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Investment Education

Alternative Investments

Alternative investments are a way for an investor to gain additional diversification by investing in assets that have a low correlation to traditional investments. By investing in asset classes that have low or no correlation to traditional investments such as domestic stocks and bonds, an investor could receive a higher rate of return with less overall volatility. These asset classes include managed futures, REIT’s, foreign/emerging stocks, bonds and collectibles. Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor's portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.


Arbitrage is the simultaneous purchase and sale of the same security in different markets in an attempt to profit from short-term price disparities between the two markets. An example would be the simultaneous purchase of a convertible security and sale of the common stock into which the security is convertible. A successful arbitrage would be profiting from a short-term price disparity that could exist in the market between these two equivalent securities.

Master Limited Partnerships

Master limited partnerships are a type of limited partnership that is publicly traded. There are two types of partners in this type of partnership. The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP’s cash flow, whereas the general partner is the party responsible for managing the MLP’s affairs and receives compensation that is linked to the performance of the venture.

One of the most crucial criteria that must be met in order for a partnership to be legally classified as an MLP is that the partnership must derive most (~90%) of its cash flows from real estate, natural resources and commodities.

An MLP combines the tax benefits of a limited partnership (the partnership does not pay taxes from the profit – the money is only taxed when unitholders receive distributions) with the liquidity of a publicly traded company. MLP investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor's portfolio.


Real Estate Investment Trust an investment company that invests exclusively in commercial real estate and mortgages. A REIT is managed portfolio of real estate. REIT's can include office building, shopping centers, strip malls etc. REIT's generally have a daily liquidly period. The value of shares in a real estate investment trust is determined by supply, demand, and the trust’s net asset value. Importantly, the REIT itself is not taxed; rather taxes are passed on to shareholders. Investing in this asset class in which to invest as it helps to diversify a portfolio. Investing in Real Estate Investment Trusts (REITs) involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.

Shorting The Market

Shorting the market is selling securities in anticipation of a market decline. The customer borrows the securities to be sold through his or her brokerage firm with the intent of buying them back (and replacing them to the lender) once the price has declined. Note: A “short squeeze” can result if the security that was shorted rises rapidly in price and the short sellers are forced to cover or buy back their securities at a loss. This results in the underlying security being pushed even higher. Shorting the market not be suitable for all investors and should be considered only for the risk capital portion of the investor's portfolio.

Investment Education