Asset Classes

Many of us frequently get trapped in a single asset class for a simple reason: we’ve never dipped our toes in anything else. This familiarity breeds investment laziness and leads to missed opportunities. We keep our sights on a single tree, ignoring the forest. Even within the one asset class, we tend to do the same thing over and over again. You might not believe it, but there are thousands of day traders on the stock market who buy and sell the same one or two stocks hundreds of times a day –for years on end. Now we would like you to step into an air balloon, go up a few hundred feet, and view the entire forest. The landscape below should comprise five main asset groups: equities, fixed income, precious metals, real estate, and commodities. We can promptly discount this last group –commodities- as being far too volatile and risky. Stocks are currently at all-time highs, and there is a case to be made for bonds –treasuries in particular- being ready to drop sharply as the FED should sooner or later put a stop to their quantitative easing policy. As for precious metals, is your crystal ball currently giving you clear signals as to the direction that these are getting ready to take? Ours simply isn’t that sophisticated.

That leaves real estate. The first advantage you get in real estate is that they’ve already had their bubble burst. Ask a hundred savvy counselors and 98 of them will tell you real estate is now on the rise (the other two might say that it will linger a little more at the current levels before taking off). But even then, Capella isn’t only about real estate in general, it is about carefully selected and screened real estate. Not only have we put thousands of properties through the mill, but we’ve also involved our investors in this scrupulous fact-finding process so that each investor becomes intimately familiar with the underlying value of their investment.

At Capella, we are first to recognize that when we get 10, 12 and 13% for our investors year after year, future investors approach us guardedly. How can that be, they ask themselves, when a 10-year T-bill yields less than 2%? In truth, we want our investors to exercise utmost diligence. Newcomer clients will quickly take comfort in the fact that our members comprise some of the savviest investors around.

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