3 min read

Alternative Investments are Booming – Get Access to New Opportunities

Andreas Bezner

Dec 08, 2020

When is a good time to invest? Millions of people worldwide regularly turn to Google, their banks, or wealth managers to find out about lucrative investment opportunities and the right moment to start investing. “The stock market does not move linearly; there are ups and downs, and no one can say with certainty which way it will go next. Its path is even more unpredictable during an emotionally charged economic crisis like the coronavirus pandemic”, investment journalist and financial planner Tanza Loudenback wrote in an article on “Business Insider”. Stock market investors are now anxiously awaiting the COVID-19 vaccine, as this will likely be a significant driver for growth in the markets. Until then, sell-offs provide opportunities to get a hold of sought-after shares. However, access to the most successful companies’ stocks is often limited to a small number of players in the exclusive Venture Capital (VC) and hedge fund community.

Stock market developments rely heavily on macroeconomic variables

To counteract and measure volatility, models such as the arbitrage pricing theory or the CBOE Volatility Index have been developed. Arbitrage pricing is defined as a multi-factor asset pricing model based on the idea that an asset’s returns can be predicted using the relationship between the expected return and macroeconomic variables such as GDP, inflation, price indices, and unemployment rates. As the arbitrage pricing theory helps identify securities that may be temporarily mispriced, it is a useful tool for analyzing portfolios from a value investing perspective. The Chicago Board Options Exchange Volatility Index (CBOE Volatility Index or VIX Index), often referred to as the “fear index”, measures the implied volatility of the Standard & Poor 500 Index (SPX) option prices. It is calculated and disseminated on a real-time basis by the CBOE.

Tech helped the stock market bounce back quicker than usual in 2020

The global tech industry has produced many winners of the pandemic. With Apple, Microsoft, Amazon, Facebook, and Google, five of the largest S&P 500 companies are in tech. It was the tech industry that significantly drove the S&P 500 levels up. Historically, it takes an average of about two years for the market to recover from a crash. After an initial downwards spiral in the first stage of the 2020 pandemic, the S&P 500 bounced back in just 149 days. By the end of August 2020, the index was hitting record highs. As the festive season 2020 is approaching, market exuberance is showing on many fronts. Investor margin debt is near record peaks, stock prices are trading at all-time highs, and “junk bond yields” are near record lows. While private investors tend to be more inclined to buy and sell based on daily headlines, financial intermediaries are looking further ahead.

At Stableton, we are convinced that now is the ideal time to look beyond the current market uncertainty and start investing. We have recently launched our Crisis Alpha Strategy that allows trading quantitatively in liquid instruments such as global futures across volatility, equity, commodity, currency, stock index, bond index futures, and crypto asset classes.

Diversified portfolios reduce the risk drastically

Most of the underlying strategies of the Crisis Alpha Strategy are trading extremely liquid instruments. These strategies can thus immediately react to changing market regimes and profit from swift market moves. Protected by disciplined risk management, our Crisis Alpha Strategy is an opportunity to earn positive, uncorrelated returns in a wide range of markets over the long-term. Banks, wealth managers, and investment advisors catering to private investors need access to multiple investment options across more than one alternative investment vertical. Variety is a must as diversified portfolios reduce the risks for the end client massively. Gateway and aggregation platforms like the Stableton Marketplace enable financial intermediaries to discover opportunities faster and execute transactions more efficiently. Investments can easily be monitored during their lifetime, and consolidated reporting provides an efficient overview of the portfolio performance.

Through an investment into the Crisis Alpha Strategy, financial intermediaries gain exposure to an actively managed portfolio consisting of alternative investment strategies. It is an efficient and diversified way of investing with investment opportunities starting at 5,000 USD. By enabling low investment minimums, the diversification essential for alternative investments is much easier to accomplish.

Are you interested in the new Crisis Alpha Strategy for financial intermediaries? Fill out the form below.

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