The Other Path reveals lucrative alternatives to traditional investments for investors
In the other wayRobert J. Klosterman’s follow-up to The four horsemen of the apocalypse, the author once again offers his astute financial and investment advice. The subtitle of the book, “Lighting the way to volatility while achieving equity-like returns“fits, since that’s just what Klosterman advocates that investors do to achieve optimal monetary returns from their investment portfolios. Klosterman gets its title from Robert Frost’s famous poem, “the road not taken“, which he quotes at the beginning of The Other Path, a very interesting book that offers investors information about a different type of investment approach than they might be used to, yet it is very effective and designed to help investors raise capital Generate returns while reducing the volatility experienced by many other investors who only try more traditional approaches when it comes to planning their portfolios.
Klostermann’s book the other way, is relatively short, at only 60 pages, not counting the Appendices at the end, but his detailed investment approach in it is very informative. The book is sure to be of interest and benefit to anyone who wishes to reduce their investment risks while maximizing their potential monetary return.
The very title of Klosterman’s book, the other way, refers to an investment strategy or path that most people have traditionally followed, which is to invest your money entirely in stocks, bonds, and cash. Such an approach is tried and true that has proven to be beneficial for many investors, but has also proven to be a sometimes volatile path for others. Investing in stocks, bonds and cash, Klosterman argues, is an important part of an overall investment strategy, although there are other opportunities to diversify investments and reduce the volatility that many portfolios unfortunately experience, volatility that can cause the monetary value of one’s wallet. experience a disastrous tailspin.
Still, the main leg of the milk stool—that is, investing in stocks, bonds, and cash—is a vital component in a wise investment strategy, according to Klosterman’s assessment in the other way. He calls it the middle leg of a metaphorical three-legged milk stool, and each leg in the metaphor refers to a different but complementary strategy when it comes to investing. If an investor diversifies their portfolio and doesn’t just focus on the main tranche of stocks, bonds, and cash, but also invests their money in non-traditional ways, argues Klosterman, using a series of helpful and informative charts and graphs, the portfolio one’s portfolio is much less likely to experience a disastrous financial loss and the volatility of one’s portfolio will be reduced.
The second of the three legs of the milk stool is “Diversifiers” and the third leg is “Absolute Returns”. Klosterman argues that “diversifiers,” or alternative or nontraditional investments, help reduce the volatility of an overall investment portfolio. Some examples the author gives of non-traditional investments include real estate, private equity, “international emerging and developed stocks,” distressed debt, and managed futures. These types of nontraditional investments can reduce volatility by having a “very low correlation with traditional markets,” as Klosterman writes, or by generating “consistent returns year over year, with little or no volatility.”
The third leg of the milk stool, “Absolute Returns”, is also the name of Chapter Four of The Other Path. Absolute returns are investments, according to Klosterman, that “demonstrate the same qualities of a bond with the guarantee of a return of principal and constant payment of interest.” The author writes that they are similar to ten-year Treasury bonds, but “are not backed by the full faith and credit of the United States.” Despite this, Klosterman says that the look of absolute return vehicles can be seen as an advantage. This is because strategies involving absolute return vehicles, as the author writes, “can invest in strong ideas and not have to adjust to the restrictions that other institutions have.”
An example is investing in companies that lend money to small businesses and homeowners. These companies can work fast and close loans faster than banks. These companies have the ability to provide fast access to loans for money to people such as real estate developers or home builders, compared to banks.
In the other way, author Robert J. Klosterman writes about a sensible approach to nontraditional investing and how it can benefit your investment portfolio and help reduce volatility. The book also examines and identifies “signs of trouble” other than volatility when planning the portfolio, such as groupthink, market disruptions, and inflation. While Klosterman recommends that investors take advice from professionals who are experts in investment portfolio planning and have a proven track record of at least a decade, The Other Path is an interesting and insightful look at adding non-traditional investments to your portfolio. an individual’s wallet. Whether investors want and like to plan their investment strategies on their own or with the advice of professionals, the other way is an eye-opening must-read designed to educate investors on the types of alternative investments that can balance their portfolios and reduce the negative effects of market volatility. It is a book I would highly recommend to anyone who has ever considered expanding their investment portfolios and adding non-traditional investments to them.
