Book Reviews: The Handbook of Alternative Assets
The Handbook of Alternative Assets
Peter Temple is a former fund manager and now a writer aiming at the private investor. He publishes regularly in the Financial Times and Investors Chronicle, often discussing his own financial and alternative investments, and the Handbook is written in his usual clear style.
He stresses that for an asset to be investable (rather than just collectable) involves a network of dealers and regular auctions, relative durability (fine wines qualify, race horses do not), measurable returns and price histories. Portability and scarcity are also words that recur throughout the handbook.
For each of the areas covered in the title, Temple sets out background to the market, historic returns, quality grading, how to buy and sell sensibly, where to go for further information and advice, and questions an investor should consider in deciding whether the particular asset is right for them, including likely capital requirements and taxation. The general theme is to be very choosy, to buy the best combination of quality, value and scarcity, and to have a firm eye on the market, ideally one with a large number of collectors. In the areas that I know something about, the advice offered is sensible and well-informed, albeit that there are a vast number of specialist areas in most of the cases.
A key issue is liquidity (which determines the spread between buying and selling), which he notes is often better than assumed. There is a helpful chapter, clearly based on experience, on the merits of buying and selling through dealers or auction houses.
Generally he makes a convincing case for alternatives – they help diversify investment portfolios, have returns for the long-term investor that are largely uncorrelated with the stock market and ofeten with much lower volatility as well, all of which provides a good counterweight to the often market-influenced decisions of securities markets. In addition, investors gain an aesthetic dividend and the additional interest of a hobby (an earlier version of the book was published as ‘Superhobby Investing’.)
Most investors are collectors by nature and will, like me, find this book a stimulating review of a wide range of accessible collecting areas.
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