The Alternative Answer by Bob Rice is a book that explains the new world of alternative investing strategies. It shows how to use these new products for inflation-protected income, risk-adjusted growth, and long-term wealth transfer.
The book provides readers with an understanding of how to use nontraditional options to significantly increase returns and lower risks. It also outlines a framework for a family office or institution to invest in alternatives.
The book is divided into 10 chapters. In the first chapter, the author introduces the concept of alternative investments and explains why they are important. The second chapter discusses whether alternatives work and the third chapter covers major alternative strategies. The fourth chapter looks at major alternative structures, while the fifth and sixth chapters focus on higher, inflation-protected current income and broadening the base for risk reduction. Chapters seven and eight discuss long-term growth enhancement and purchase power protection. The ninth chapter looks at the big picture and the tenth chapter provides advice on how to invest in alternatives.
The book provides readers with an understanding of how to use alternative investments to improve their investment performance. It also provides useful information on how to separate beta from alpha and outlines a logical fee structure for alternative investments. Additionally, it provides advice on how to invest in alternatives and outlines a framework for a family office or institution to invest in alternatives.
What I Liked
It was well-structured and made the world of “alternative assets” much more approachable – even for someone without that much capital.
What I Did Not Like
It’s still quite advanced, and you need to have significant assets (like north of $2 million) before any of these strategies make sense. Stock and bonds and your day job FTW for the rest of us :)
The short version is that while equities are for growth and bonds are for security, alternative assets can perform a few different jobs –
- Asset Job 1 Higher Income – EM Debt, Cat Bonds, Specialty ETFs, Royalties. In non-taxable.
- Asset Job 2 Risk Reduction – Cash. In both.
- Asset Job 3 Long Term Growth – Angel Investing. Energy.
- Asset Job 4 Purchase Power Protection – TIPS and Timber.