We respectfully declined, and bought our own box of crayons.
We were offered Black & White - but respectively declined and purchased our own box of crayons.
Stocks and bonds are black and white, and with only these two options to invest in, it is much more realistic to say that this creates a ‘gambler’ in the market - not an investor. Of course all investing is gambling to a certain extent, however as the player, we have far more options than we are commonly told. There are alternatives, and they’re a box full of crayons in terms of investment options.
Alternatives are investment options that sit outside of the ‘status quo’. They are composed of everything from real-estate opportunities, to ‘Unicorn’ startups half way across the world, all with the commonality of not being common at all. They tend to have very few significant investors instead of the masses we see in the traditional stock and bond investment structure; this can increase the risk, but if they are diversified throughout your portfolio, they offer significant protection from market volatility.
With the extreme volatility we have all seen and experience in recent years, why aren't more investors seeking out Alternatives?
Many desirable alternative investments are out of reach for the majority of investors. The options to invest has a significant buy-in that keep them available only to the Ultra High Net Worth, institutional investors and pension funds.
The status quo. Many investors are timid when it comes to ‘investing outside the box’. The belief that the markets always come back is stronger and more reassuring to them than the ‘alternative’.
One of the best examples of an investment into Alternatives is Ron Wayne. Many don’t recognize his name, however, he is widely known as ‘The Unluckiest Man Alive’.
In 1976 Ron Wayne founded a company with two partners half his age. They were young, brilliant and passionate regarding not only their future, but the future of the world. At 41 years old, Ron had not only invested his future on the young talent that were now his partners - he had also invested in a significant ‘alternative’ to the status quo.
In a short amount of time, Ron made the decision to leave the company. There are many theories and numerous explanations from Ron Wayne as to why this happened - but at the end of the day, it was a decision made due to the fact that his company was operating outside of the tried and true black and white status quo of investment opportunities. This alternative was simply too risky.
His initial buy-in to the company was $500 for 10% ownership - upon leaving he sold back his shares for $800, and considered this a decent return on investment, especially when taking the risk of an alternative into question.
Today the initial investment Ron Wayne made into Apple for a 10% stake is valued at $35 billion. What was considered a risky alternative, grew into one of the most successful companies in the world. Of course not all alternative investments are Apple, but the moral of the story isn't get rich quick by taking unnecessary risk - the moral is that the alternative to the status quo is full of possibility.
Why WealthCo bought a box of crayons.
Alternative investments bring diversity to your portfolio the same way a box of crayons can diversify black and white. You don’t select every crayon for every picture, instead you select the crayons that are complementary colours that add depth and purpose to the entire piece.
WealthCo’s model portfolios represent our commitment to alternative investments and authentic diversification. They bring significant value to our clients’ experience with our investment philosophy by providing depth and purpose to the entirety of their portfolio. Each model portfolio is designed to be well diversified across multiple assets classes, including alternative investments not normally available in public capital markets.
Inspired by the work done in many of the leading pension funds and endowments, our WealthCo model portfolios include allocations to alternative assets classes such as hedge funds, private equity, real estate, private mortgages, and debt in addition to meaningful investments in more traditional equity and fixed income investments. The intent of this portfolio design is to lower the expected portfolio volatility over time without compromising the expected long-term rates of return.
Our clients are not black and white, they are people who have invested their lifetime and future with us because we see them in colour. Our authentic diversification investment philosophy is a direct reflection of who they are and the responsibility we have to continue to act accordingly. WealthCo stands beside each of our clients and their unique goals and objectives for the future with long term growth, development and a shield against the volatility of a black and white world.