Monday, 22 April 2013
Stock Market Losses Spell Gains For Alternative Investments
If you took a poll at any investors conference, you would find out that the number one question asked among investors would be "What do you have in your portfolio?" Of course the vast majority of answers would be different nowadays. In past years though, the answers would invariably be dominated by responses that included a variety of stocks and bonds. However, many investors have changed their approach to investing in the last decade. As the stock markets continue to fall and gold has begun to lose its luster, investment-seekers are losing their confidence and moving toward the profitable alternative options.
Recent reports have shown that since the financial crisis begin in 2008, the percentage of American households that invested in the stock markets has declined every year since and the trend is expected to continue. In fact, with all the ups and downs in the markets since the turn of the century, investors in stocks have only seen a marginal increase overall. Although, many stock market investors hope to see a return to the glory days of the 1980’s and 1990’s, it looks as though those days may be gone for good. It seems the investment industry is being overtaken by the many alternative opportunities that are now available in the marketplace.
As a result of the shift in consumer confidence to alternative options, many global financial advisers and firms have begun to include more alternative investments in their clients’ portfolios. Before the year 2000, the percentage of alternatives in an average portfolio was relatively minimal. Since that time, alternative investments have given investors a reason to invest and the percentage rate has grown substantially. Nowadays, it is recommended in the industry that investors include (at least) 30 per cent alternatives, with some financial experts believing a 50/50 split between traditional options and alternatives; is the best strategy. In fact, there has been a huge surge in the market of financial firms that only deal in alternative options since 2008 and they are gaining in popularity.
Alternative options are investments such as real estate, oil and gas, precious metals, precious gems, fine art, currencies and even shipping containers. Since alternatives are not correlated to stocks and bonds they are not subject to the same ups and downs in the market that stocks and bonds are. As a result, many investment firms now strongly advise that a well-balanced portfolio, should contain the right percentage of alternative investments to act as a guard against under-performing traditional investments. In the minds of investors, the answer is clear. Alternatives are becoming increasingly popular because the have demonstrated that they can deliver constant returns, while most of the popular traditional options are producing very poor results and repeatedly reporting losses.