From the May 01, 2009 issue of Futures Magazine • Subscribe!

The Only Guide to Alternative Investments You’ll Ever Need

The Only Guide to Alternative Investments You’ll Ever Need

By Larry E. Swedroe, Jared Kizer

Bloomberg Press

$29.95, 288 pages

Irony exists in the title and the content of this book. Had an investor diversified his portfolio in early 2008 (when the book came out) according to the authors’ six “good” alternative investments, that investor would have suffered losses in all six categories, and in some cases, extraordinary losses. Having said this, the premise of the book is a good one, despite 2008 — investors should diversify “…outside the familiar categories of equities; Treasury bonds; other high-quality, investment-grade debt; and bank instruments such as certificates of deposit.”

Swedroe and Kizer are financial advisors and financial writers who thoroughly researched and analyzed 20 alternative investment possibilities for this book, the third in Swedroe’s “The Only Guide to…” series of investment books. Divided into four well-organized parts, the book is a comprehensive guide to learning how to carefully manage and hedge your portfolio. Brimming with candor, clarifying information, and sound advice for investors, the book sheds light on the reality of investing in good, not so good, and potentially dangerous financial products.

The authors rank and thoroughly assess the investment possibilities in four categories: The Good, The Flawed, The Bad, and the Ugly. This categorized ranking approach eases the complexity inherent in discussing this group of investments. It also allows them to cover much ground in specific detail without losing the reader in a swirl of jargon and explanation. The authors utilize defined criteria to evaluate the investments in each category. These criteria include expected returns, volatility, distribution of returns, diversification potential, fees, liquidity, associated expenses, location, and tax issues. Their investment evaluations provide the reader with effective strategies for diversifying safely and achieving maximum returns.

The book is interesting, enlightening, and exemplary in the way the authors explore the depth of the investment possibilities. They have taken what are, for most of us, abstract concepts and converted them into concrete, comprehensible information. The clear and easy writing style lightens the otherwise dense material. The authors avoid the sleep-inducing language inherent in such a complex subject. The concise, clear, and helpful summaries provided at the end of each chapter exemplify both the overall writing style and their demonstrable concern for educating the reader. This approach opens the door of a complicated world to anyone with basic, investment knowledge.

The book contains a wealth of solid and timely information derived from well-documented research. Credible, good information presented in a writing style that allows for easy digestion makes it worth wading through the deep waters of the investment possibilities covered in the book. Perhaps of equal importance, though, the book imparts a sense of accessibility to the financial products evaluated. Anyone learning or wanting to learn to manage a portfolio will find value in the book. Given what we have learned in this, the year of financial failure, even those who consider themselves to be “experts” might back up a bit, read this book, and learn a thing or two about how to prudently, carefully, and with great awareness approach the whole concept of investing others’ hard-earned dollars. More likely is that you, the investor, can learn to manage your money successfully with educational books such as this.

Brandon Jones is an entrepreneur, writer, educator and retail trader. Reach him at brandon@affectwriting.com

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