Before I grandstand about Senior Life Settlements, and I will, how about a little comic relief. When I worked in the wirehouses, there were some common quips that were passed around the bullpen as a way of coolly stemming the anxiety of a bad market day or a blown call…a couple comes to mind.
- “I promise to make you a small fortune provided you give me a large one to start with!”
- “I have never been wrong…but my timing’s been off!”
- “Tomorrow, I’ll know exactly why what I predicted yesterday didn’t happen today!”
This water cooler chicanery served to deflect advisors’ insecurity over the pickle we were all in. We were being paid to be right, have perfect timing, and always be on the right side of every trade. No pressure, right?
But that speaks volumes about the traditional money management industry’s knowledge, acceptance, and approval of the endemic risk involved in managing somebody else’s money. Risk equals volatility. Volatility is what makes market investing work…and not work. It depends on a multitude of factors to determine how it all turns out for you.
Senior Life Settlements are an alternative asset class that’s useful in managing the risks associated with market-based investments because they can only turn out one way. The mechanics of how life settlements produce investor yield versus volatility-priced assets naturally hedges risk in an organic way. With low correlation to markets and absolute returns, life settlements help balance asset portfolios against bad timing, and forces beyond your control and it generally stops big fortunes from becoming small ones. Investors generally fail to find the humor in that.