Friday, April 2, 2010

The power of analogy: U2 and alternative investments

What could the band U2 and hedge fund-style investing have in common? 

This unlikely combination came up in a March 15 presentation to the Boston Security Analysts Society by Robert Kaimowitz, CEO and portfolio manager, Bull Path Capital Management.  

Kaimowitz asked the audience, "How many of you think U2 is an alternative band?" No hands went up. The band is mainstream now. Yet it was considered an alternative band when it first emerged.

So-called "alternative investments" will follow a similar path, suggested Kaimowitz. They're new and poorly understood, so they're considered "alternative." That will change as they become accepted. He figures alternatives will become mainstream partly because a long-only fund can't be conservative because it's 100% exposed to the market.

Kaimowitz' comments about U2 and alternative investments demonstrate the power of analogy. They stuck with me long after the details of his fund's performance faded.

If you're trying to convince your clients to adopt alternative investments, consider trying this U2 analogy on them. I'd like to hear if it works for you.
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Copyright 2010 by Susan B. Weiner All rights reserved

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