Waking Up On the Wrong Side of History
On Friday morning, June 24, 2016, the entire Euro-American establishment woke up to find that, contrary to their strict instructions, the British had voted to leave the EU.
On Friday morning, June 24, 2016, the entire Euro-American establishment woke up to find that, contrary to their strict instructions, the British had voted to leave the EU.
In a low return environment investors need to do things differently if we want to have any hope of growing our capital. Many of these different things – the ones I’ve already talked about – have to do with playing offense in a smarter way. We’ve examined using more aggressive asset allocations, taking greater advantage of the premium for illiquidity, focusing more on alpha than beta, and searching for opportunistic investments.
In my recent posts we’ve looked at various strategies investors might turn to if we find ourselves mired in a long period of unacceptably low investment returns. We’ve evaluated higher equity allocations, taking better advantage of the return premium associated with illiquid investments, and departing from indexing to try to find more alpha among the managers we use. In this post, we’ll look at opportunistic investing.
We’ve looked at two options for our portfolios if, as seems likely, we are entering into a period of historically low returns: more aggressive allocations to equities, and taking better advantage of illiquid assets. We now turn to the question of alpha.