Bob Rice - The Alternative Answer: The Nontraditional Investments That Drive the Worlds Best-Performing Portfolios

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The Alternative Answer is a must-read for investors and advisors! Bob demystifies the world of alternative investments, and offers his unique perspective on how to use and evaluate the various types of strategies and structures. The Alternative Answer is destined to become an instant classic.

Tony Davidow, alternative beta and asset allocation strategist, Schwab Center for Financial Research

This is no pie-in-the-sky guide to unearthing the next cant-miss penny stock or the next pathbreaking technology too secret to be named. Rice offers sophisticated, easily accessible advice for using alternative investments to build a portfolio thats likely to generate solid gains in an age of anemic returns, yet still be resilient enough to weather a global financial crisis.

Peter Passell, senior fellow, the Milken Institute, and author of Where to Put Your Money Now

Stocks have gone nowhere for thirteen years and bonds offer no yield. Investors sense there must be good alternatives, but dont know where to look. Help is on the way! Bob Rice has written a timely and invaluable guide to the world of alternative investing. The Alternative Answer presents a clear path through the minefield of alternatives so that you can arrive safely in the promised land of higher returns without undue risk. This book is your first step on the road to increased income, wealth preservation, and a more secure retirement.

James Rickards, author of the national bestseller Currency Wars: The Making of the Next Global Crisis

Rice has provided a great service and a timely educational tool for the most overlooked and underserved class of investors: average Americans. This book needed to be written and Rices timing is perfect.

Guy Haselmann, director, U.S. Rate Sales and Strategy, Scotiabank

Bob Rice has written the ultimate primer on alternative investments, a necessary component of any investment strategy, regardless of sophistication or net worth.

Stephen L. Weiss, managing partner, Short Hills Capital Partners, LLC and author of Unhinged and The Big Win

Bob Rice takes a crowbar and pries open the door to alternative investments. With clear prose and wise counsel, he reveals the formerly off-limits world of hedge funds, futures, and partnerships.

Todd G. Buchholz, former managing director of the Tiger hedge fund and author of Rush: Why We Thrive in the Rat Race

Weve been taught that the investing universe is made up of stocks, bonds, and maybe some real estate. But elite investors know those categories represent only a fraction of the real possibilities... and that by broadening their choices they can, and do, dramatically improve their total returns while simultaneously reducing their risks of big losses. That the rest of us didnt even know about these alternative investments hardly mattered, because we couldnt invest in them anyway. That has changed. Today nearly all investors should be expanding their investment horizons to profit from these new opportunities... and also to protect themselves from the inevitable next major market shock. Thats what this book is about.

Admittedly, the vocabulary of this world is a bit odd, but the ideas are not difficult. Over my thirty-year tour of duty in alternativesas a lawyer, investor, entrepreneur, and director of broker-dealer and asset management firmsIve constantly been amused by the way these relatively straightforward concepts are wrapped in such crazy lingo. After all, the original alternative investors were the European aristocracy who threw their art and gold into saddlebags, fled temporarily, and later returned to their timberlands. And somehow they managed all that without ever hearing a peep about reversion to the mean.

Even the original hedge fund managerBenjamin Graham, the hero of Warren Buffett, in factwas just a classic value investor who recognized that simply buying cheap stocks while simultaneously shorting expensive ones would create profits regardless of overall market movement. If youve never had anyone explain to you exactly how long/short strategies work (youre about to), it may seem marvelous and sound oxymoronic; but once you have, its pedestrian.

And so it goes. The language and tactics may be unfamiliar, but the core ideas are vital. The secrets of alternatives, so effectively used by the worlds top investors for decades, are essential tools for anyone hoping to survive financially when more common options are volatile, limited, and unrewarding.

Now, obviously, everyone approaches this topic with different financial needs and goals. Therefore, to make the book as useful as possible, its organized around the four essential jobs that investments can perform:

Job 1: Generate greater income than typical fixed income instruments provide, with a focus on income that rises with inflation.

Job 2: Reduce overall risk by diversifying into a radically broader set of strategies and assets, and by incorporating insurance against stock downturns.

Job 3: Enhance long-term growth through opportunities with substantially more upside than traditional investments.

Job 4: Protect purchasing power from inflation, currency devaluation, and crises.

As we progress youll discover dozens of new strategies and asset classes, from royalty rights to global macro funds, and from start-up investing to timber. Certainly not every option will be suitable for all investors, but there is one common, ultimate goal: to maximize returns and mitigate risks.

If you already know a bit about alternatives, you may be surprised to see that the content is not organized by subjects like Private Equity or Real Assets or Hedge Funds. Rest assured, theyre explained in full. But these labels are of little practical use to investors, not only because of extensive real-world overlap, but now also because the picture has been blurred by new mutual funds and ETFs that deploy many of the same strategies.

Instead, well start with an overall explanation of why and how alternative strategies work ().

The entire story is brought together in The Big Picture, , with model portfolios tuned to different levels of wealth and liquidity, and also to the investors view of our long-term economic prospects (youll hear mine). Then youll get all the tools necessary to get to work, with a list of resources for help in finding opportunities, the key questions to ask before investing, and a glossary.

OK. If youre new to the subject, you might want to just pop right over to and dive in. Have fun! If you are already familiar with the topic, an investment professional, or just really curious about the books conceptual framework, stick around for a few more paragraphs.

Perhaps youre wondering how the contents relate to what you already know about the alternatives landscape. So, for your convenience (meaning, so you can decide whether you actually want to read the book or not!), heres a summary.