Summary of The Alternative Answer
© 2013 by Bob Rice. Published by arrangement with HarperBusiness, an imprint of HarperCollins Publishers
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Investment expert Bob Rice believes that more investors should add alternative assets to their portfolios of stocks and bonds for greater long-term returns with less total risk. Mutual funds, exchange-traded funds and similar vehicles now offer exposure to long/short stock strategies, oil and gas royalties, private equity, timber and many other types of alternative investments. Such assets may not outperform stocks in the short term, but, because alternatives’ returns are uncorrelated with equity returns, they can resist depreciation when share prices fall. However, Rice cautions in this breezy and informal but instructive text, choosing wisely is critical: Alternatives managers tend to produce a wider variety of good and bad results than those who handle only equities and fixed-income assets. While not advocating any particular investment or investment strategy, getAbstract recommends this overview to individual investors looking for ideas on how to improve their portfolio performance and protect their gains from bear markets, recessions and inflation.
In this summary, you will learn
- Why alternatives to stocks and bonds are necessary in a well-balanced investment portfolio;
- How various alternative assets reduce portfolio risk by minimizing correlation, and increase returns by expanding sources of growth and income; and
- Which alternative assets and strategies can help investors protect and improve their portfolios.
About the Author
Bob Rice is Bloomberg TV’s alternative-investments editor and the managing partner of Tangent Capital.