Alternative Investments

Question 1

how is low basis stock acquired?

Answer 1

either entrepreneurial success (starting own business), executive success (stock options) or investment success (buy extremely low sell high).

Question 2

what risk is left after diversification

Answer 2

counterparty risk, and regulatory risks still exist in terms of them taxing you more than you think on your position or that you cant sell in market to another party.

Question 3

ways to diversify too much specific risk

Answer 3

outright sale, exchange funds, add assets to lower volatility of specific portfolio, multi asset class completion portfolio

Question 4

what is an exchange fund

Answer 4

two people come together with assets that can diversify the others holdings in order to avoid paying taxes. Public are well tested in market but are expensive with a lot of fees. Private has regulatory issues as they are relatively new

Question 5

how do you use exchange funds and other managed portfolio to reduce tax issues?

Answer 5

you harvest losses

Question 6

monetization of position

Answer 6

borrow against gains in portfolio. no one really does this because of excess leverage issues

Question 7

limits on equity collar to not trigger capital gains

Answer 7

must have a 15% risk exposure

Question 8

so when might you monetize your postions

Answer 8

after putting an equity collar in place. Then you can basically reinvest the gains without triggering any capital gains taxes.

Question 9

variagble pre paid forward

Answer 9

you deliver stock at some future date in exchange for cash. Other party bears the liabiiltiy of stock price increasing and getting owned