From Alternative Investments to An Open Mind

Whether young and wealthy or older and wealthy, your goals regarding investing your money are the same. In fact, all investors would prefer investments that are stable and go up more than down with upside potential and returns exceeding those of the market averages. According to a study by Bank of America Private Bank, 75 percent of high-net-worth individuals between the ages 21 and 42 do not believe it is possible to achieve excess returns by investing in traditional stocks and bonds. In the same study, only 32 percent of investors over the age of 43 had the same opinion. So, where are young high-net-worth investors putting their money? According to the same study, 80 percent of these investors are putting their money in alternative investments. When compared to investors of all ages, younger investors are allocating significantly more money to alternative assets and substantially less capital to stocks.

Generally, most investors view the financial markets and any associated risks through a lens of their personal experiences or knowledge gained through hearsay or the media. Unfortunately, in either case, investors who fail to do their own research and who are not open to investment options that go beyond alternative investments and/or index funds are missing opportunities to achieve excess returns. Traditional investment options utilizing strategies based on publicly traded stocks can certainly provide market beating returns with consistency and even better returns promised by alternative investments such as hedge funds and private equity. With the recent collapse of FTX and hedge fund returns that regularly fail to outperform index funds over time, what is available that can provide better options?

Fundamentally solid and highly focused investment approaches using publicly traded stocks can fill that void. However, investors have to demand better solutions that come with investment fees that are not excessive. Alternative investments sound great in theory but unfortunately the vast majority do not provide what they promise and therefore fail to provide stability of returns or returns that beat the market averages over time.

Currently, young high-net-worth investors only hold 25 percent of their investments in traditional stocks or stock funds according to a survey conducted by Bank of America Private Bank. Excess investment returns do not require alternatives to traditional assets classes but do require a willingness by investors to think beyond often limited personal experiences. For instance, investing in our approach during 2008 would have left investors significantly better off as our approach was down only about 7 percent when the overall market was down about 40 percent. The following year, our approach was up over 100 percent. During the Covid crisis, our approach was up over 70 percent. Having fundamentally sound strategies that utilize publicly traded stocks can yield positive experiences that might make all the difference in how an investor might view investment strategies based on traditional investments.

Reach out to your investment adviser and ask for the best solutions that give your money the opportunity to grow and outperform the market indices with lower volatility and significantly higher returns. Achieving better solutions does not require alternative investments and higher management fees but rather an open mind to new and more effective approaches. Believing in alternative investment approaches based on sketchy logic with lots of risk might be appropriate if you limit your portfolio’s exposure to these types of investment approaches. However, committing a significant amount of your investment capital to an equity strategy that provides much higher returns and lower risks than all other equity-based index approaches is the key to growing wealth. If you are interested in our investment approach, reach out to us today to discuss options with one of our portfolio specialists. Open your mind, not your wallet to higher fees and you can achieve higher returns.