Why Alternative Investments ? Exceptional Alternative Investment Returns.

 Why Alternative Investments?

RISK DISCLOSURE: Alternative Investments carry a high degree of risk, and may not be suitable for all investors. Before deciding to participate in Alternative Investments you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Alternative Investments, and seek advice from an independent financial advisor if you have any doubts or concerns.

 

For additional information, please contact: John Geering Snook, CA Lic. Registered Investment Advisor – USA – (619) 347-2294 – Skype: johngeering1 – jg@PacificAlternativeInvestments.com
 

 

Characteristically speaking, an Alternative Investment is an investment category comprised of non-traditional investments (stocks and bonds).

Alternative Investments can include futures & options (derivatives), currencies, real estate, private purchase programs, as well as hedge fund investments and private equity investments – many using sophisticated, diversified strategies, and usually are considered riskier than traditional investments. As a general rule, many people believe that no more than 10% of one’s liquid net-worth should be allocated to alternative investments. We believe when properly structured, these investments can be quite attractive and although still considered very high risk when compared to a typical “run-of-the-mill” investment, they should not necessarily all be treated equally in terms of risk, as there can be quite a variance from one program to another.
 

 

One of the largest advantages of many Alternative Investments is in their ability to profit in virtually ANY economic environment. Time after time, the successful growth of this investment class thrives regardless of conditions such as a strong economy, low inflation, high interest rates, or a depressed stock market. The success of these investments typically depends on performance, as well as the risk and diversification used. Investors adding this asset class to their portfolio can help reduce volatility, minimize risk, and possibly increase the risk versus return ratio of their overall portfolio. Because of this, it is no surprise that alternative investments have increased dramatically in popularity over the past 10 years as investors search for alternatives to traditional markets. It is more common now to see these types of investments used in typical portfolio management strategies.

 

This offshore company (non-USA) provides forex and alternative investment related financial consultancy services as well as brokerage and FCM consultancy services with the intent to provide unique opportunities to investors and to educate investors in the alternative investment trade.

 

The company is responsible for all live trading activity and managed programs and includes a team of professionals with extensive practical experience and formal education in the alternative investment and trading industry. The  team has ample experience as investors and traders, as well as money managers, investment consultants, designers of trading systems, analysts, and educators. They work closely with various stakeholders in the industry and are always building and growing a network of contacts. This is a truly global company, in that our team has a wide reach, with partners residing across the globe in Canada, USA, Europe and New Zealand.

 

Due to the fact that many of the FX trading systems utilized in the managed accounts consist of various different scalping strategies, the company thought it would be both beneficial and educational for  investors and prospective investors alike to understand a little bit about this trading technique.

Scalping strategies typically attempt to capture profits on small price changes across various currency pairs. Systems which implement scalping strategies will usually place anywhere from 5 to 100+ trades in a single day in the conviction that multiple small moves are easier to catch than large ones. The main goal is to place a number of trades which meet certain parameters, and then quickly close them at a few pips higher (or lower) for a profit. Many small profits can easily compound into large gains if a strict exit strategy is adhered to in order to prevent multiple large losses from occurring.

The premise behind most scalping strategies is that of the “dine and dash” principal – get in quick, grab a fast, albeit small profit and then get out unscathed. The less time you spend in the market the less risk exposure you have to adverse price movements or long-term trends. What this typically means is that the overall equity gain in profit comes from the accumulation of many small wins over time. Unfortunately with scalping strategies there’s also the inevitable large losing trade that we need to deal with from time to time.

As mentioned above, most classic scalping strategies accumulate many small wins over time, and then eat the occasional large loss. While losses are rarer than winners, unfortunately the loss is often many times larger than each individual small win and can have a sizable impact on the system’s overall performance.

 

Now, in a successful system the small wins over the long run will in fact win out over the less frequent large losing trades. When scalping is done correctly it can be one of the fastest and most profitable trading methodologies one can employ to increase the equity in their account. It’s also a strategy which is a lot of fun to watch, and is often very exciting to trade. The high frequency of trades and the high accuracy rate of these systems make for an entertaining trade session. However it must be understood and accepted by all investors, that with all scalping strategies, inevitable large losses will occur from time to time resulting in large dips in equity.

Those who understand this concept, and let their accounts trade through the peaks and valleys are often rewarded with excellent long-term performance. It is however very important to understand the underlying strategy and how draw-down is encountered and handled.

In the company’s opinion, successful scalping strategies need to employ both fundamentals and technical’s, they must establish high-probability trading times, they must be able to filter the good trades from the poor ones with various technical indicators, and they must have a strong exit strategy for “runaway trades” which may end up in a stop loss.

The good news in relation to the inevitable draw downs with scalpers is that their accuracy rate is usually excellent! So draw-downs are made back very quickly, sometimes even in the same trading session. For those who are participating in any of the scalping FX systems, you will see that over a given period of time, these systems have the uncanny ability to predict rapid moves in the markets with very high accuracy, while always protecting the downside and quickly recovering from the inevitable losses which occur from time to time with these powerful strategies.

 

 

While the company believes that increased regulation does bring credibility to the spot foreign exchange asset class, simply put, they feel that both the NFA and CFTC’s imposing onerous regulations are counterproductive in the marketplace.  The saga first started with their anti-hedging legislation. Followed shortly by their FIFO (first in, first out) rule. Now their proposed rules call for restricting leverage to a maximum of 10-to-1, even for the most widely traded currency pairs. It’s quite clear to us that these regulatory agencies are trying to regulate a market, which is a true global interbank market, and prevent traders from being profitable in their true potential in their trading endeavors.

 

 

In addition to the existing changes in trading conditions in the USA, these proposed new rules by the U.S. government agencies responsible for the regulation of retail foreign exchange, if enacted in their current form, would have an enormous impact on the U.S. forex industry. In addition to this, the amount of red tape, restriction, and limitations imposed by NFA memberships have simply deterred us from becoming members or participants let alone becoming a CTA. There may be turbulent times ahead for traders trading in the spot forex market. The company states "we are positioning ourselves as advantageously as possible to ensure the success and future growth of our endeavors."

 

 

By request from prospective clients, the company has hired the services of a USA based CPA to perform an independent 3rd party audit and verification/analysis on our trade account’s performance. Our first audit was conducted in April 2010 for Q1 2010 (January 1st – March 31st) and will follow suit for every quarter from here on forward. The audit will comply with the standards set forth by the American Institute of Certified Public Accountants.

 

Please review the company performance table for a month-by-month performance comparison since inception.

 

The Performance Table has also been updated with the following statistics of interest (note, the ‘Private’ Trading Program’s historic performance will be compiled to the performance table during July. For now we have only included the month of June)

MONTH      FOREX # 1  FOREX # 2  FOREX # 3  PRIVATE        AVERAGE           

Dec-08        32.30%          72.73%                                                          52.52%

Jan-09        18.70%            -4.19%                                                            7.26%

Feb-09        27.50%        160.30%                                                          93.90%

Mar-09        29.50%          21.97%                                                          25.74%

Apr-09        -34.40%          61.33%                                                          13.47%

May-09          53.30%          33.35%        3.52%                                      30.06%

Jun-09          23.60%          25.77%        4.69%                                      18.02%

Jul-09            10.10%        20.69%        4.13%                                        11.64%

Aug-09            26.92%      10.77%        4.86%                                        14.18%

Sep-09            -0.32%        5.44%        5.79%                                          3.64%

Oct-09              -4.26%        20.36%        6.55%                                          7.55%

Nov-09            10.76%      -20.98%      30.98%                                          6.92%

Dec-09              9.37%      15.94%      10.39%                                        11.90%

Jan-10              33.63%      27.91%      16.02%                                        25.85%

Feb-10              15.31%      14.93%      22.63%                                        17.62%

Mar-10              15.43%      -5.08%        3.23%                                          4.53%

Apr-10                -8.11%      -9.43%      -0.05%                                          -5.86%

May-10                0.70%      -7.66%      27.30%                                          6.78%

Jun-10                20.86%      10.56%      4.83%          9.68%                    11.48%

AVERAGE        14.78%      23.93%    10.35%          9.68%                    14.69%
MONTHLY

TOTAL COMP’D RETURN:

                          932.22%  2323.86%  277.82%          9.68%                  885.90% (in just 18 months)