Like many of you, I was watching the debate and got so sick and
tired of hearing politicians talking about how bad this economic crisis
is and how much they sympathize the average working class, but they
don’t really have a single clue of how to fix it. Sometimes I wonder
how these people sit in terms of their average intelligence. Watching
some of them (both US and Canada since both have upcoming elections)
talk makes me wonder how these people (with very few exception) have
little ideas of how policy, economics and geopolitics work. Can these
people find a job if they get out of politics?
In this investment climate, many people don’t trust money markets or bonds not
to mention stocks. But money needs to put to use somewhere, expect to
see people investing in alternative investments I don't mean hedge
funds). All of a sudden, some things that didn't look good now look
attractive (relative terms). What I think are good alternative
investments? I think three suggestions as follow (not in any particular
order):
- Fine Wine
- Social Ventures
- Farming Services (Food and Energy)
- Alternative Mortgage Lenders
- Real Estate
Real estate is an obvious choice as home prices dropped 19.5%,
according to the S&P/Case-Shiller 20-city composite home price
index. This is best time for upgrade to a house if you are currently
living in a condo.
Wine is a good choice, why? Unlike stocks or bonds, you could end up
having nothing (wallpaper stock certificates). Or instead you can go for
Wine Investment Funds. All of a sudden, some things that didn't look
profitable now do. Fine wines can make you money, there are now
independent wine investment fund in the market seeking absolute returns
from a professional investment in wine. They buy, hold and then sell
some of the finest wines in the world in order to maximize returns. All
the wine they hold is stored in a UK government bonded warehouse that
means there is no duty or VAT to pay. The good part when the fund
manager wants to evaluate their portfolios, they go wine tasting. With
wine, the worst thing that could happen is that you drink all of it. If
you know how to pick, the upside is pretty good.
Social Ventures
is a good one. Expect to see these companies taking off and expect to
see some early success stories. These politically active and culturally
aware young entrepreneurs are pursuing socially responsible business
ventures in high numbers. Gone are the days of those power hungry MBAs
and we see many young people starting new companies dueling bottom
lines—social and financial—and getting investors buy ins. From an
investor’s perspectives, you get double return and believe me, it feels
good to know that you’re investing in social ventures.
Farming (not just about growing things, it is about the eco-system of
farming), w all know they do not attract investments. Consider the
periodic surges in prices for computer memory hardware. Because its
price is declining over the long run - a result of new technologies and
automation - innovators tend to stay away from the field, leaving it to
a few large companies. One clear "big opportunity" lies in changing the
relationship between food and energy. Fertilizer lets farmers raise
production but is energy-intensive to make. Transporting food great
distances also uses large amounts of energy. Finally, some foods are now being valued in relation to oil because of
their potential use as fuel. For years, innovators have put their
attention on alternative energy; they are now likely to concentrate on
food production as well. It is like going back to the future, 80 years
back farming was the technological frontier. Expect to see people
building efficient modern farm. Someone is going to buy out these farms
and design a new supply chain to meet the needs of the eat-local
movement. The idea is pretty simple, food gets expensive and will
attract innovation.
Mortgage, I am not saying you should buy AIG
stock. Here’s an example: As storied financial institutions topple and
consumers struggle to pay their mortgages, Tesco and Virgin Group’s
latest innovation is the mortgage business. Yes mortgage. Britain's biggest mortgage
lender, Halifax Bank of Scotland, which holds 1 in 5 mortgages in the UK, is
disappearing as part of a rescue package by rival Lloyds TSB. Bradford
& Bingley, another big lender to the average Brit, has collapsed,
and Spanish banking group Santander has bought two British banks, Abbey
and Alliance & Leicester.It is a mess.
Tesco sees this as an opportunity for a challenger brand like Tesco.
hey think it is once again possible to make money out of mortgages
because theye are seeing the return of more rational pricing, and that
affords them the opportunity to go in." They are experiencing a big
influx of new deposits since people believe supermarket is saving than
banks. They are right, worst case you can grab some fruits and
vegetables.
Tesco just bought the other half of Tesco Personal
Finance that it didn't already own from the Royal Bank of Scotland for
$1.77 billion. But Tesco shoppers probably won't be able to fill out
their mortgage applications on their next visit to the grocery store.
The company said it plans to offer checking accounts within 12 months
while mortgages will follow "in due course."
Virgin at the same
time is seeking a return to the mortgage market. Branson announced
that he is looking to launch a new Virgin mortgage product, because
consumers need choice and because mortgages are a more viable business
proposition than in recent years.
This weekend is a good time to rethink your investments. Share with me if you can think of another great one.
Have a great weekend.
