The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly

Final Thoughts

Hopefully, you have enjoyed our tour of the world of alternative investments. Now that you are a more informed investor, you should be better able to separate the good from the bad and the ugly. You will also be able to determine if an offering has flaws and whether the flaws outweigh any positive attributes. At the very least, you will be more skeptical of the sales pitches and claims made by Wall Street's product-selling machines and its purveyors.

If this book has met its objectives, you will have learned:

• To remember that the more complex the product, the more likely it is that the complexity is designed in favor of the seller or issuer, not the investor.

• To not think of risk and expected return of assets in isolation, but in terms of how the addition of an asset affects the overall risk and expected portfolio return. Some assets (for example, Treasury inflation-protected securities, commodities, and fixed annuities) mix well with others in a portfolio, while others (for example, hedge funds and venture capital) mix poorly.

• To consider that standard deviation is not the only measure of risk. Skewness and kurtosis should also be factored into your evaluation.

• Not to be blinded by enticing features, such as the potential for high returns or guaranteed minimum returns. They are likely to be accompanied by negative features—including the potential for huge losses, high costs, and tax inefficiency— that outweigh the potential benefits.

• To keep in mind that the location of ...