Alt Blend

In Part 1, we talked about TWRR (time-weighted rate of return) and MWRR (money-weighted rate of return), which are essentially used to answer the questions, “what is my return if I ignore cashflows,” or “what is my return, including the impact of cashflows,” respectively. The other return measures we'll cover today exist to shed light on “return” from other perspectives, so that's how I'll break it down. This topic can get pretty complex, so we're still going to keep this at a relatively high level. And we'll throw in a little bit of gardening and Magnum P.I., just for fun. Today also marks the final regular audio/podcast version of Alt Blend (tear). Thank you to all who have listened, but we will be producing only the written version for the foreseeable future. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

Doing something for the mere joy of it – for one's self or others – is quite possibly one of the best returns on an investment of time that a person can receive.” – Laurie Buchanan, Ph.D. (author) Perhaps someday, we'll be able to explicitly measure the joy associated with how we spend our time – and maybe that will even have implications for how we approach financial planning. After all, it would be cool if we could estimate the likelihood of joy based on the path a person pursues and incorporate that with the financial side of the picture. But I digress. For now, we have a variety of return measurements to help assess investment managers, advisors, portfolios, and – of course – Alts. A basic understanding of “what's what” across that return-measurement spectrum can have a lot of utility. After laying a lot of groundwork for the edition of Alt Blend entitled Incoming: Part 4 –– we discussed the significant difference between taxable gain/loss and total return. Unsurprisingly, investors often assume the associated gain or loss shown on their account-holdings screen or statement is the same as the performance. It required four blog posts to differentiate between tax basis and total return properly, but I think we can be more efficient in exploring various return measures – and that's the journey we embark on together today. Here we go. https://altblend.com https://thebahnsengroup.com

If you haven't already read or listened to Part 1 of this series, I suggest you do so before getting into the below, as some of the references could otherwise be confusing. In that edition, we talked Boston (the band, not the city), their hit Don't Look Back, Cadillacs, fund blowups, and why it's important not to let negative past investment experiences cloud our judgment when it comes to sound financial planning. There is an appropriate level of risk to be taken in each situation, and not taking enough risk can be detrimental to a long-term plan. Picking up where we left off, let's look at the opposite side of the situation. Here we go!  Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“Don't Look Back. Ooh, a new day is breakin'. It's been too long since I felt this way.” -Boston (from the song, Don't Look Back). Before we get into this topic, I want to thank our client, Roger P., for the inspiration, as he reminded me of this song and its background as part of an email conversation back in January. I've been keeping it on the back burner ever since. What has 7.0 liters, four doors, and an 8-track player? My dad's silver 1977 Cadillac De Ville, for one. At least it did when I was a teenager, and it was one of three massive older Cadillac “boats” that he accumulated during the 90s (there were also white and blue ones, and – yes – I looked super cool driving all of them). More importantly, the 8-track player in the silver Caddy was the only working 8-track player I've ever had access to (there was also an 8-track player in my parents' console record player, but that one never worked). And one of the few 8-track tapes that lived in the car was Boston's 1978 album, Don't Look Back. For the record (yep, that's a pun), I have personally always been a bigger fan of Boston's self-titled album, but beggars can't be choosers when it comes to 8-tracks and Cadillacs, so Don't Look Back became a staple soundtrack of trips in the silver Caddy. I'm sure Boston's naming of the album wasn't intended to be infallible life advice (and it wasn't even the title they originally wanted!), so we should probably take it with a grain of salt. At the same time, it's a good motif for some investment perspective and for staying in good spirits as we say goodbye to summertime. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

No, we aren't still in the Crypto Dip-Toe series, and today's topic is perhaps a good one for easing back out of the crypto world and onto other topics. In that series, we covered many facets of crypto and blockchain and why caution is warranted when interacting with those technologies and related investment opportunities. Still, I couldn't agree more with Ms. Johnson's general assessment. For years, I've been thinking about how cool it would be to have illiquid investments – commercial buildings, for example – sliced up into small pieces and owned by “the common folk.” In the blockchain world, that process is called “tokenization,” and maybe it will be a game changer. But that future crypto “on-chain” solution is not what we're talking about today. Because what I've learned lately is that the future is already here, and that future is…wait for it…securitization. And securitization is definitely off-the-chain! In the context of a classic Spaceballs scene, this realization gave me the feeling that THEN has become NOW, now. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“Mortal as I am, I know that I am born for a day.” -Claudius Ptolemy For those who have forgotten some of the things we learned in school, Ptolemy was a Greek “mathematician, astronomer, astrologer, geographer, and music theorist” who lived about 1900 years ago. While he covered a lot of disciplines, the common thread seems to be that he dedicated his life to pushing knowledge forward and always asking, “what comes next?” With that in mind, today we'll wrap up this initial crypto adventure contemplating what may be on the horizon for crypto and blockchain (though, as we've covered many times already, and I'll be sure to remind you again, humans are terrible at predicting the future). Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

Since today's update is just continuing a conversation from Part 7 (as I couldn't fit it all into one edition), this may be the first time we're not starting with a unique quote as a starting point. And, since I'm sure you have no shortage of more important things to keep in mind than my past ramblings, here's a refresher: last time, we covered the recent/ongoing crypto crash and its similarity to tech; and then we learned about stablecoins, including those backed by fiat currencies, commodities, cryptocurrencies, and finally algorithms. I voiced my immediate concern regarding algorithmic stablecoins, and that's where we're picking up today. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

Volatility is often cited as a significant challenge for cryptocurrencies – and rightly so! If crypto eventually plays a role as day-to-day money in the future (as one potential use case), it will need to be stable. Some would call the recent events in the crypto space a drawdown, and others may deem it a full-blown bloodbath. I'll let you decide, but first, we need to understand some more crypto basics before making sense of what happened. As foreshadowed last time, today we'll learn more about Stablecoins and how those fit into the ongoing crypto conversation. And – to Coach Wooden's point – perhaps flexibility is a necessary means to that stability. Bend, don't break. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

Ether Ain't What It Used To Be Ethereum and its cryptocurrency, Ether (ETH – or “eeth” for short), may seem like just another “crypto thing” we hear about in the news. But, if you aren't already aware, you'll soon learn why these could become an integral part of our digital future.  Perhaps unsurprisingly, part of the use case is in digital payments/banking and money transfers – topics often surround Bitcoin. More importantly, however, Ethereum is a platform on which to develop new solutions, aka “the world's first programmable blockchain.” As we now know from Parts 1-5 of this series, “blockchain” is simply this new-ish protocol that can provide us with a secure, decentralized way to verify, trust, and track interactions, transactions, and other information. We've also learned that Bitcoin is one cryptocurrency constructed on one specific blockchain. Ethereum, in contrast, is a blockchain on which many digital currencies and other solutions can be created, and now we're going to study it in more detail. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

In the last edition of Alt Blend, we broadly examined the landscape of digital currencies, and the plan for this current update was to start learning about how some prominent cryptocurrencies function. Coincidentally, there have recently been some substantial challenges within crypto markets over the past couple of weeks (at the time of writing), and I think we're only one or two editions from really being able to grasp what's going on. Thus, if you haven't followed the news or it's just too confusing, stay tuned, and we'll get to all of it by early summer. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

It never hurts to have a reminder of the things that matter in life, and it's fair to say that many people would be willing to exchange money for more time if only it were possible (I suppose it is indirectly possible, as money can improve longevity via better healthcare, nutrition, personal training, etc.). While we cannot have life without time, we certainly can have life without money; however, that doesn't mean money isn't important. Today's title consists of a fun-to-say phrase I cobbled together from the pros and cons of digital currency. It loosely translates to the “willful parallel happenings (within digital currencies),” which is just what I'm planning to work toward today: improving our understanding of money and where things currently stand within the realm of digital currency. Continuing where we left off in Part 3 of this series, we find ourselves in a front-row seat for what may be one of the most notable developments in the history of money. The only problem is that we won't know that until decades have passed and the ongoing “digital currency revolution” can be placed within a historical context. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“Bitcoin and digital currency is just this thing that was always going to happen.” – Tyler Winklevoss The digital currency movement (including Bitcoin) is undoubtedly “a thing” that is happening, but I think the jury is still out on where it all goes. Will it: Take over the world of fiat currencies and function as the dominant form of global reserves? Find a place coexisting within our current system of centralized, country-specific money? Fizzle out? If you forced my hand, I'd choose “d” – some combination of the above that plays out in ways we'd never guess at this point. As we've touched on in the past, humans aren't good at predicting the future, and tempering our expectations (in either direction) is probably a reasonable thing to do. Although we have no idea what the future of currency will be, we can take a brief look back to see where it's been to have a firmer basis for thinking more critically about it. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“I am everywhere and I am nowhere. That's the beauty of the Internet Age.” – Ai Weiwei In part one of this series, we touched on the origins of blockchain and cryptocurrency technology, so let's build on that today by exploring how it works. Don't worry – the goal isn't to be able to code the next cryptocurrency (and sorry to disappoint you, if that's your aspiration). But, by approaching this in “bit-sized” pieces, we can better understand what is really happening behind the scenes and, hopefully, make the whole topic less daunting. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“I guess you guys aren't ready for that yet. But your kids are gonna love it.” -Marty McFly. After bringing the Enchantment Under the Sea Dance to a dead stop with a blazing rendition of “Johnny B. Goode,” today's quote was the line Marty uttered to the awestruck crowd before leaving the stage. I'd like to think that if they make a Back to the Future reboot that begins in the year 2045, and Marty travels back in time 30 years to 2015 (instead of the original 30-year leap from 1985 to 1955), he could use the same quote after giving a cryptocurrency/blockchain presentation at a retirement community. I'll let you choose your own adventure regarding the backstory of why he would be doing such a thing, but perhaps it's to trick an elderly Bif into unwisely investing his retirement savings? (I know, I should really get into writing screenplays). The whole “crypto” movement may feel very futuristic for many investors. While no one knows what the future holds, the extreme perspectives range from crypto/blockchain eventually being involved in nearly everything to just being a short-lived fad. What is for sure is that the crypto phenomenon has gained a lot of traction, grabbed a lot of headlines, and created/destroyed a lot of wealth over the last decade. And, since it's “a thing” and definitely an alternative investment, it's about time – now 36 posts into Alt Blend – that we learn the basics of how it works and what potential utility it holds for us and future generations. I'm not an expert on cryptocurrencies or the blockchain, so this may be more of a research project than most editions of Alt Blend, but maybe that means we'll collectively learn even more than usual. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

This post is a helpful reminder that I need to consistently prioritize setting my and client expectations as an essential component of successful investing, especially for Alts. Like most investments and life itself, Alts will rarely play out as originally intended. They may be better, and they may be worse. Still, the management of each strategy involves continuous adaptation to unforeseen circumstances, which is something we must expect and accept when investing. Diversifying across a mix of strategies (even ones that may be inherently diversified) and sizing investments appropriately can help smooth out the total portfolio impact and our experience. And all of that can better align outcomes with our (hopefully realistic) expectations. There WILL be unpredictable investment journeys, but what we must avoid at all costs are potentially catastrophic outcomes related to concentration risk, thus allowing us to fight another day, try again, fail again, and fail better. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

I could've more predictably started this post with a quote from F.A. Hayek, well known in economics for what is concisely named “the knowledge problem,” which he lays out in his short writing, “The Use of Knowledge in Society.” But what fun is predictability? And, if it's knowledge-problem quotes you desire, an entire chapter of this There's No Free Lunch book is dedicated to the subject. I took more of the “roundabout” path into wealth management (via engineering rather than economics), but – from my non-economist perspective – the knowledge problem can be summarized as follows: it's impossible to make good decisions without complete information, and NO ONE has complete information because everyone's circumstances vary so significantly. The POTUS cannot possibly make broad (macro) decisions that are in the best interest of every US citizen at their particular (micro) level. But even making decisions at the local level is not going to be the best thing for every person. There are always tradeoffs. However, the beauty of free markets is that local decisions made with local, specific knowledge can aggregate to good overall outcomes for society. When I first learned of the knowledge problem (which, I assure you was much later in life than it probably should have been), it screamed “RELATIVITY” to me, and that brings us to today's quote and Einstein. While Isaac Newton did a relatively (

Unless you have some type of tax-sheltering structure in place (or tax losses that can help offset income or gains), then Uncle Sam will almost always be taking a slice of your “pie” (aka investment distributions). The way in which investments are taxed varies significantly, but how does that work, exactly? Also, where do fees fit into the equation, and – to finally discuss the question that prompted this series over a month ago – why are investment returns often confusing? Listen for the answers. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“Money, well, get back. I'm alright, Jack, keep your hands off of my stack.” -Pink Floyd, Money Your investment portfolio may seem a bit ethereal, as it's held electronically at a custodian under the guidance of a trusted wealth management team (hopefully TBG), helping to capitalize companies and economic activity throughout the world. But, if you're distributing income (aka yield) from your portfolio, that can feel much closer to home, contributing directly to your local “stack” of cash (or bank account). It's worth spending “some time” on the concept of yield because it can be confusing. And it turns out (in hindsight) “some time” is a precise term meaning an entire edition of Alt Blend, instead of the originally planned four topics I thought we'd cover today. With that in mind, let's discuss more than you probably ever wanted to know about yield. Here we go! Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

“Money, it's a gas. Grab that cash with both hands and make a stash.” – Pink Floyd, Money Not so fast. Yes, many people receive income from their investments into their accounts, which they can reinvest, spend, or use to “make a stash.” However, my hunch is that very few investors understand how the income distribution process works and its impact on the investments themselves. While it's not typically an issue, sometimes this lack of understanding can cause unnecessary concern. For example, in December 2021, our clients – or at least the ones who follow their accounts closely – awoke one morning to discover that one of their mutual funds had dropped -17% overnight. If your initial reaction was, “Yikes! What happened to that fund?” you're not alone, and that situation naturally led to some incoming client questions. But what if I told you that there was absolutely no issue with the investment and that the “loss” was simply a matter of optics related to an income distribution? That real-life situation is partially what prompted this current Alt Blend series. And with our income-generation basics in mind from Part 1, it's what we're going to continue learning more about today. Here we go… Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

You're likely already familiar with many different types of investments and distribution terms like interest, dividends, capital gains, and return of capital. But what are the similarities and differences between different types of distributions? How do distributions affect the value of an investment? What are the tax implications? THAT is what we're going to begin talking about today:  how different investment options generate income and how that income is distributed to investors. Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com

Over the past two weeks, I've realized that the first anniversary of Alt Blend blew right past us (it was officially October 14, 2020). So, happy anniversary-ish to us! Yes, it's already been over a year of this mindnumbing blast of Alts goodness. Don't worry, “meh” is the correct reaction. Moving on… As we're about to put 2021 in the record books, today's edition of Alt Blend is an index (loosely speaking) intended to a) archive all of the posts-to-date to help you free up some precious space in your brain for the new memories you'll be making in 2022, b) briefly recap everything we've talked about over the past year (ish) for easy future reference, and/or c) bring to light topics that you may want to pull from the archives to re-read (or read for the first time, in the case of newer readers). I'll try to be concise and break it into palatable blocks of information. And it may very well be the boringest Alt Blend yet, so my apologies in advance. Here we go! Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Even if you don't immediately recognize the name Edie McClurg, if you're old enough to remember the 1980s and ‘90s, then you'll almost certainly know her the instant you see her photo. Somehow she was everywhere and nowhere for the better part of my childhood, appearing in movies like Ferris Bueller's Day Off, Mr. Mom, Planes, Trains, and Automobiles (a Thanksgiving classic for not-quite the whole family), and sitcoms including The Hogan Family. You can also hear her voice in several well-known animated films, like The Little Mermaid and Cars (so even my young daughters have familiarity). Was she the star of the show? Never, as far as I can tell. Was she there time and time again as a very dependable supporting cast member? You betcha. She is even credited with the quote, “Acting isn't a singular profession, it is a collaborative profession.” It takes a small army to create the shows and movies that have meant so much to us over the years (try reading the credits some time), and it seems Ms. McClurg embraced this notion. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In the previous edition of alt.Blend, we discussed the due diligence process and some considerations involved in both investment due diligence (IDD) and operational due diligence (ODD). To expand on that topic, this week I am joined by Chris Hughes, Chief Operating Officer of Axonic Capital – a structured credit manager – to gain an inside perspective on ODD and the continued evolution of the due diligence process. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In a recent edition of Dividend Café, David Bahnsen revisited the premise that economics is, at its core, the study of human action. It's easily overlooked on a day-to-day basis, but the combined diligence of individuals in a society is what drives all of the economic growth and investment opportunities we experience. With this in mind, today's quote applies not only at a personal level but also, more importantly, to our communities and society as a whole. We can all use a reminder to be grateful for the efforts of everyone else, as – without all of our collective efforts – the opportunity set for each of us would be diminished (or nonexistent). Links mentioned in this episode: http://www.altblend.com http://www.thebahnsengroup.com

In The Big Short, Michael Lewis outlined the experience of a handful of investors who saw the red flags before the onset of the 2007-08 financial crisis and were determined to find ways to profit from the collapse. The meme stock phenomenon, which made for many salacious headlines earlier this year, once again brought short-selling into the limelight. The power of social media and retail-investor crowds were harnessed as a way to “stick it to the man” via a combination of Reddit and Robinhood, squeezing short-sellers out of their positions (with “the man” in this case being hedge funds trying to profit from the collapse of some struggling companies). More quietly, however, shorting stocks is a standard part of everyday financial markets and generally goes unnoticed by most investors. Recently, a client inquired about the effects of investors shorting a given small-cap stock – particularly one that he believes to be a good business at its core. Should business fundamentals ultimately win out, or are common stock shareholders (aka “the longs”) at the mercy of “the shorts,” barring a coordinated effort ala Robinhood/meme situation to drive out the short interest? Frankly, I don't know enough about the subject to provide a robust off-the-cuff answer, so my goal today is to research this topic and see where that leads us. Here We Go! Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In our recent six-part series, “A Historic Blogpost,” we covered a number of strategies across the spectrum of private equity, debt, and other holdings. While some aspects of risk/reward were alluded to throughout that series, I think it's worth examining the risk/reward continuum of the capital structure for additional context. Much of this topic isn't only applicable to alternative investments. Still, it's an important one for understanding many alts strategies – and it may even provide insights for the traditional part of your portfolio. With that, let's build ourselves a capital sandwich. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Alternative investments are not perfect. As we've covered thus far in this series (which has only touched on a tiny sliver of the alternatives universe), there exist many alts strategies that come in various structures, and there are always tradeoffs involved. After covering some of the disadvantages in Part 5 of this series, today we'll try and finish with some of the advantages. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In the first four entries of this “historic” series, our quotes focused on perspectives and lessons regarding history. Today's quote, however, is a shift to remind ourselves of the importance of execution and the respect we must have for execution risk within private investments (and all investments, really). That's because today, we'll get a taste of some execution failures and the implications for the outcome of a given strategy. Here we go. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Today, we're continuing through the list of alternative strategies I've used on behalf of clients in recent years to reflect on and learn from the experience. In this update, we'll begin covering funds that are restricted to accredited investors and, therefore, may include less liquidity than what we've discussed so far in this series. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

We were on a mission to find various strategies with improved characteristics vs. what we expected from daily-liquid investments; that difference would come in the form of less volatility with more income/total return and risk mitigation (ways of minimizing losses if things didn't go as originally planned). In theory, this endeavor could provide a more consistent experience for clients through market cycles (“recession resilience”) while improving cashflow and long-term returns – especially in light of the (already at that time) low-rate environment in which we found ourselves. Since not every client was a Qualified Purchaser, the goal was also to identify several alts that could be used for Accredited Investors or required no qualification. In addition, we needed to combine a variety of liquidity profiles to make the overall portfolio palatable. With this in mind – as we now explore each of these strategies – I will segment them by investor qualification, which will then loosely align with their liquidity profiles. Here we go. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Aligned with George Santayana's quote from A Historic Blogpost (Part 1), today's quote by Oscar Wilde is seemingly of the opinion that history can be misleading at best or intentionally false at worst. Perhaps a good approach – which has much broader application beyond that of history – is to employ healthy skepticism, seek multiple viewpoints (especially from those who disagree!), and try to understand a variety of data before forming a steadfast opinion. We'd be wise to keep this in mind as we continue our foray into the world of alternatives and the mission of identifying quality managers/strategies. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Alternative investments may seem like a recent phenomenon to many investors, but the concept dates back over 150 years to such endeavors as the Transcontinental Railroad (1852) and the creation of US Steel (1901). Having just celebrated the 4th of July, it's a good time of year to reflect on the rich history and past generations that have brought us to where we are today. From an alts perspective, it's a good opportunity to examine how these investments evolved to their current state and my personal journey of introducing such strategies into the lives of our clients. In this edition of alt.Blend, we'll try and do just that. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

While each day we may get to decide between basic choices we've always had – like what to eat for lunch or what clothes to wear – sometimes our available options materially change because our legal framework evolves. There are three distinct qualifications in the US (under the SEC) that determine who can invest in what type of investment offerings: the accredited investor, the qualified client, and the qualified purchaser. I believe the idea is to protect the average person (aka retail investor) from more “risky” offerings, like private equity, venture capital, and hedge funds. And maybe the intent is good, but – as we'll see in exploring this issue in more detail – it's built mainly on the premise that wealth is the same thing as investment sophistication, and that is simply not true. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In this special audio-only edition of alt.Blend, I was joined by Jeremiah Riethmiller, Chief Investment Officer (CIO) at Sarian Strategic Partners (our Hightower colleagues), and Gregg Loprete, Portfolio Manager (PM) at Water Island Capital. We touched on a few topics, including: • Broader considerations of alternatives and how they are used within portfolios • Challenges investors face in current markets, especially as it relates to traditional fixed income • An overview of merger arbitrage strategies, and, more specifically, leveraging Gregg's experience as credit arbitrage PM to help us gain a better understanding of how it works and where it may be useful. We did our best to alleviate some of our standard jargon and kept it to a relatively high level, but I hope the discussion gives you a “fly on the wall” experience of what it's like to be walked through an investment strategy and trade examples directly by a PM. In essence, it's a virtual field trip that allows you to play the role of a novice investment analyst sitting in on a manager meeting. Until next time, this is the end of alt.Blend. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In Part 1 of this 2-part series, we reviewed the extreme lack of consistent outperformance among domestic equity funds. In this edition, the plan is to see if the same holds true within alternative investments or if we can uncover any segments where consistent outperformance is “a thing.” Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

The New York Times recently featured an article about an apparently common emotional reaction to the ongoing socially restricted recovery:  There's a Name for the Blah You're Feeling: It's Called Languishing. Languishing, I learned, is the state of existing somewhere in between living your best life and the depths of depression – or, more succinctly, “the absence of well-being.” And, rather than languishing indefinitely, there's also evidence to suggest that this emotional middle-ground can lead to increased incidence of depression in the future. Given our coverage in the previous alt.Blend of how the status quo is unlikely to persist into the future, this emotional-status migration is not surprising. Some thriving today may be in the depths of despair a few years from now, and the opposite may very well be true for some currently enduring painful depression. And those now languishing may find they have moved in one direction or the other, for better or worse. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com Contact: stresnan@thebahnsengroup.com

One doesn't need advanced physics to understand that there are many possible courses our lives and investments may follow; the challenge is figuring out which are most likely to occur. Ultimately, the possibilities are endless, but there will only be one path with one outcome. Regardless of whether infinite parallel worlds exist, we are relegated to only one of them, and we must plan accordingly. At the same time, there is utility in contemplating a broader set of potential outcomes to help enhance risk management on multiple levels. The universal financial truth is that we can develop a financial plan specific to our unique circumstances and desires. Further, that plan can become more robust by a) considering a broader set of outcomes to drive the allocation framework itself and b) incorporating the world beyond stocks and bonds into our investment selection, aka the alternative investment universe. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com Contact: stresnan@thebahnsengroup.com This podcast is hosted by ZenCast.fm

When it comes to hedge-fund blow-ups, our goal is first to avoid them altogether and then secondarily limit their impact on a portfolio if this situation unexpectedly occurs. It is not a matter of embracing normal volatility because it is not normal volatility; instead, blow-ups are one-off, unrecoverable situations that can essentially only be mitigated via portfolio construction. But we can learn valuable lessons from them, and so we forge ahead with this topic. Here we go… http://altblend.com https://thebahnsengroup.com

Having your own “stuff” can be nice. It's a source of independence, of freedom. Eventually, we grow up, venture out from our parents' protection, and make our own homes. Free at last. In some places, you can even dig a well and have your own water supply. And now Elon Musk can deliver you a solar roof, and you can generate your own electricity. Living off the grid: now that's freedom! Off-the-grid living sounds excellent, but it's also wise to build-in contingency plans, for instance: staying within a few miles of friends or family, just in case help is needed; having a friendly neighbor and a long hose for when the well-water isn't flowing so good (see what I did there?); or, for those opting for solar power, maintaining a connection to the grid in case of emergency. It took an unexpected winter storm to expose the weakness, but, in financial terms, the Texas power-plan was “short volatility,” which is to say that the strategy worked well until it didn't. And therein lies the rub. There are some classic examples of short volatility (aka “short vol”) gone wrong in the Alts world, and it's a good idea to revisit them from time-to-time to learn from past mistakes. Inspired by recent events, in this edition of alt.Blend, we'll examine some of the greatest hedge-fund blowups of all time. Here we go… Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In this fifth and final post in our miniseries on portfolio longevity, we're continuing with our overview of the B-squad – various components that can play a role in the fixed income portfolio of the future. We'll cover more of the credit spectrum and even touch on private real estate, including strategies that can and should require some degree of liquidity sacrifice for proper execution. Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

In the previous three alt.Blend posts, we covered: Living longer coupled with a low-rate environment poses serious challenges to investors; however, similar to positively affecting life expectancy, there are things we can do to increase portfolio longevity. For a portfolio to be sustainable, ideal attributes include a growing income stream, asset-price appreciation, and reasonable volatility. There is no direct replacement for the value that US Treasuries (“the A-team”) have added to portfolios of the past, and other standard bond holdings – such as the Barclays Aggregate or High-Yield corporate bond indices – likely won't provide the risk/return/income characteristics they have previously. => We have to a) rethink fixed-income allocations and solutions, and b) reframe our expectations for the role fixed income will play in a given portfolio. With that as our backdrop, this current edition will start to focus on strategies that can play a more substantial role in the fixed income portfolio of the future, aka “the B-squad.” Links mentioned in this episode: http://altblend.com http://thebahnsengroup.com

Many people have heard of the modern-day Mark Wahlberg, as he's been an A-list celebrity for many years and was even the world's best-paid actor in 2017. Far fewer people – especially those coming of age in the early 90s (like yours truly) – likely remember his bringing the world Good Vibrations as the leader of Marky Mark & The Funky Bunch. Although it wasn't the type of music my supercool-hockey-playing-skateboarding friends and I actively listened to, that song certainly evokes some nostalgic feeling of that era. And I'm sure Mark Wahlberg will be happy to know that his former persona can still inspire both hilarious quotes and puns of questionable quality (like today's title). Picking up where we left off in the last alt.Blend, we're now looking for our B-squad: investment strategies that can help replace a portion of traditional bonds (especially US Treasuries) that will no longer provide the income or total-return needed for adequate portfolio longevity. And, as I previously mentioned, there won't be any perfect solutions, so this rethinking of portfolios will also require some adjustment of our expectations, and that's where today's title comes in. Today will focus more on the expectations-setting, and the next piece – likely the last in this miniseries – will outline solutions. Links mentioned in this episode: http://www.altblend.com http://www.thebahnsengroup.com

From Steve Tresnan, Private Wealth Advisor of The Bahnsen Group In part one of this topic, we discussed human longevity and how living longer – along with the quality of one's overall health – can increase the demand on one's retirement portfolio. I also proposed the notion that the overall health and sustainability of a retirement portfolio is an aggregate of underlying components, tax structure, monitoring/rebalancing, and the stress (volatility, income/spending needs) placed upon it. In this part, we'll begin to identify investments to help increase portfolio longevity. With this in mind, strategies that can help to achieve growth of principal and income, reduced volatility, and increased yield can have a lot of utility, but it's seldom possible to find all of those attributes within a single strategy. Links mentioned in this episode: http://example.com http://second-example.com This podcast is hosted by ZenCast.fm

What I consider to be an ideal retirement situation is where we can a) avoid depleting the corpus of one's retirement nest egg by relying on systematic income for lifestyle needs, and b) also creating some additional growth to keep pace with inflation over time. And, just as we can monitor our weight, exercise regimen, stress levels, and diet to help increase our quality of life, there are parallel factors for allowing a portfolio to age gracefully http://thebahnsengroup.com http://altblend.com This podcast is hosted by ZenCast.fm

“It's been a long, a long time coming. But I know change gonna come, oh yes it will” -Sam Cooke During this past summer, I noticed a resurgence of Sam Cooke's “A Change is Gonna Come” on news broadcasts and in social media - and appropriately so. What a fitting ballad to capture the essence of struggle, pain, and optimism associated with the widespread protests, civil rights discussions, and, of course, the “COVID moment” our country has been enduring. Now that we're in the midst of the release of very promising COVID-19 vaccines, however, I find the song taking on a different meaning for me. Does this other meaning have to do with alternative investments? You bet! While on the surface, the developments of Pfizer and Moderna's mRNA vaccines have happened at “warp speed,” there is a much longer history behind these beacons of hope that makes for a captivating tale loaded with setbacks, perseverance, and – yes – investment lessons. Here we go. Links mentioned in this episode: http://example.com http://second-example.com This podcast is hosted by ZenCast.fm

"Experience is a good school. But the fees are high.” -Heinrich Heine As Mr. Heine points out, experience can be expensive, whether it's earned via the school of hard knocks or obtained by paying others for the skillsets they bring to the table. One of the first topics that people tend to inquire about when discussing alternative investments is some reference to their charging “high fees” – especially as it relates to hedge funds or private equity funds. However, it is also vital to compare various fees of investments fairly, considering what experience/skillsets we are paying for, how the fee structure aligns managers' interests with those of their investors, and what we should expect in return. As with many other purchases we make, the fee discussion surrounding alts is ultimately a weighing of cost vs. (expected) value. But to make an informed decision, we first need to understand typical fee structures and their application – a “feesibility” study, if you will. Here we go… Links mentioned in this episode: http://example.com http://second-example.com This podcast is hosted by ZenCast.fm

“If you build it, they will come” – Field of Dreams While I don't think any portfolio manager has been beckoned by the whispers of deceased investors to build the ultimate alternative investment fund so they could come back to life and invest in it (if you haven't seen the movie, Field of Dreams, then this analogy is making ZERO sense right now), I do believe that selecting the “correct” structure is an essential factor in being able to successfully raise money and manage a given alt strategy; this is not in any way to imply it is the only factor. But what are the various structures and some of the pros & cons of each? In this issue of Alt Blend, we'll explore exactly that. Links mentioned in this episode: http://thebahnsengroup.com/alt-blend/ http://thebahnsengroup.com http://thebahnsengroup.com/get-smart/

“First master the fundamentals.” -Larry Bird It doesn't get simpler than that. This is but the second edition of Alt Blend, and we are continuing to examine the basics, with today's focus being on alternative investment funds. When one spends time contemplating the advent of alternative investment funds (which I have just done), it's almost surprisingly obvious why they exist. However, it's also a topic worth spending some time on because it will help us cover some alternative investment essentials. Imagine you and some of your long-time friends decide to all pitch-in money and buy a few investment properties. Even if you could afford to buy some property individually, there may be appeal in doing this as a group, for several reasons: • You can buy more properties than you'd be able to on your own (more financial resources, more diversification of risk) • Each member has a different skill set that will be useful to the group (more expertise); perhaps your group even includes a real estate professional who can source promising off-market deals (more/better access) • The workload will be more manageable for each member (more human capital) Links mentioned in this episode: http://thebahnsengroup.com/alt-blend/ http://thebahnsengroup.com http://thebahnsengroup.com/get-smart/

In considering where I may help round-out an already robust content offering at The Bahnsen Group, the world of Alternative Investments seemed to be the natural fit. After all, “alternatives” – and more specifically, private investments – are an area for which I've developed a passion that has led me to pursue additional education and investment solutions on behalf of clients in recent years. This undertaking has been, in part, due to our industry creating more “investor-friendly” access to such strategies. This podcast may also be an outlet for alternative perspectives on traditional finance areas, but time will tell. Overall, the goal will be to impart relatively short and interesting nuggets of information that you're not getting elsewhere. Links mentioned in this episode: http://thebahnsengroup.com/alt-blend/ http://thebahnsengroup.com http://thebahnsengroup.com/get-smart/