In times of uncertainty, investors look for ways to protect their principal and still earn a good return. Financial advisers Larry Swedroe and Jared Kizer say the best approach is to add carefully chosen alternative investments to traditional stock and bond portfolios. In this, the third book in the popular The Only Guide Youll Ever Need series, the authors detail twenty alternative investments, explaining which to consider seriously and which to avoid entirely. They make specific recommendations about the best ways to access each investment, address tax and liquidity issues, and create an allocation and implementation strategy.
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Editorial Reviews
Review
A major success of this book is its demonstration of how to obtain the purported benefits of nontraditional asset classes more cost-effectively through adjustments to the reliable old stock-bond-cash allocation. --Martin Fridson, The Investment Professional
The authors provide a wealth of information, provocative insight, and simple 'food for thought' that can encourage both the novice investor or the financial professional to 'think outside the box' and fashion more creative and effective investment strategies for this volatile time. Required reading in this new era of personal finance. --Estate Planning Magazine
The authors provide a wealth of information, provocative insight, and simple 'food for thought' that can encourage both the novice investor or the financial professional to 'think outside the box' and fashion more creative and effective investment strategies for this volatile time. Required reading in this new era of personal finance. --Estate Planning Magazine
Review
“A timely and valuable book. The authors describe twenty alternatives to investing in traditional U.S. stocks and bonds, and how they work. They tell you which ones to walk away from, which to consider (carefully!), and how to get involved. These are good-sense judgments that every investor should pay attention to.”
—Jane Bryant Quinn
Author, Smart and Simple Financial Strategies for Busy People
“Larry Swedroe and Jared Kizer have written a different sort of investment book, and one that has been sorely needed: a comprehensive guide to the theory, peer-reviewed literature, and practical nitty-gritty of actually deploying portfolio assets. It is a gold mine for even the most experienced of practitioners, and a vital lifeline for small investors. This volume is destined to become the most marked and Post-it–noted tome on the average investment shelf.”
—William Bernstein
Author, The Intelligent Asset Allocator and The Four Pillars of Investing
“What’s missing in your library? Larry’s new Alternative Investments! You’ve already got tons of books on stocks, bonds, and funds. The Only Guide to Alternative Investments You’ll Ever Need is all about the future of investing, the new stuff that’ll give you an edge in the twenty-first century. An absolute must-read!”
—Paul B. Farrell, JD, PhD
Columnist, DowJones-MarketWatch
Author, The Millionaire Code, The Winning Portfolio, and The Lazy Person’s Guide to Investing
“Swedroe and Kizer provide a thorough analysis of the pros and cons of each alternative investment. They recommend ‘good’ alternatives to add to a diversified portfolio of high-grade bonds and stocks. Perhaps more important, they warn investors about the dangers of truly ‘bad’ and ‘ugly’ alternatives."
—Dr. William Reichenstein, CFA
Pat and Thomas R. Powers Chair in Investment Management, Hankamer School of Business, Baylor University
“Swedroe and Kizer have sorted through the clutter and confusion of alternative investments to provide the authoritative voice on these much hyped and frequently misunderstood financial products. Kudos to them for sharing their wisdom in a manner that can be easily understood by all.”
—Bill Schultheis
Author, The Coffeehouse Investor
“What a great service this book is to the investing community! As investors reach out for higher returns, many will venture into the higher-risk category known as alternative investments. For those who are so tempted, this book provides an invaluable guide.”
—Edward R. Wolfe, PhD
Professor of Finance and Director of the Financial Planning Program, Western Kentucky University
“At the risk of being clichéd, Swedroe has done it again! I make it a point to read every book written by him. This time, it’s all about alternative investments, and Swedroe, running true to form, tells it exactly as it is. He pulls no punches, he holds nothing back. If he doesn’t like something, he says so. If emerging markets equities are downright risky, he doesn’t mince his words or try to put a puffy spin on it. That is what makes reading Swedroe so fascinating.”
—Stuart Kahan
Executive editor, CPA Wealth Provider
“For investors looking to go beyond an S&P 500 Index fund and a bond fund—and every investor should—don’t make a move until you’ve read The Only Guide to Alternative Investments You’ll Ever Need. Full of historical evidence, practical advice, and specific investment ideas, this book provides a blueprint for what to include and what to avoid in an intelligently constructed portfolio.”
—Robert Brokamp
Editor, The Motley Fool’s Rule Your Retirement service
“As a financial journalist, I’ve been recommending Larry Swedroe’s books for years because they are filled with invaluable advice that can make any reader a more successful investor. I will now be adding The Only Guide to Alternative Investments You’ll Ever Need to my favored reading list.
—Lynn O’Shaughnessy
Financial journalist and author, The College Solution
—Jane Bryant Quinn
Author, Smart and Simple Financial Strategies for Busy People
“Larry Swedroe and Jared Kizer have written a different sort of investment book, and one that has been sorely needed: a comprehensive guide to the theory, peer-reviewed literature, and practical nitty-gritty of actually deploying portfolio assets. It is a gold mine for even the most experienced of practitioners, and a vital lifeline for small investors. This volume is destined to become the most marked and Post-it–noted tome on the average investment shelf.”
—William Bernstein
Author, The Intelligent Asset Allocator and The Four Pillars of Investing
“What’s missing in your library? Larry’s new Alternative Investments! You’ve already got tons of books on stocks, bonds, and funds. The Only Guide to Alternative Investments You’ll Ever Need is all about the future of investing, the new stuff that’ll give you an edge in the twenty-first century. An absolute must-read!”
—Paul B. Farrell, JD, PhD
Columnist, DowJones-MarketWatch
Author, The Millionaire Code, The Winning Portfolio, and The Lazy Person’s Guide to Investing
“Swedroe and Kizer provide a thorough analysis of the pros and cons of each alternative investment. They recommend ‘good’ alternatives to add to a diversified portfolio of high-grade bonds and stocks. Perhaps more important, they warn investors about the dangers of truly ‘bad’ and ‘ugly’ alternatives."
—Dr. William Reichenstein, CFA
Pat and Thomas R. Powers Chair in Investment Management, Hankamer School of Business, Baylor University
“Swedroe and Kizer have sorted through the clutter and confusion of alternative investments to provide the authoritative voice on these much hyped and frequently misunderstood financial products. Kudos to them for sharing their wisdom in a manner that can be easily understood by all.”
—Bill Schultheis
Author, The Coffeehouse Investor
“What a great service this book is to the investing community! As investors reach out for higher returns, many will venture into the higher-risk category known as alternative investments. For those who are so tempted, this book provides an invaluable guide.”
—Edward R. Wolfe, PhD
Professor of Finance and Director of the Financial Planning Program, Western Kentucky University
“At the risk of being clichéd, Swedroe has done it again! I make it a point to read every book written by him. This time, it’s all about alternative investments, and Swedroe, running true to form, tells it exactly as it is. He pulls no punches, he holds nothing back. If he doesn’t like something, he says so. If emerging markets equities are downright risky, he doesn’t mince his words or try to put a puffy spin on it. That is what makes reading Swedroe so fascinating.”
—Stuart Kahan
Executive editor, CPA Wealth Provider
“For investors looking to go beyond an S&P 500 Index fund and a bond fund—and every investor should—don’t make a move until you’ve read The Only Guide to Alternative Investments You’ll Ever Need. Full of historical evidence, practical advice, and specific investment ideas, this book provides a blueprint for what to include and what to avoid in an intelligently constructed portfolio.”
—Robert Brokamp
Editor, The Motley Fool’s Rule Your Retirement service
“As a financial journalist, I’ve been recommending Larry Swedroe’s books for years because they are filled with invaluable advice that can make any reader a more successful investor. I will now be adding The Only Guide to Alternative Investments You’ll Ever Need to my favored reading list.
—Lynn O’Shaughnessy
Financial journalist and author, The College Solution
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Most Helpful Customer Reviews
29 of 29 people found the following review helpful:
5.0 out of 5 stars
Alternatives to equities aren't just for bad times,
By Allan S. Roth "dare_to_be_dull" (Colorado Springs, CO United States) - See all my reviews
This review is from: The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly (Bloomberg) (Hardcover)
With the stock market in turmoil, investors are looking for alternatives. Larry Swedroe's latest book with Jared Kizer suggests some alternatives that probably belong in our portfolios regardless of what the market decides to do.
Larry Swedroe and Jared Kizer examine twenty different alternative investments, and arrive at six that may be keepers for your portfolio. They also point out those that should be avoided like the flu, regardless of how exciting the sales pitch is. Professionally and personally, I've always found that advice on what to avoid can often be more valuable than advice on what to buy. Swedroe and Kizer note the roles that real estate, TIPS, commodities, international stocks, fixed annuities, and stable-value funds can successfully play in our portfolios. If we buy them, they should be for the right reasons as performance-chasing occurs across all asset classes. Current market conditions make this book very timely as it does a great job of explaining how you can implement alternative investments into your portfolio now and in the future.
60 of 66 people found the following review helpful:
3.0 out of 5 stars
A good introduction, but some topics are very incompletely covered,
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This review is from: The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly (Bloomberg) (Hardcover)
I found this book to be sometimes poorly researched in the sense that the research is often incomplete. Some chapters are excellent and are fully worthy of five stars and others are poor and only worthy of two stars. The recent unprecedented (or at least unprecedented for the last 80 years) market conditions compel me to write an in-depth review.
The authors start the book out by listing real estate as one of the best investments, but barely mention real estate/housing bubbles and the crashes that follow. (They devote one paragraph to real estate price declines. I can't wait for the next edition.) While I am not knowledgeable on all the alternative investments listed, such as the chapter on "Private Equity (Venture Capital)," those investments I am knowledgeable about I found often to be incompletely or superficially covered or even misleading to a lesser or greater degree. I consider this book to be just another investment resource that has to be critically examined and should only be used as a starting point for one's research or investment strategy. None the less the book is valuable as it covers twenty asset classes and explains which asset classes are flawed or dangerous and why. Six good asset classes are covered, along with eight flawed, three bad and three ugly classes. The six good classes are: real estate, inflation protected securities, commodities, international equities, fixed annuities and finally stable-value funds. The eight flawed classes are: high yield (junk) bonds, private equity (venture capital), covered calls, socially responsible mutual funds, precious metal equities, preferred stocks and convertible bonds and finally emerging market bonds. The bad consist of hedge funds, leveraged buyouts and variable annuities. The ugly are: equity-indexed annuities, structured investment products and finally leveraged funds. This book will be most useful in helping the beginning or intermediate investor avoid the pain of investing in dangerous asset classes. Except for the long chapter on hedge funds which is excellent it is not so useful to the advanced investor who is looking for an in-depth understanding of each asset class. However, inexperienced investors with lots of money will most benefit from this book as they will be forewarned of the dangers of many tempting investments. The book focuses on the asset classes, the historical correlations between asset classes and the need for asset allocation in one's portfolio. The authors base their conclusions on how the asset class behaves as a whole as if it were an index and how the asset classes are correlated to other asset classes. In most cases it is assumed the investor will buy into a fund not individual commodities or equities. These correlations are somewhat suspect in my humble opinion. These past correlations don't always hold and the correlations depend on what time period one examines and how far back one goes, such as twenty-five years or fifty years or one hundred years and whether the periods examined included recessions, depressions or bubbles. During panics (such as during the last quarter of 2008) all asset classes tend to go down together and correlations go towards negative one and the historical negative correlations between different asset classes no longer hold. For example, the negative correlation historically present between the S & P GSCI (a widely cited commodity index first developed by Goldman Sachs) and stocks disappeared in the last quarter of 2008. Very little information is given as to when an asset class is overpriced or underpriced and how to determine this. Instead they focus on the relative performance of the different asset classes. It can be misleading to say that a given investment class is good, flawed, bad or ugly. It is relative and depends on the current and future economic environment and how cheap or expensive the asset class is. For example, they are critical of covered calls in general, but make no effort to explain under what market conditions covered calls are a good investment strategy. This is like saying the stock market is always a good investment, but not distinguishing between buying stocks when the market is dangerously high such as in late 2007 versus buying low such as during March of 2009. They discuss at length the theory behind buying collateralized commodity futures funds in that these will be negatively correlated with stocks and hence these funds "diversify the systemic risk of equity investing--the part that is not supposed to be diversifiable." I am slightly suspicious of this theory as the theory is based on historical correlations going back to only the early 1970s and doesn't take into account the rare but painful speculative bubbles in commodity prices. (I distinguish speculative bubbles from "legitimate" price shocks due to economic or political events.) I also wonder if this correlation will hold up over time if large numbers of commodity futures are solely purchased for their negative correlation with stocks as the very process of buying commodities for this purpose would tend to eliminate the negative correlation as it is ultimately a sophisticated technique to "beat the market" by getting more return for the same risk. Techniques to beat the market tend to weaken the more they are used. At any rate this kind of portfolio management requires a degree of sophistication that will be hard for the average investor to implement based on this book as only a limited amount of theory and practical advice is given as to how much of one's portfolio should be allocated to each asset class for one's investment objectives, age and occupation. They barely mention the need to adjust one's asset allocation based on one's profession. For example, if one works in the oil industry then owning oil futures might be a real bad idea as they will perform badly about the time one is at risk for being unemployed, and a real estate broker or builder should in general be underweighted in REITs. A computer programmer would do well to not invest heavily in tech stocks as tech stocks will likely start to drop a few months before he or she is at risk for being laid off. A book that covers the topic of asset allocation in more detail is: <<Asset Allocation: Balancing Financial Risk >> by Roger C. Gibson. Rather than buying one book that treats each asset class in one chapter one would be better off buying several in-depth books on the various different asset classes. Despite the claim that it is a comprehensive book I found it all in all to often be a superficially researched book on a multitude of topics of which only about 30-40 % are covered in sufficient detail for a serious investor. Still I give it a solid three stars as it is a good introductory book and one has to start somewhere, and for most investors the knowledge of what asset classes to avoid in general will be very helpful, but just remember portfolio asset allocation is a treacherous and complicated subject and this book only scratches the surface. It simply is not possible to adequately cover this complex topic in one medium sized book as the authors over confidently imply in their book title: <<The Only Guide to Alternative Investments You'll Ever Need>>. SOME EXAMPLES of DIFFERENT ASSET CLASSES COVERED REITS They cite data from 1978 to 2007 showing that REITs (Real Estate Investment Trusts): "had the lowest correlation with the total U.S. stock market of the major equity classes, making REITS the most effective diversifier." A REIT index the authors recommend is Vanguard's REIT Index Fund that tracks the Morgan Stanley REIT Index. (They don't give the ticker, but I assume they mean the "MSCI US REIT Index," which is the new name for the old Morgan Stanley REIT Index. The name change occurred on June 20, 2005. [Note, MSCI Barra, Inc. the owner of the index is the new name for Morgan Stanley Capital International which acquired Barra in 2004 and hence became MSCI Barra, Inc.]) At any rate the ticker is VGSIX as well as VNQ for the ETF version. Now the book was published in 2008, but the high for VGSIX occurred on February 7, 2007 at $28.44 and by December 31, 2007 it had dropped to $20.45 which is just over a 28% drop. Now the SPY (an Exchange-Traded Fund) that tracks the S & P 500 was $145.21 on February 7, 2007 and on December 31, 2007 was up a bit closing at $146.21. While it is true that this is a negative correlation, but a 25% drop is hardly what the average investor would want and by March 6, 2009 the VGSIX closed at $7.01, a huge 75% drop from its February 7, 2007 high. Whereas the stock market as a whole performed better, only dropping about 55% from its high to its low. By fall of 2008 the REIT index was no longer negatively correlated with the stock market. In fact it now rises and falls with the market, but with more volatility, which is likely not what the average investor would want. (Note, the above historical prices are daily closing prices unadjusted for splits or dividends from [...]) HIGH YIELD BONDS While this chapter is pretty good and has lots of useful theory they clearly are biased against high yield junk bonds. They state that high yield (Junk) bonds are too risky and too exposed to equity risk to: 1) serve as a liquid reserve,2) generate a stable cash flow or 3) provide a portfolio with stability. They fail to mention that some studies have shown that a diverse portfolio of high grade junk bonds, i.e., just below the lowest investment grade (e.g., BB+ using Standard & Poor's grading system) have provided the best overall return (within the universe of bond funds) as the higher interest rates offset the losses due to defaults. Also, some analysts believe junk bond... Read more ›
22 of 22 people found the following review helpful:
5.0 out of 5 stars
Excellent Book on Alternative Investments!,
By
This review is from: The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly (Bloomberg) (Hardcover)
As an investment advisor and co-host of a financial radio program I have read a voluminous amount of investment material from a host of authors over the years. Larry is clearly one of the best financial writers I have come across. This book illuminates the reader on a myriad of investment strategies that are rarely understood by most investors and financial professionals. His writing style is entertaining, informative and supported by solid empirical evidence. Summarizing a quote from Larry Swedroe, "there is a difference between information and knowledge, information is a fact or piece of data, knowledge is information that can be put into practical use to make better decisions". This book provides the reader with practical knowledge on less understood, alternative investments. I recommend this book to all investors and I would also recommend checking out Larry's other books.
Kenneth R. Smith. CFP®, MS CEO Empirical Wealth Management LLC
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Front Cover | Front Flap | Table of Contents | First Pages | Index | Back Flap | Back Cover | Surprise Me!
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Key Phrases - Statistically Improbable Phrases (SIPs):
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variable annuities, sample portfolios, index fund, small value index, nominal return bonds, tive skewness, index underperformed, mortality credits, real return bonds, mining fund, fixed immediate annuities, emerging market bonds, emerging market equities, appreciated shares, tax inefficiency, inflation risk premium, nominal bonds, equity asset classes, unexpected inflation, socially responsible mutual funds, high kurtosis, operating expense ratio, real yield Key Phrases - Capitalized Phrases (CAPs): (learn more)
The Good, The Flawed, The Bad, Lehman Brothers Treasury Bond Index, Inflation-Protected Securities, Dow Jones Wilshire, The Ugly, United States, Wall Street, Hong Kong, Barclays Bank, Yale Endowment, Structured Investment Products, Dimensional Fund Advisors, United Kingdom, Portfolio Allocation Annualized Return, Mondo National Bank, Vanguard High-Yield Corporate Fund, Mark Anson, Great Depression, Equity-Indexed Annuities, Rydex Nova, Security Prices, David Swensen, Lehman Brothers Intermediate Treasury Bond Index Browse Sample Pages:
Front Cover | Front Flap | Table of Contents | First Pages | Index | Back Flap | Back Cover | Surprise Me!
variable annuities, sample portfolios, index fund, small value index, nominal return bonds, tive skewness, index underperformed, mortality credits, real return bonds, mining fund, fixed immediate annuities, emerging market bonds, emerging market equities, appreciated shares, tax inefficiency, inflation risk premium, nominal bonds, equity asset classes, unexpected inflation, socially responsible mutual funds, high kurtosis, operating expense ratio, real yield Key Phrases - Capitalized Phrases (CAPs): (learn more)
The Good, The Flawed, The Bad, Lehman Brothers Treasury Bond Index, Inflation-Protected Securities, Dow Jones Wilshire, The Ugly, United States, Wall Street, Hong Kong, Barclays Bank, Yale Endowment, Structured Investment Products, Dimensional Fund Advisors, United Kingdom, Portfolio Allocation Annualized Return, Mondo National Bank, Vanguard High-Yield Corporate Fund, Mark Anson, Great Depression, Equity-Indexed Annuities, Rydex Nova, Security Prices, David Swensen, Lehman Brothers Intermediate Treasury Bond Index Browse Sample Pages:
Front Cover | Front Flap | Table of Contents | First Pages | Index | Back Flap | Back Cover | Surprise Me!
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