By Walt Parker (founder)
Yes, I do know that Investing Makes Me Sick.com is an unusual name for a financial advisory services group. I began IMMS in 2004 after spending 13 years working as an independent financial advisor. When I began my career in 1991, I followed a traditional investment philosophy and utilized stocks, bonds and mutual funds in my client’s accounts. Many of you remember the 1990s as a time of strong economic growth, steady job creations, low inflation, rising productivity, and an overall surging stock market. It seemed as though anything you invested in made money.
When Investing started to make me sick – and a lot of other people too:
By early 2000, it looked like the booming business cycle was coming to a crest. In May of 2000 the Federal Reserve hiked rates to 6.5%. During the remainder of 2000 we saw economic growth begin to falter, job creation slow down, stock markets begin to plunge and the groundwork for the 2001 recession was being laid. The effects of the early 2000 recession continued throughout 2001, 2002, and 2003, and by 2004, (when I ventured out on my own) Investing Made Me Sick.
During the turmoil of the early 2000’s I began to see investors literally begin to feel sick as they watched portions of their portfolio exposed to the stock market decline in value. Years of hard work and dedication to build assets and wealth on which to retire, take care of their families, or send their children to college were taking a beating during the recession.
I began to wonder what can be done to assist clients through these trying times. Are there investments available that do not directly correlate with the stock market? How can I ensure that my clients are able to understand their investments and what risks are associated with them?
If Investing Makes Me Sick, then what are my options:
The big question many investors had during the early 2000s: Well, now what? If I am no longer comfortable with a portfolio comprised solely of stocks, bonds and/or mutual funds, then where can I invest?
This is when I began to seek out investments available to investors that were not the typical stock, bond or mutual fund. What I found was there is a vast array of investments known as alternative investments available to investors to help diversify their portfolio. I began to learn more about these types of investments, the asset classes, the different risks associated with each class, and how they were utilized in portfolios.
The biggest lesson I learned, not all alternative investments are suitable for every investor, and every investor is different.
Why I believe understanding your investment(s) is important:
As I began to speak to investors, both my clients and potential new clients, I realized that some of these investors really did not understand their investments. They did not understand if or how they were correlated, if or how they were diversified, if or how they carried the same types of risks, or how the underlying investment strategy worked (if there was one associated with a particular investment). (These are just examples of the information some investors did not know or understand about their investments)
As commonly attributed to Sir France Bacon, “Knowledge is Power”. Education. Information. Knowledge. This is what my clients need. Knowledge in regard to their investments. What is the investment? What are the financial objectives of the investment? What are the risk associated with the investment? What is the underlying investment strategy? Is this investment suitable for my needs, risk tolerance and objectives? What is the overall time horizon or holding period for the investment? Is this in alignment for when I foresee needing the assets?
At IMMS, we believe that if you do not understand an investment, and are not comfortable with the risks of an investment, then you should not invest. We pride ourselves in taking the time necessary with each client to explain each potential investment. You have worked hard for years to accumulate your assets, and each dollar is important. You rely on the investments in your portfolio to assist you in achieving the goals you have in mind: retirement, college tuition, family protection, legacy funding, etc. At IMMS, we believe the days of handing your money over to an investment advisor to manage without understanding the underlying investments are over. Investment decisions are vitally important, and we want each of our clients to make informed decisions in regard to where their money is invested. All investments contain some type(s) of risk, and understanding the investments and their risks will enable you to make investment decisions that are suitable for your unique and individual goals and objectives.
Some Common Questions People Ask Us.
What exactly is an alternative investment?
An alternative investment is any investment that is NOT one of the three traditional asset types (stocks, bonds and cash). Yes, even some mutual funds are classified as an alternative investment based on the underlying assets or the investment strategy behind the mutual fund.
The most commonly known alternative investments include hedge funds, managed futures, real estate, commodities, and private equity. However, there are several investments that are considered alternatives. More specific examples (to name a few) are commercial real estate funds, non-traded preferred mutual funds, non-traded closed end funds, apartment construction, senior secured lending funds, the list goes on and on.
What is the difference between a non-traded investment and publicly traded investment?
A non-traded investment does not trade on a securities exchange and has a very limited secondary market. Because of this feature, it is generally illiquid for extended periods of time. These investments generally do not have a daily value either. They are not readily exchanged for cash at a given price. In addition, most of these investments have a higher front-end fee and may only return a percentage of the investment should the investor choose to redeem the investment prior to a naturally occurring liquidity event.
A publicly traded investment trades on a securities exchange, has a daily price and can be “redeemed” on a daily basis at a given price. Most publicly traded alternative investments have the same general investment objectives as their non-traded counterparts.
How are alternative investments used in a portfolio?
As part of a long-term investment strategy, alternative investments may provide a way to obtain additional diversification within a portfolio of more traditional investments. Alternative investments in general tend not to move in direct lock-step with traditional investments (such as the stock market) therefore they are considered to have a low correlation with the stock market. However, it is important to remember that a diversified asset allocation strategy does not guarantee a profit or eliminate the risk of loss.
Are Alternative Investments right for me?
Many alternative investments can be quite complicated, and may or may not be suitable for each investor. Some alternative investments are utilized to hedge a specific risk, such as incorporating a Business Development Company or Senior Secured Loan Fund to hedge interest rate risk. However, when incorporating this type of investment you are now exposed to credit risk. Some alternative investments can be very speculative, and/or utilize an advanced trading strategy that may include the use of derivatives such as futures contracts, options and swaps. Many non-traded alternative investments also impose short-term redemption fees, have higher up-front fees, and involve additional investment risks. The most common additional investment risk associated with non-traded alternatives investments liquidity risk. Liquidity risk is defined as the lack of marketability of a security resulting in the inability to buy or sell quickly to prevent or minimize a loss. All in all, each investment is different and has its own unique set of risks.
Suitability is an individual determination for each investor. There are several factors considered before determining suitability – prior investment experience, net worth, liquid net worth, annual income, number of dependents, liquidity vs. illiquidity needs, timing for investment needs, retirement planning, just to name a few. The only way to determine if an investment is suitable for you is to allow myself, or someone on my team, to meet with you face to face and learn more about you.
Because each investment is different, it is imperative that you review and request any and all information available for each product. We are more than happy to go over all of the documents with you, in person.
Can alternative investments be held in IRA’s?
Yes, most alternative investments can be held in an IRA account.
Do you offer traditional investments?
Traditional investments are available. However, we have a preferred selection of alternative strategy mutual funds as well as preferred third party money managers that we utilize for “traditional” investing.
How much money do I need to invest with IMMS?
We do not have a minimum investment amount requirement to work with us. Any amount of money a person has accumulated is valuable to them and we will provide the same service and conscientious advice to anyone who calls. We believe that doing the right thing and helping others brings good things in return.
How do you make it convenient for a prospective client to meet?
We believe in the idea of old fashioned service. My team and I like to make it as easy as possible. We will come to you… your home, your office or even a Starbucks near you. You are always welcome to meet at our main office in Rowlett, TX or at the office of our Broker/Dealer in Dallas near Beltline and the Tollway. We do not charge a consultation fee.
 In the world of finance, correlation is a statistical measure of how two securities (or investments) move in relation to each other. Correlation rages between -1 and +1, with a +1 implying a perfect correlation, or that the securities move in lock-step with each other.
 Diversification is a portfolio strategy designed to reduce exposure to risk by combining a variety of investments which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in the a portfolio.
 There are several types of investment risks. Not all risks are associated with all investments. The most common risks associated with investing are interest rate risk, business risk, credit risk, taxability risk, call risk, inflationary risk, liquidity risk, market risk, reinvestment risk, social/political/legislative risk and currency/exchange rate risk. Be sure to review any investments prospectus in detail before investing. Each prospectus will have a section entitled “Risk Factors” which outlines all the risks inherent to the investment
 There are several types of investment risks. Not all risks are associated with all investments. The most common risks associated with investing are interest rate risk, business risk, credit risk, taxability risk, call risk, inflationary risk, liquidity risk, market risk, reinvestment risk, social/political/legislative risk and currency/exchange rate risk. Be sure to review any investments prospectus in detail before investing. Each prospectus will have a section entitled “Risk Factors” which outlines all the risks inherent to the investment.
 Investing Makes Me Sick does not have a minimum investment amount requirement, however, some alternative investments may require a minimum investment amount and/or have certain suitability requirements based on net worth, liquid net worth and/or annual income. Please read prospectus carefully before investing.
Walt Parker and the registered persons associated with Investing Makes Me Sick.com are all licensed representatives of Titan Securities, doing business under the name of Investing Makes Me Sick.com. Investingmakesmesick.com and Titan Securities are not affiliated.
Investments are subject to suitability. Risk, fees and taxes may apply. Investment products are not FDIC insured, have no bank guarantee, and may lose value. Investments may contain a high degree of risk, may be considered speculative, and may result in the entire loss of the amount invested. Investments may incur substantial fees and expenses which are borne by the investor. Read prospectus carefully before investing. Investing Makes Me Sick.com nor Titan Securities offers tax advice. Clients should consult a professional tax advisor for their tax needs.