The Battle for the Last Mile, or the Future of Retail Investing

Quite a few years ago, back in 2008, I had the following conversation with one of my MBA students, Billy Ruck:

Billy: Why aren’t ETFs more popular now? They are great…

Alexey: Yes, ETFs are great! It’s a conspiracy, man!

As outlandish as my response may have seemed, it was absolutely true. Since this interaction, it’s been fascinating to see how both parts, the ETFs and the conspiracy, have been playing out. But, before we break out the tin foil hats, let me expand a bit on my 2008 answer…

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Alternative Investments? There Is No Such Thing!

Alternative investments are hot these days… But what are they, exactly? Broadly speaking, “alternative investments” could mean pretty much anything beyond “traditional” investments in stocks, bonds, or cash. These could be futures, options, commodities, currency carry trades, and a multitude of other specific strategies that yield risk-and-return profiles that don’t fall neatly into the framework of the capital asset pricing model (CAPM), and cannot be fully described through their correlations with the S&P 500. I guess, that’s why they are labeled “alternative” investments.

In my mind, the word “alternative” is not that far from “marginal”, and in real life it seems like many people tend to marginalize these investment options. I don’t know why… Perhaps, it is fear of the unknown, as many “alternative” investment strategies may not be easy to comprehend within the modern seven-minute attention span…

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