Alto had its first Covid period board meeting last week. Like many companies, we considered our strategy in light of the new world order.
Our strategy -- to provide affordable access to alternative investment opportunities for everyone – remains unchanged.
Ten weeks ago, most people under 30 who had been contributing to their retirement portfolio thought that making money in the stock market was like taking candy from a baby. And just about everyone else thought that passive and undifferentiated ETF, index fund and mutual fund investing was a safe, conservative, fool-proof investment approach. It isn’t.
Implicit in this conventional wisdom is that it employs portfolio diversification. It doesn’t.
Arguably, the worst thing about public market investing is that it can’t protect us from ourselves. The one piece of conventional wisdom I believe you can take to the bank is that most of us are terrible public market portfolio managers.
Twenty years ago, I was an investment banker making a living raising private and public money for internet companies. I can still remember being at the printer on the eve of filing an S-1 and glued to the TV as the market fell. I thought it was someone else's misfortune.
I also remember receiving my next 401k statement and thinking the administrator must have confused my account with someone else's because the balance looked nothing like the one from the month before.
March and April 2020 statements, like those of 2000, look nothing like the ones from prior months.
The market's response to this crisis highlights the need for true portfolio diversification, which includes a healthy percentage of illiquid, alternative assets – or, in industry speak, non-correlated return assets. I don't know what healthy means for you, but I suspect it is more than 2 percent, which is approximately the national average.
I also can't tell you what to invest in, that's homework you need to do on your own or with a financial advisor. As an older, wiser, former colleague once said to a large room filled with high school students, investing is like sex, it is a participatory sport. They began to pay attention.
It is not lost on me that not everyone gets to participate. And not everyone has access to professional alternative asset managers, arguably the most efficient way to achieve a diversified portfolio that generates outsized returns. In short, we need the SEC and related congressional committees to rethink the rules that box out the average American from participating in this investment sector.
While we wait for those with regulatory power to catch up, the Alto team, together with our partners – AngelList, Carofin, Coinbase, Equiam, EquityZen, Issuance, Masterworks, Republic, and Wefunder, to name a few – will continue to do what we can to open doors and opportunities for every investor.
Thank you and if you have any questions, please do not hesitate to reach out to our team.
If you have not already done so, you can start with an AltoIRA today.
That dream of retirement has persisted in America for several generations. But it could be over for many Americans because of a pending crisis: elder poverty. By the year 2035, nearly 20 million retirees could be in poverty. By 2050, that number could be 25 million, which rivals the elderly poverty numbers of the Great Depression. Gen-X and Millennials are the generations that will experience this firsthand. Why is this the case? Why is elder poverty on the rise?
What do institutional investors invest in? Alternative assets. They are a growing part of their diverse portfolio and are willing to take the risk.