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The world has become captivated by instant gratification. Smartphone apps, TV and movie streaming on demand, same-day delivery services – the speed of obtaining immediate reward has become an obsession….

In today’s fast-paced world, it’s easy to get caught up in the noise of predictions, forecasts, and market speculation. It’s tempting to listen and react to predictions, but successful investing and sound financial planning involve tuning out the noise and taking a more disciplined, strategic approach.

Investing takes nerve. There’s always a reason to “let things calm down,” “hold off for now,” “take profits,” or any other common quip we’ve all heard. We do know that long-term, diversified investing leads to positive outcomes in almost every circumstance.  Despite that, human nature leads us to make emotional choices affected by outside influences.  There are times when these emotions seem especially heightened.  This year promises to be one of those years. 

Background: How We Got Here

In late 2008, the Federal Reserve (the Fed) cut the Fed funds rate – the target interest rate at which commercial banks borrow and lend their excess reserves to each other overnight – to 0% for the first time in history in response to the Global Financial Crisis.
Since cutting the Fed funds rate to 0% didn’t cause inflation to surpass the Fed’s 2% target (one of their dual mandates is price stability), the Fed maintained this accommodative policy (along with quantitative easing) for the next decade-plus as shown in the chart below.
Ultra-low interest rates from 2009 to 2021 paved the way for one of the longest economic recoveries in history; during this period, borrowing was cheap and therefore prevalent, and because credit investments offered meager returns, investors were encouraged to pursue higher-return (and higher-risk) investments such as stocks.

Recently, I wrote about alternative credit and the rationale we use for this type of alternative asset category at Strategic Wealth Partners. Another area of alternatives we use extensively is what we term “alternative equity.” In order to discuss this topic, traditional equity investing first requires review.

Why do people invest in equities to begin with?

An equity investor has the opportunity to participate in the growth of a company. A company’s value is reflected in a company’s profits, growth in profits, and distributions from those profits in the form of dividends.

As anyone can attest to lately, it certainly feels like the economy and financial markets are confounding. Browse any news source of your liking and you’re bound to see the first few articles with titles that make your head spin. Disruption brings change, including to capital markets. While this can bring financial anxiety, it also creates opportunity for investors.

A new school year just started for my daughters, Myles and Sawyer. And with this came A LOT of emotions in the Karmin household. There were tears of sadness for…

I will admit that I am a little bit of a news junkie. In the age of the internet, we are constantly bombarded with stories about anything and everything vying for our limited time and attention, from the “Most Exciting Football Play of the Week” to the “Best Places to Retire.” Even more so, money controls many of our basic human emotions, such as personal security, fear, and greed. With the constant deluge of information coming at us from all directions, how are we supposed to stay up to date with what’s going on in the world AND maintain our long-term investment strategy?

As I mentioned in my article last summer, there are many types of alternative investments. Within this discussion, we created two categories, alternative asset classes and alternative strategies. A subset of alternative strategies is alternative (‘alt’) credit. From where we sit, there are great opportunities presently in the alt credit area. In this piece, I’ll discuss why we like this area of the capital markets.
Background on Investing in Traditional Bonds
When building a portfolio of bonds, investors often seek securities where interest payments are fixed, like a traditional bond, and when there is a specific date that the bond matures. A bond makes the same payment every six months, with the principal being paid at maturity. Investors often take comfort with the defined nature of bonds and especially like them when the credit quality is from an institution like the US federal government or large credit-worthy corporations.