E3: Introduction to Risk

Description

In this conversation, attorneys Roland Wiederaenders and Sarah Florer invite the audience to join them in understanding the distinction between public and private securities and how risk is managed differently. They explain the concept of liquidity risk and how it varies depending on the type of alternative asset. They also emphasize the importance of considering the time horizon and return calculations when investing in alternative investments. The conversation touches on the qualifications for investing in alternative assets and the role of accredited investors in managing risk. In this conversation, Sarah and Roland discuss the risks of investing in alternative assets. They highlight three main risks: liquidity, information, and management. They explain how these risks can impact investors and provide insights on how to mitigate them. They also emphasize the importance of thorough disclosure and due diligence when investing in alternative assets. The conversation concludes with a call for feedback and engagement from the audience, encouraging them to be active participants in their financial education.

Takeaways

Risk is a critical consideration when investing in alternative assets.
Liquidity risk varies depending on the type of alternative asset.
The time horizon and return calculations should be carefully considered when investing in alternative assets.
Accredited investors have certain qualifications that allow them to manage risk more effectively.
Liquidity risk, information risk, and management risk are the main risks associated with investing in alternative assets.
Potential Investors should carefully consider the liquidity of the underlying assets and the quality of the information provided by the investment promoters when evaluating investment deals.
Management risk can be mitigated by having a succession plan and involving multiple individuals in the project.
Thorough disclosure and due diligence are essential when investing in alternative assets.
Engaging with financial planners and seeking feedback can help investors make informed decisions.

Chapters

00:00 Understanding Risk in Alternative Assets

05:31 Managing Liquidity Risk in Alternative Assets

09:28 Liquidity and Alternative Assets

12:09 Liquidity in Hedge Funds

14:40 Liquidity in Commercial Real Estate

17:41 Liquidity in Private Equity

21:30 The Risk of Liquidity in Alternative Investments

23:47 Introduction to Risks in Alternative Asset Investing

26:15 Importance of Disclosure and Due Diligence

30:14 Mitigating Management Risk

32:39 Considering the Liquidity and Exit Plan of Underlying Assets