Are you frustrated with all the noise and propaganda around investing?
Have you resorted to direct real estate investing to escape the incompetence and corruption of traditional finance?
Would you like to understand how to accurately measure the risk associated with any investment or portfolio—from real estate to individual stocks, bonds and mutual funds—to gain absolute clarity about which investment is better than another… regardless of asset class?
When it comes to investing, there are only three considerations that matter: risk, return, and liquidity.
And of these three quantifiable considerations, risk is the most important.
Ironically, people have no problem talking about expected return as a number (e.g., 8%, 10%, etc.), or liquidity as a number (e.g., I need my money back in 6 months, or 2 years, etc.), but when it comes to risk, the conversation quickly deteriorates into storytelling.
All these stories either represent noisy ignorance, or at worst, a deliberate distraction intended to separate you from your money without any regard for your financial well-being.
Risk is not story; it’s not a feeling; and it’s not a relationship. Risk is a number: it's the probability of loss weighted by the potential degree of that loss.
And risk is the only thing that separates investing from gambling…
In gambling, the probability of loss exceeds the probability of gain. With investing, the probability of gain should greatly outweigh the probability of loss.
Do you think the big banks don’t understand the probabilities associated with the investments they’re selling you... especially when they're often sitting on the other side of the trade?
The big shadow banks hire physicists and mathematicians called quants to measure and engineer the risk-adjusted performance of the investments they sell. They often use this expertise to bet against the public and push shoddy product through their armies of sales staff called financial advisors who are deliberately left out of the loop on this subject.
How many times has your financial advisor provided you accurate quantitative risk measures of the investments they recommend?
If you’re trying to escape the financial advisor world by pursuing a DIY real estate investment strategy, do you know how to measure the risk associated with the properties you’re considering so that you can make a responsible decision about where to put your money? Can you even determine if you'd be better off simply buying a REIT?
Almost no one in real estate—including the largest asset managers—has any idea that quantitative risk measures even exist, but there's no shortage of gurus advocating that you take control of your investments by buying and managing your own real estate portfolio... or even worse, pushing you to give them your money so they can buy real estate.
Despite human nature’s feelings to the contrary, control does not necessarily equal effective risk management. Think about the person who’s deathly afraid of flying but has no problem hopping behind the wheel at 70mph on a traffic-laden interstate… feelings are deceptive.
This period of time represents the greatest transfer of wealth in human history, and there’s only one way to position yourself on the right side of that transfer: by utilizing the insight of the 0.01% to tip the investing tables in your favor.
We’re talking about your entire life’s work to date represented as savings. Is that not worth making the effort to protect by simply being informed?
While all this may sound complex, it can all be boiled down to one simple example…
Think of a coin flip… if I told you that I’d give you $10 if you were to correctly guess which side comes up, what would be a fair bet? The answer—as you probably intuitively know—is $5.
Mathematically speaking, the chance of winning is 50%; so, if you divide $5 by 50%, you get $10, which is the fair return. If I paid out more than $10 on that $5 coin flip bet, that would be a good deal; if I paid out less than $10, it wouldn’t be.
That, in essence, is how the smart money makes investment decisions.
It doesn’t matter how you feel about the coin or the person doing the flipping or what kind of story is used to predict the outcome. The probability is the probability.
Now, the math associated with measuring investment risk is quite a bit more complex, but the fundamental principle remains, and with a willingness to learn, the rest will take care of itself.
Wouldn’t you like to know how to confidently evaluate and access investments with 40X the returns available through traditional markets while incurring even less risk that is accurately measured and verified by third-party administration, quarterly reporting, and annual audits?
So, can investments with very low measured risk lose value in some black swan event? Of course. But if those investments lose money, their traditional counterparts will lose exponentially more. On a relative basis, you win—and likely win big—even under the absolute worst case scenario.
(It's important to note that there’s no such thing as zero risk, despite the guarantees annuites salesmen make. Even U.S. Treasuries have risk associated with them.)
I’m Ben Summers, the founder and managing director of Adagio Group. Our firm’s purpose is to engineer investment products with substantially better risk-adjusted performance than what’s otherwise available through traditional markets by securitizing best-in-class alternative asset managers that are able to take advantage of arbitrage opportunities unique to private markets, and I recently published the book on this subject:
The Shadow Banker’s Secrets: Investment Banking for Alternatives.
For a limited time, I’m making this book available for free; just cover the cost of shipping your hardcover copy—and upgrade to gain immediate access to the book’s companion masterclass at an extraordinary discount—then schedule your free strategy session with me to help you apply what you learned to your specific circumstances.
This unprecedented offer reveals the proven Wall Street techniques I learned over my 15 plus years of experience as a quantitative alternative asset manager successfully navigating both the 2008 and 2020 financial crises, and developing innovative structures that allow even non-accredited investors access to the most exclusive private investments—investments generating above-market returns while being protected from market crises—investments that otherwise require a minimum of $5 million of investible assets to access.
In other words, you'll learn how to accurately measure the risk-adjusted performance of any asset or portfolio and even compliantly profit from aggregating capital by providing yourself and others—including non-accredited investors—access to this exclusive class of private investments without needing any licenses.