TRANSCRIPT:
Hey everyone, here today to discuss the use of alternative assets in your portfolio. I know that sounds like a mouthful, and I can see all the eyes out there rolling right now. However, whether you know it or not, essentially most people that even have the most basic form of portfolio management, whether it’s through a financial advisor like myself or a do-it-yourself platform, have what’s called alternative assets in your portfolio. It’s really easy to understand why, because alternative assets is essentially just a catchphrase for anything that isn’t on a publicly traded exchange like New York Stock Exchange.
So i.e., usually it used to refer to typical types of alternative assets like private equity or hedge funds, things you might actually need to hire a sophisticated alternative manager to manage for you. But really what they are is code language for an alternative to stock market performance. Again, whether you like it or not, if you’re a huge believer in indexing, or you don’t even know what that is, or you’re just trying to pick stocks, you have exposure to the stock market, whether it’s your 401k, if you have a direct pension, if you’re a teacher, or if you just signed up for something simple like a savings account on Fidelity or Vanguard.
My point here today is to tell you something that I find very alarming in the stock market today. Stock market is being presented to people, and this is from the press at large to famous investors like Warren Buffett talking about this as one big game. Everybody is day trading again, like it’s the dot-com era. There are certain online platforms that actually gamified the experience. So being everyone all in on the same trade usually doesn’t end badly. I’m not calling for something stock market crash. All I’m suggesting is there are alternatives. And frankly, the alternatives have yielded pretty good results over time. Going back to something that I mentioned before, like private equity, for example, actually have offered, over the long run, better returns in the stock market.
The stock market average annual return is 10%, whereas private equity is 14.3% average annual returns, and with very low correlation to stock market returns. So alternative assets are things that just basically aren’t stocks. In my opinion, it could be gold through an ETF. It could be crypto. A lot of people are in exposure now to real estate investment trusts because the Fed is starting to cut rates. Either way, it’s time to start to think about that maybe these huge stock market returns that we’ve seen over the last few years aren’t going to persist. So look, I’m not pitching any financial product. Our job at Gasima is just to guide you to the optimal portfolio that works for you.
But I hope the point is clear, diversify returns when you’re trying to create wealth, not just go all in on one type of asset that provides great returns. Give us a call here at Gasima, let us walk you through a successful portfolio strategy that can not only optimize your situation, but give you great performance that’s not correlated with the stock market. Give us a call today.