Dick Pfister advises those interested in alternative investments not to be afraid. COURTESY PHOTO
You've seen it before, and you'll see it again – in fact, as the Great Recession tightened its grip in the late 2000s, you may have been part of it. Say you lost exactly half your shirt in a $100,000 investment portfolio you were nursing. Not only were you out $50,000; you then had to work twice as hard to recoup the half you'd lost (50+50 = 100). The math doesn't lie, and it's going to hold true during the next recession and the one after that and the one after that.
Dick Pfister, founder and CEO of La Jolla-based AlphaCoreCapital, doesn't have a way around the figures; he has even less control over the real-life outcomes that those figures reflect. But just as traditional approaches to the consumer marketplace have shifted amid wildly changing tastes, old investment models don't hold the same sway as of yore.
The kid's lemonade stand of 2015 doesn't live and die by one flavor; the smart investor diversifies accordingly.
“When most people look at their portfolio,” Pfister said, “they're probably educated in stocks, bonds and real estate. Most people understand when they buy their house that you can make money and lose money. Same with stocks, bonds, Treasury bills,” known in the vernacular as the 60/40 stock-bond mix.
“At AlphaCore,” Pfister said of his independently owned firm, “we are providing a method for the individual investor to [include the] prudent use of alternatives in investment portfolios... with the goal of decreasing risk.
“What's happened,” he explained, “is that the 60/40 model hasn't really held up as well as everybody said it could” amid the recession's nosediving stock activity, the subprime loan crisis, bank consolidation and unemployment among those who might otherwise invest. “In fact, many investors know that risks are increasing but do not know what to do about it.”
Currencies and commodities. Real estate, most obviously in the house-flipping market. Peer-to-peer lending. Hedge fund support. Investing in one's own skills. Penny stocks. Internet stocks. It's easier than ever, Pfister said, to balance a portfolio – better yet, it's crucial to do so as investment's traditional face grows weary with age.
“The alternative [investment marketplace] is so broad it scares a lot of people,” Pfister added. “But we can guide investors through the maze, and part of what we do is try to put the terminology in layman's terms. I've spent 20 years trying to do that.”
Pfister has a degree in finance from the University of San Diego and is an inaugural member of the Chartered Alternative Investment Association. He was also awarded the first Corporate Recognition Award in 2012 for excellence in alternative investment education.
He's also aware, therefore, that that lemonade stand isn't necessarily just some neighborhood lark. It took Harland Sanders 600 tries before he landed on his “secret recipe” for Kentucky Fried Chicken. In 1984, 74 people worked for Canadian entertainment company Cirque du Soleil; it now employs 4,000 the world over, and founder Guy Laliberte is a billionaire. Self-help author Louise Hay worked in dime stores as a struggling victim of child abuse; her Carlsbad-based Hay House is a publishing mecca, having put out more than 300 books by 130 authors.
Those companies know a thing or two about diversification. Come to think of it, so does Pfister.
For more information, visit alphacorecap.com or call (858) 875-4100.