Becoming Familiar with Alternatives | The Financial Commute (Ep. 2)

Host Chris Galeski is joined by the CEO of Morton Wealth, Jeff Sarti, to demystify alternative investments.

Jeff discusses the law of familiarity, which suggests being exposed to something frequently may breed comfort. Because stocks and bonds occupy most of the conversation when it comes to investing, people tend to be more comfortable with traditional investments and may not question them as much—when in reality, they may be harder to value than alternatives.

Huge companies like Apple are more difficult to appraise than a house or an apartment building. Assessing an apartment complex’s rent rolls and competition within a certain neighborhood is simpler than investigating Apple’s balance sheets, supply chains, and business structure. An investor may enjoy Apple’s products, but that doesn’t necessarily mean they understand Apple as a company enough to invest in them.

So, what exactly are alternatives? Chris and Jeff define them as anything beyond stocks and bonds. The same way different positions on a football team serve various purposes and have different skillsets, investments in a diversified portfolio fulfill different purposes too. Stocks and bonds are only two positions of many in a diversified portfolio.

In the past, whenever stocks went down, bonds would go up and naturally balance an investor’s portfolio. However, because of inflation, bonds are down today too. Morton Wealth has paired stocks and bonds with more resilient investments so that even in inflationary environments clients’ portfolios are protected. When the core of a diversified portfolio is made of resilient alternatives, that affords an investor the option to be more opportunistic with other investments too.

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Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.

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