by Axel G. Merk, Merk Investments
Talk about diversification comes cheap. Actually diversifying one’s portfolio is far more difficult.
We have been preaching for some time that in an era where both stocks and bonds may be expensive, investors may want to embrace alternative investments. I have been quoted saying that unless investors have at least 20% in alternative investments, they may not be truly diversified. While that quote made some headlines at the time, many college endowments have a far greater allocation to alternatives, at times more than half of their portfolio. There may be a good reason for that; let me elaborate and make a case why, in this context, investors may want to consider absolute return investing.