This Simple Analogy Protects You From Catastrophic Loses

“Invest like the 1%.”

This is the sales pitch for many alternative assets, like crowdsourced real estate and fractional ownership in investment-grade art. If you’ve been on YouTube recently, you’ve probably heard ad reads for both, with the selling point that these are “Elite, 1% investment opportunities.”

In today’s article, I want to explain why “rich people own it” isn’t a compelling investment thesis.

And, I want to highlight a hidden danger when it comes to investing in funds that are managed by someone else — even if the people managing your money are qualified experts.

A Simple Analogy About Actively-Managed Private Investment Funds

Many up-and-coming poker players have financial bakers who stake them.

These backers pay tournament entry fees, or pool money for large cash games. And if the player wins, the backers get a percent of the profit.

But if the player loses, the backers are out their investment.

Alternative asset funds are incredibly popular on YouTube and social media. “For just $100, you can own a fractional share of a Picasso painting!” “If we can raise $___.___, we’ll renovate this old apartment building and…