Generally speaking, an alternative investment is any investment opportunity that has not established a reputation for itself as a long-standing, traditional investment. Examples of well-established or “traditional” options include stocks, bonds, and, although investing in precious metals is quite new, gold is a long-standing investment too.
The trouble with many of the investments that occupy portfolios right now is that their performance is unduly influenced by the economic and political environment, which for the most part is dictated by bias (often self-serving) policy makers.
Economic progress, in capitalist society, means turmoil. – Joseph A. Schumpeter
During the onset of the global financial crisis in 2008, it was the traditional investments identified above (stocks, bonds, etc.) that experienced the greatest drop in value. On the other hand, many of the leading alternative investments were unaffected by the poor performance of traditional assets, or saw limited losses followed much quicker recovery than their more established counterparts. That said, the investment community has taken notice of this impressive track record, and many have adjusted their portfolios to include more non-traditional options.
Albeit a majority of investing dollars remains in stocks, bonds, commodities, etc., investors feel the need to regain some control over the direction and performance of their financial future. In doing so, investors have discovered that placing financial resources into hard assets like investing in gemstones, precious metals, and/or real estate investments, provides a degree of protection from the effects of market volatility, political turmoil and global economic woes; three strong influences on the performance of traditional investments.
Too oft is transient pleasure the source of long woes. – Christoph Martin Wieland
Despite bouts of prosperity, Wall Street and other stock markets have repeatedly disappointed the investment community. And, with the constant threat of inflation, bonds do not appear to offer a better option for the world’s cautious investors. The main driving force behind this is caution is economic uncertainty. This combined with the fact that investors know that banks and governments represent their own interests, means investing opportunities that operate outside their sphere of influence are a much more favorable option.
With the world’s traditional investments still struggling to recover and perform, alternative investment brokers are demonstrating that their offerings are more appealing, especially given that they offer lower risk and have demonstrated that they can (and will continue to) outperform the established list of more traditional investments. That said, these are the opportunities that will allow investors to take back control of their investment portfolios, and release their financial future from the grips of greedy institutional investment firms.