Time to Consider These ‘Alternatives’ to Stocks, Bonds

Just about everyone I meet asks me what I think about the stock and bond markets.

That makes sense. Stocks and bonds are the most-popular ways investors can grow their portfolios and generate the income they need from their assets.

Yet today, there’s a growing sense that stocks are feeling too “toppy.” And that bonds are going to suffer from the inevitable rise in interest rates.

Fears of a stock and bond bubble are always legitimate. But those fears do seem exacerbated by the current zeitgeist in each respective market. (Goldman Sachs calls it “maximum optimism.”)

Now, I am not saying there will be a big correction in stocks, or a big meltdown in bonds. Yet a good argument can be made for preparing your money for either outcome … or both.

One way to do just that is through the use of so-called “alternative investments.”

Before we can talk about alternative investments, we need to define the term.

I know this, because whenever I bring up the topic of alternatives, people immediately ask me if that means assets such as artwork, classic cars or other collectibles.

And yes, those assets do offer alternative ways to invest money. But the category of alternatives is much-broader than you might think.

The most-salient feature of an alternative investment is that it tends to have a low correlation to the stock and bond markets.

Here I am speaking about assets like venture capital funds, hedge funds, private-equity funds and Real Estate Investment Trusts (REITs).

Perhaps the biggest and most widely invested in alternative investment is commodities.

Here we are talking precious metals such as gold and silver. Then there’s copper and other industrial metals. There’s also agricultural commodities, and energy commodities such as oil and natural gas.

There are also things like the aforementioned art and classic cars. Then there’s wine, rare coins, watches, antiques, etc.

Whatever the value, the key to these assets being considered alternatives is that they have a low correlation to stocks and bonds.

Related story: If You Own Gold, The Government Might Owe You $5,000

For the individual investor, access to alternatives has usually been the biggest issue. Often, you must be accredited (i.e., a very well-heeled investor) to participate in private equity, hedge funds and the art market.

Yet with the growth of Exchange-Traded Funds (ETFs) over the past several years, individual investors now have many more ways to easily invest in alternative assets.

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My colleague, Grant Wasylik, is our resident ETF expert.

Grant recently asked his readers what general topics they were most interested in learning more about.

The “alternative” results here were very interesting.

Grant found that more than half (55.26%) said they were interested in finding out more about alternatives (i.e., anything beyond traditional stocks and bonds).

This level of interest intrigued me, as I would have thought this number would be lower. Still, this number also encouraged me, as I am a big fan personally of investing in alternatives.

So today, my question to you is are you interested in alternative investments, and if so, which ones?

Is it traditional alternative investments such as art, antiques, rare coins, classic cars?

Is it REITs, commodities, currencies?

Is it hedge funds, private equity funds, or IPOs?

Related story: This Unique IRA Lets You Own Gold, Real Estate & More

I am really curious to find out what you think about this subject. More importantly, I want to know if my readers are interested in finding out more about alternative investments.

If you are, then it’s our goal to make sure you learn about them.

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Please help us out. Let us know if you’re interested in alternative investments, and if so, which kinds. Your input will go a long way to helping us determine the most valuable content to provide.

And, doing so is easy. All you have to do is leave me a comment on our website or send me an e-mail.

***

It was the dozenth-straight record close for the Dow. The Industrials gained 16 points, or 0.1%, now the longest streak since 1987.

• Defense stocks dominated the day: Raytheon (RTN), Lockheed Martin (LMT) and Northrop Grumman (NOC) gained 0.9%, 1.3% and 1.4%, respectively, on word from the Trump administration that forthcoming tax cuts would benefit infrastructure spending. (This puts our subscribers who bought LMT on our signal up almost 8%.)

• Priceline (PCLN) is trading 3% higher the closing bell. The travel-booking site just posted Q4 earnings-per-share of $14.21 vs. $13.01 expected.

• Which jobs will robots take first? Oxford University says middle management, commodity salespeople (ad sales, supplies, etc.), report writers/journalists/authors/announcers, accountants & bookkeepers, and doctors may either see a decrease in business or an increase in “alternative” colleagues. (Ad Age)

• 12-month low for pending home sales: The National Association of Realtors suggests that, with buyers outnumbering sellers in areas like the Midwest and the West, the 2.8% January drop can be attributed to an inventory shortage. (Reuters)

• $25 per every American adult: That’s how much customers paid in ATM and overdraft fees to JPMorgan (JPM), Bank of America (BAC) and Wells Fargo (WFC). The three big banks took in fees worth $6.4 billion in 2016, $300 million more than the previous year. (CNNMoney)

• Five-year fee hike to come? Costco (COST) may soon bump up its basic level membership fee by $5 and the executive level by $10, the first hike in five years. Stores in Taiwan, Korea, Japan, Mexico and the UK just saw their fees increase. The company expects that 90.3% of U.S. and Canadian customers will renew, and that 87.5% of customers worldwide will stick. (Business Insider)

• How’s your heart health? This weekend, actor Bill Paxton died at age 61 after heart-surgery complications. And “Biggest Loser” fitness trainer Bob Harper reportedly suffered a heart attack at a New York gym. (During his recovery, his exercise is limited to walking.) We’ve written about The Real Cause of Heart Disease, how to Beat Stress Using the Power of Your Heart and, for investors, Don’t Let the Stress of the Markets Destroy Your Health.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

Your thoughts on “Time to Consider These ‘Alternatives’ to Stocks, Bonds”

  1. I have invested extensively in a very esoteric art media that I well believe is/has been way undervalued. Have bought nearly 500 signed, original pieces that are/had been so ridiculously priced as to appear–for me at least– a true (hard to believe !!) arbitrage situation. Started 3 1/2 years ago, and market value of about 6 or 7 pieces increased enough to pay for all 500 pieces. Bought one $246 that currently lists for about 4.5-5k depending on sales venue. And that was SAME day as purchase. Basically, arts are so very thin in terms of general audience knowledge, so lots of estates, storage lockers, grandparents passing, flea market ignorance, etc. yields these finds.
    I am thinking of starting a small ltd. partnership w/r/t this and other art forms. My original degree in studio art, and later a finance and also separate marketing degree has/will serve me well. Have been banker and reg. rep in NYSE firm as well, so feet quite wet.
    Regarding this schema, i say: a little knowledge is dangerous, a little more can be informative and profitable…..even more….yields bliss and wealth in multiple arenas.

  2. always interested in commodities , metals and real estate . I would like to stay ahead of any future troubles . helps with my confidence on the economy .

  3. Reits, commodities, closed end funds & insider possibilities would be great subjects to get more investment info on.

  4. We desperatellt need infos about:
    1. Trading stock options and all statistics like volume, open interest, Bid-Ask spreads,,
    2. volume of stock shares, and Put /Call options at closing.
    3. EMA, MACD, ETF.

  5. You teased my attention with the mention of • Toppy bubbles…
    But did not provide any detail. What are they and how does one invest?

  6. I would like to know more about the the alternatives to stock and bonds, particularly commodities, equity funds, hedge funds and REITs in that order.
    Thank you

  7. Would be interested in:
    1. Peer Lending investments
    2. Life Insurance settlement investments
    3. Coins
    4. Other collectibles

  8. I would be interest in your take on the metals in the form of coins and bullion.
    Thanks.

Comments are closed.