Summary of The Alternative Answer

The Nontraditional Investments That Drive the World’s Best-Performing Portfolios

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The Alternative Answer book summary
Alternatives to stocks and bonds strengthen investment portfolios by increasing their tolerance to all types of risk.

Rating

8 Overall

9 Applicability

7 Innovation

9 Style

Recommendation

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
  • Which alternative assets and strategies can help investors protect and improve their portfolios
 

Summary

Alternative Assets and the Four Purposes of Investing
Long-term investments in bonds and stocks are traditional parts of portfolios. But simply betting that equities and fixed-income securities will rise in value is riskier than owning a portfolio with a variety of other assets, which ...
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About the Author

Bob Rice is Bloomberg TV’s alternative-investments editor and the managing partner of Tangent Capital.


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Contained in Knowledge Pack:

  • Knowledge Pack
    Alternative Investments
    From art to zinc – all you need to know about investing your money in nonfinancial products

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