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Last week, I began the CalTier series with “Are Alternative Assets right for your portfolio?” with the premise that the average investor misunderstands alternatives. Rightly or wrongly, they may be hesitant because of potential risks, illiquidity, or lack of access or understanding.

This week’s article will address a more basic fundamental, yet perhaps the biggest challenge for both the investor and the Advisor, which is the mindset.

In my 30+ years of working with investors, I have learned that most, if not all, investment decisions are made emotionally, not logically. Early on, I remember presenting the new Merrill Lynch Stock of the Week, Johnson & Johnson, then for $40, with a further 12-month target of $60, as a significant investment, only to be told, “Let me think about it.”

It wasn’t until my manager suggested explaining to that client that 1,000 shares would potentially pay for his daughter’s first year of college that he bought 2,000 shares.

The Bud Fox comments aside. The investor mindset can determine the difference between building a successful and tax-efficient nest egg versus one beset with nail-biting anxiety and frustration.

We are all driven by a mindset.

Our investing mindset is a collection of thoughts and beliefs (acquired over time) that shape our investing habits and actions. It dictates how we perceive and approach the market and, consequently, determines the kind of result we attain.


We have all taken “flyers” that either hit or we paid the price. Forget hedging with gold or commodities and losing. Does anyone remember the Iraqi Dinar in 2010 – 2012, when every US 1 Dollar invested would turn into US 1,000 Dollars after the Iraqi Government restructured its financial system? One frantic woman asked if she could put $100 on her SEARS charge card to pay for her investment.

It begins with the premise that “most people would rather avoid pain than enjoy pleasure.”

Crazy right?

All one has to do is invest in something they didn’t know or understand but were convinced was a “sure thing” to make them wealthy overnight and lose it all.

This mindset becomes self-reinforcing and sabotaging, blaming the Advisor, the markets, and the asset class.

Well, if the average High Net Worth Investor has only a 22% Portfolio Allocation in Public Markets (stocks, bonds, Mutual Funds, and ETFs) and the rest in some Alternative Asset (like real estate), perhaps we need to do our homework and learn, get good advice from Advisors, join Investing Clubs and get ongoing Investor Education like this one

First, however, let’s think about having the right mindset. Let’s start by believing that we are in control of what goes on in our life and financial situation, and we are responsible for those choices and results.

One must believe they can do something about their financial situation by committing to goals and developing plans. In working with High-Net-worth Investors and very successful people over the last 30 years, the common denominator is the belief that they can manifest financial success.

Manifesting involves turning thoughts, goals, and dreams into reality by visualizing them and having them materialized based on the law of attraction. What I initially thought might be “hocus pocus,” after many years of studying and applying these principles, has proven that the right mindset applies to all areas of our lives.

Next week we will talk about how Alternative Assets can be applied and perhaps save what many experts call the death of the 60/40 Principle.


Senior Vice President


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