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Ten Alternatives to a Dismal Market


If trading's got you down, try something a little more exotic.


MSN Money's Jon Markman writes that "The unexpected destruction of up to $14 trillion in wealth worldwide was... seared into the psyches of investors, most likely forever, due as much to the surprise as to the severity of the event. It had the effect of a trauma, much like a car accident or a street assault, psychologists say, and as a result it will have an effect on the way most investors perceive change in securities markets for the rest of their lives."

The S&P is down 23% over the past 10 years. Robert Arnott, in the Journal of Indexes, points out that, "In real, inflation-adjusted terms, the 1965 peak for the S&P 500 was not exceeded until 1993, a span of 28 years. That's 28 years in which -- in real terms -- we earned only our dividend yield... or less."

This dismal performance has some people jumping at new investment opportunities of the exotic sort. Not satisfied with spreading your portfolio between an intelligent mix of stocks, bonds, and cash? You may be interested in what's called "radical diversification," a way to put money to work in ways not directly correlated to the broader indices.

Radical diversification is not for the novice investor. It's also not for the faint-hearted experienced investor. Such investments are difficult to price and can be illiquid and unpredictable. The trade-off is the potential for outsized returns.

But Chuck Jaffe of Marketwatch says: "Collecting is a terrific hobby, but not a great way to make money," as "an item is only worth what a dealer will pay for it."

Let's take a look at some investments that tend toward the more exotic end of the spectrum.

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No positions in stocks mentioned.
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