Demand for Alternative Investments
By Lawrence
While dealing with my chaotic quest of relocation, I got the chance to talk to several ex-clients turning into personal friends from my hedge fund days. It is interesting that many of these seasoned investors are quite worrisome about the future outlook for return on investments. Their point of views are both insightful and interesting.
In short, they do not see good long term investment opportunities on a global basis from real estate to stock markets. To these investors, government bonds are now no good. Risk of significant setbacks in real estate and other standardized investment vehicles is telling them to scale back on all kinds of regular investments to raise cash instead.
But then the cash sitting around becomes a problem – should they put them to use or should they simply sit on it until the expected financial storm has passed?
This led to an interesting idea of investing in alternative investments.
The alternative investments include backing proprietary traders with fixed interest rate instead of the hedge fund approach of profit sharing. I have done this before for my friends when I was young so it is not something new. The key to success in such investment is that you have to know the trader very well. The other factor is to limit the amount of money to a small percentage of your net worth so that the investment will not impact your portfolio significantly.
There are also other form of alternative investments. For example, an investor can help funding a local small business in exchange for decent interest payment. Due diligence is important with this type of investment. Hence the investor has to be either very knowledgeable about the business or know the operator of the business very well.
Very interesting change in mentality among these long term investors makes me think the concept of financing and investing could be facing drastic changes in coming years.
