2023 is now well underway.
Already, we’ve all had a go with ChatGPT, we’re witnessing stress cracks within WEF, we see that Russia’s making another push in Ukraine, and here in NZ we’ve just farewelled a prime minister. While all this is going on, investor sentiment seems to be bouncing back. Is it a trap and more pain’s to come? Or are things cautiously getting back to normal?
Time will tell – these are curious times.
Going back 50-60 years ago, when most of our parents would have been diving into the music of The Doors, The Beatles, and The Rolling Stones, it was another curious time. There was a growing desire for change and a rejection of the agenda’s coming down from the top. It felt in many ways that the end of the world may have arrived…except it didn’t. All lot of change within a short space of time kind of just happens every now and then. The logical response to curious times then, is to have a curious mind (something increasingly difficult to exercise).
In 1968 there was a song called “Five to One” by The Doors – according to Songfacts, 5:1 was the approximate ratio of whites to blacks, young to old, and non-pot smokers to pot smokers in the US in 1967. It was also the amount of Vietnamese to American soldiers in Vietnam. There’s always been this ‘annoying’ minority that dance to a different tune, keeping the status quo accountable.
Perhaps its true also, that the ratio of 5:1 or 20% represents those who hold alternative views, opinions, and belief’s.
As it relates to investing, some analysts estimate that only 3-10% have exposure to alternative investments though.
Are we investing in a way authentic to ourselves here? Should open our minds to the world of alternatives a bit more?
What is an alternative investment?
An alternative investment is anything that’s not a mainstream investment.
More specifically, cash, term deposits, bonds/ bond funds, property, infrastructure and publicly listed companies (either directly or through some sort of managed fund) – these are mainstream investments. Anything else, well there’s a good chance it may dance to a different tune compared to the majority. Alternative investments are the quiet ones in the room, taking it all in – they’re the different ones, often misunderstood, and if they had feelings, they may feel a little marginalized.
So, why invest in alternative investments?
Diversification, and a chance to get an outsized return are a couple reasons, but there’s a few more reasons you’ll learning by watching this episode.
In The Doors song already mentioned there’s a part that says “You must have whiskey, over wine..”
I think, if Jim Morrison was alive today and investing, he’d be heavily into alternatives, including Whisky AND wine.
He’d be self-medicating with it no doubt, but here’s a clue about how to grow wealth in the future.
The more wealthy people there are in the world, the more people there are to drink fine wine and whisky. The more anxiety around the present age there is also, the more likely investing in this space could work as a zig to your zaggers (ie, this type of investment may not drop in value as much during poor economic times – it could even increase). Alternative ‘luxury’ investments could make an interesting portfolio diversifier.
Like many investments, you can diversify at a fractal layer. In other words, you can put your eggs in different baskets within the different baskets you’ve already put them in. For example, invest in Apple shares directly, through an index fund, or even engage with short term trading. Same asset, held through different hands, unlocks a dimensional return. Another example would be to invest in a company like Anheuser Busch (not investment advice) or you could invest in VICE, an exchange traded fund (ETF) that invests in alcohol companies among other things (again not investment advice). Lastly, you could buy a distillery, participate in crowd funding opportunities, or perhaps invest in a cask of whisky direct from the producer. Same asset, held different ways, to provide diversification within a concentrated high risk investment, that may come with an increased possibility of out performance.
Personally I’m not a massive fan of alcohol, but I still have something to learn here – as you watch this one, try to remember there’s a lot more money in the world right now. Exceedingly wealthy people are actively looking for nicer things to consume . The struggle’s real and I know this evokes a bit of envy, but place it aside if you can. Investing in the luxury space could be a way to benefit from rising inequality. Sound controversial? It is, and you can learn more about it in audio episode called the Slow-Cooked Passive Property Profit Strategy.
Maxwell Nee from Oeno talks to me more about investing in fine wine and whisky in the following episode of the Everyday Investor – enjoy!
The usual disclaimers very much apply when I’m talking about alternative investments like Gold, Bitcoin, free speech and whisky, so please do a lot more research before going further here. While you’re at it, please consider if investing in this space violates any of your own ethical investing standards you’ve chosen to adopt.