One of the most compelling arguments for goldor even WorldCom and Enron still fresh in investors minds, there is some appeal in an asset that will, by definition, always be worth something.

Volatility is much more abstract than a gold bar, but as an asset class within a portfolio, it s the same sort of animal. As measured by the popular CBOE Volatility Index (VIX), it s not a security, rather a measure of the implied volatility of options on the S&P 500. As the demand of options goes up, so does the VIX, which is why it is commonly referred to as the fear index.

We last wrote about owning volatility in early January. As markets sank amid sovereign debt worries in Greece and Dubai, volatility jumped, prompting the VIX to soar about 55%. Of course, markets have since recovered, the Nasdaq just touched a new 14-month high, and the VIX has again fallen back to a hair above early January s lows.

Have No Fear?

CBOE Volatility Index (VIX) 6 year
Source: BigCharts.com

Although volatility and by extension, the VIX cannot go to zero, it certainly can fall and stay low for an extended period. Now, even at 17, the VIX still remains above where it traded for much of the mid-2000s. But January s swoon again demonstrated that, in an environment in which most risk assets still move in close correlation, the VIX jumps when greed inevitably turns to fear.

Absent a futures account, the best way for average investors to play the VIX is via shares of iPath S&P 500 VIX Short-Term Futures ETN, which I profiled shortly before it launched last year. Although not a perfect match, the highly liquid security generally tracks the VIX, less expenses.

Even as I add to recently strengthened names such as Sony and Mitsui, I ve also added exposure to VXX, which last week nipped a new 52-week low.

More than gold or even cash, I can t think of a more pure and perfect hedge against the unknown.

An Everyday Millionaire

I doubt Grace Groner thought that capitalism is broken or that the market is dead money when she died in January at age 100 outside Chicago.

Groner s estate left a $7 million fortune grown from a small stake in Abbott Laboratories to her alma mater, suburban Lake Forest College. It was the largest gift in the school s history.

How did she amass such a sum? After graduating in 1931, Groner began work as a secretary at Abbott. A few years later, before the advent of 401(k)s, IRAs or any other prodding from the government, she bought three shares of Abbott, which cost her $180 about $2,900 in today s dollars.

Then she waited. She waited through the depths of the Great Depression and through a massive World War. She waited though the Cuban Missile Crisis, and Vietnam, and Korea, and the historic inflation of the 1970s. She waited through Republican and Democrat administrations, through periods of political liberalism and conservatism.

She didn t use Fibonacci retracements, high-frequency trading or advanced moving averages, but simply reinvested her dividends and never sold. After many splits, her three original shares became 129,000 shares worth roughly $7 million.

What permitted her to hold on to her investment over a lifetime was that she lived within her means. Unlike many investors who rang up debts during the 1990s tech frenzy and the 2000s real estate boom, Groner was thrifty, rarely splurging on purchases outside of travel and charity. Even after she became a millionaire, she didn t live like one.

In today s populist culture, we too often paint the rich as conniving Uncle Scrooges, dining on caviar and foie gras between dips in their bathtubs full of gold.

Grace Groner is a much more accurate archetype: a hardworking, educated, parsimonious and charitable woman whose modest investment a lifetime ago will yield student scholarships for generations to come.