Scenes from Beyond The Stock Market: Investing 2.0

Conversations about Alternative Investments continue to grow, as does the size of and depth of different types of alternative investments. No matter how many articles are written or coffee shop conversations with your friends, it’s hard to get a grip on which alternatives are the real deal and which ones are just the latest fad.

What better way for investors to discover the landscape of alternatives, then putting five alternative investments managers, in the Chicago area, in the same room, for investors to hear direct from those who make a career out of doing things outside the usual stock and bond portfolio.

1871 June Alts Event Bobby Schwartz

Yesterdays’ Beyond the Stock Market: Investing 2.0 event included founders from these five different “non stock market” investment styles:

Hedge Funds / Managed Futures – RCM Alternatives

Angel Investing – Hyde Park Angels

Peer to Peer Lending/Private offering Marketplace – CFX Markets

Venture Capital – Nin Ventures

Distressed Debt – American Homeowner Preservation

Here are some key points discussed and a few of our takeaways:

1. We’re in the area of “Democratization of Markets and Investing.” Juan Hernandez of CFX markets, (a real estate Peer2Peer group) says with each day, investors are realizing the status quo of typical investing is in the past. Investors want to make the choices of where their money goes, and deciding between which bond or stock index doesn’t cut it.

2. Disruption is bad for entrenched institutions and great for startups and those approaching a problem differently. Market disruption is likewise bad for entrenched strategies (like buy and hold) and great for different strategies like alternative investments, which can seek out value and prosper in disrupted markets.

3. Moderator Garrett Baldwin of The Alpha Pages notes that the 60/40 portfolio style isn’t sustainable with stocks near all-time highs, and bond yields at all-time lows. There’s hardly any room for error, and people are taking alternative investments seriously.

4. Bobby Schwartz of RCM shared that investors now have more access to investment styles than ever before, and are no longer just the realm of the uber wealthy and institutional investors. Of course, it all depends on how long you want to be invested in said alternative, and how much return and risk you’re looking for. Finding a trusted resource to help you navigate these waters is a must.

5. Doug Monieson of Hyde Park Angels says companies are waiting much longer to go public, and many investors get in and out of ideas and companies long before a ticker symbol is created, leading to a 7 to 10-year investment horizon (and cash lockup) for many Angel Investing deals.  Additionally – in response to how Brexit may have affected different investments  – Doug said in contrast to futures prices updated every second, his investments are priced when he gets in, and then again maybe 4 years later – meaning not a lot of angst watching the quote screen in that business.

6. Nin of Nin Ventures says endowments are increasing their allocation to Venture Capital. In 2008, Yale’s asset allocation in Private Equity was 20.2%. In 2014, it has increased to 33.0% out of which 16.3% was Venture Capital.

7. George Newbury of AHP Fund started as a non-profit in the aftermath of the 2008 mortgage crisis. George says the Big Banks could have actually made yield and left people stay in their homes but they weren’t interested. He said that despite all we’ve learned from 2008, the big banks and large hedge funds continue to buy up mortgages, good and bad. No one knows if this could lead to the same result, but as that saying goes.. “fool me once, shame on you…. Fool me twice…”

8. Some alternative Investments seek to provide a social service of helping new ideas and entrepreneurs change the world.  Venture Capital, Angel Investing, and Distressed Debt all seek to provide investors with alpha while at the same time help society out in some way.

9. Peer2Peer Lending is growing, big time. Juan Hernandez of CFX Markets says that Real Estate Crowdfunding is a $34 Billion industry on the way to $300 Billion.

10. Regarding LendingTree’s problems – it was noted that they are mainly a loan originator, versus other crowdfunding/peer to peer sites which actually own the loans. Most of the panelists were more comfortable with the latter type.

11. Managed Futures can provide you with protection to Brexit types of events. Managed Futures doesn’t prepare for these types of events, but can react to them.

12. You don’t need to be in Silicon Valley anymore to launch a great idea. The startup, fintech, space is exploding in Chicago and other areas of the country. Doug says that of all the companies he prospects, 80% are in the Chicagoland area. He said 40% of the business ventures are dedicated to companies seeking to improve society.

13. The event space 1871 in the Merchandise Mart is one of a kind space, where people come together to discuss, debate, and promote new ideas and new technology that seeks to change the way people live in this world. Whether that be a new app, technology that helps the medical field, or an investment style that hasn’t been offered to others before, 1871 is helping the people of Chicago create a community of change.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.