Regularly monitoring these metrics helps investors judge whether equities are likely to sustain purchasing power from any given starting point.

Special cases and nuances

Sector differences: Defensive sectors (consumer staples, utilities) typically show lower volatility and more stable dividends than cyclical sectors (materials, industrials).
Dividend aristocrats: Companies with long histories of dividend increases can offer more reliable income streams.
Geographic differences: Emerging markets carry different growth and inflation dynamics compared to developed markets; country-specific risks matter.
Single-stock vs index: Single-stock risk can lead to permanent loss; broad indices materially reduce idiosyncratic failure risk.

These nuances mean the simple question "are stocks a store of value" has conditional answers depending on exposure, sector and geographic mix.

Stocks and the crypto debate (contextual note)

The rise of Bitcoin and other cryptocurrencies reframed store-of-value debates. Crypto proponents emphasize scarcity and decentralization, while critics point to volatility, regulatory uncertainty and technological risks (e.g., cryptographic threats). Institutional reallocations — such as the Jefferies move noted above — illustrate how long-term investors weigh tech and governance risk when assessing crypto as a store of value.

As of January 16, 2026, Bloomberg reported that Christopher Wood of Jefferies removed Bitcoin from a model portfolio citing potential future vulnerability to quantum computing; funds were reallocated to gold and gold-mining stocks. This move highlights that store-of-value assessments are also shaped by perceived long-run security and systemic risk, not only past performance.

At the same time, the crypto development community is working on post-quantum signatures (for example, proposals like AIP-137 on some chains) and research into lattice-based cryptography — responses that demonstrate technological adaptability but do not remove uncertainty.

Conclusion: balanced answer to "are stocks a store of value"

Equities can act as an effective store of value for diversified investors with long investment horizons because they represent claims on productive capital, historically deliver positive real returns, and generate income via dividends. However, stocks are not a guaranteed short-term store of purchasing power: high volatility, prolonged valuation drawdowns and company-specific failures can erode purchasing power for investors with shorter horizons or concentrated holdings.

Choosing whether to rely on stocks as a store of value depends on investor time horizon, risk tolerance, need for liquidity, tax situation, and the role equities play inside a diversified portfolio alongside bonds, gold, real assets and selective crypto exposure. For investors evaluating platforms and custody, Bitget and Bitget Wallet provide integrated services for trading and secure wallet storage; consider platform features, custody protections and regulatory compliance when selecting a provider.

Further explore Bitget's educational resources and wallet solutions to assess how equities and digital assets might fit your long-term wealth-preservation strategy.

References and further reading

Bitcoin Magazine — "Store Of Value: A Comprehensive Guide" (conceptual overview of stores of value).
Exencial Wealth Advisors — "Exploring Stores of Value" (comparison of cash, gold, bitcoin and productive assets).
Investor.gov / SEC — "Stocks - FAQs" (what stocks are, risks and mechanics).
Investopedia — "Are Stocks Real Assets?" (distinguishing financial vs real assets).
FINRA — "Stocks" (role and risks of stocks in portfolios).
Wikipedia — "Store of value" (definitions and common examples).
Monetary Metals — "The Anti-Concepts of Money: Store of Value" (critique of store-of-value framing).
Bloomberg reporting on Jefferies' portfolio change and Christopher Wood (reported Jan 16, 2026).