Book Review – The Alternative Answer by Bob Rice

My Amazon Rating: 4 out of 5 Stars

Really good book – would give it 5 stars, but I felt it did not discuss the valuations you should look for in each alternative asset class.  With that said – I think it accomplishes its mandate of reviewing all the different alternative investments, and provides clear definitions and examples.

I especially appreciated the section on Portfolio construction, namely, breaking down your assets into 4 different categories:

• Job 1 (income): Examples include MLPs and long-only convertible bond funds (30%)
• Job 2 (risk reducers): Examples include multi-alternative mutual funds and cash (35%)
• Job 3 (return enhancers): Examples include long-only U.S. stocks and global blue chips (25%)
• Job 4 (purchase power protection): Examples include TIPS and Gold (10%)

I have incorporated these categories into my own portfolio – but at different percentages.