over the last two years the value of everything from G-Class Mercedes to Rolex of mariners luxury handbags and trading cards has taken a huge hit basically if you saw a luxury product in a sketchy ad from some guy trying to sell you a Drop Shipping course it's probably haved in value if you are ever feeling bad about your own personal financial choices go and watch Finance Brokers try to unwind someone who is $150,000 in negative equity on an electric humom that they purchased with an 8-year loan to rent out on turo it should make you
feel much better but I am sorry to tell you that these things might be starting to turn around for these douchebags we are re-entering a market where Bitcoin is breaking alltime records stocks are only going up and Dogecoin is worth more than Nintendo Delta Airlines or the Ford Motor Company in a market where prices only go up you better brace yourself because people are going to say that just about anything is an investment to convince their customers to convince their Partners or just to convince themselves but that doesn't matter as long as they can't convince
you that is how I could justify spending $1,000 on a first edition pack of Pokémon cards from Logan Paul that watches are actually not just fashion not just a statement about who you are I have been collecting these bags for a minute they're also a great investment sorry you owe about 190 left yeah all right Hummer EV did you see my other Hummer video with the guy that was like $100,000 upside down yeah that was yeah yeah alternative Investments do have a lot of attractive qualities for sophisticated investors that know how to effectively use them
assets like commercial real estate patents private Equity distressed debt Commodities and even some Collectibles have been purchased by wealthy people as part of their broader investment strategy because they do actually have a few advantages the value of these assets are often uncorrelated to the return of the stock market which means that if you're a wealthy individual that loses their job during a market crash you won't have to sell your investment at record low prices to stay aoat because some of your alternative Investments should still be doing fine if you just had investment in equities and
L your high-paying job in a market crash you might be forced to sell your shares at the bottom of the market which as the finance bro say is not awesome some alternative Investments also let their investors have more control over their value if you own a boring old well Diversified stock portfolio there isn't much you can do to make the whole stock market more valuable if you own a piece of commercial real estate or even something like artwork you can Market it or do it up which might help improve its sale price alternative Investments also
generally have less competitive markets if you are trying to find an edge in the market for stocks or bonds you are going up against teams of quantitative analysts from Jane Street and Citadel Securities who did a 4-year math program at MIT just to eek out five basis points of alpha you might actually know something about a niche alternative investment that does genuinely give you an edge without it bordering on insider trading because the Securities and Exchange Commission really doesn't care about what happens in these markets now if you are an industry Insider that could be
a really good thing but more likely for you it's a really bad thing thing so before you go and rethink that Masterworks investment you should also know about the long list of drawbacks with alternative Investments they are normally highly liquid because the market for them is Niche which means finding a competitive buyer can sometimes take years they are also much more expensive to buy and sell you can buy stocks on any number of commission free brokerages and while they do have some hidden fees they are barely around in a if you want to sell a
piece of artwork piece of jewelry or some other collectible you are probably going to need to go through an auction house or third party dealer soua Beast for example is the most well-known auction house in the world and they charge a 20% Commission on any sale under $10 million which is actually paid by the buyer any investment where you are automatically 20% down the moment you make your purchase is going to be risky at best but let's be honest most of you watching aren't seriously considering a multi-million doll artwork to round out your investment strategy
and if you are seriously considering a syndicated artwork investment system then I have really failed to teach you how money works the alternative Investments that have really been generating all the attention are manufactured luxury goods that can't keep up with demand or intentionally limit production to create a sense of exclusivity high-end luxury watches from Brands like PCH Philip and Rolex limited run cars as well as certain Designer Shoes and Handbags all have long weight lists from authorized dealers that can stretch for years before you're even allowed to drop five figures on a fashion accessory this
has created a huge great market for these items where people people can wait to buy a bag or a watch from these stores and then sell them for a premium to a buyer who just wants their new toy right now something that you can buy one day and then instantly sell the next day for a huge premium sounds like the most risk-free investment there is and it would be if it actually worked like that people have seen the opportunity to make some easy money and have ran with it so hard that there are even sites
that colate sales data to make trackable indexes which as you can see have not been telling a good story about the actual performance of these Investments it might be unsurprising to you but the hype around these markets is also highly correlated with the hype around other alternative Investments like cryptocurrencies and with the current massive rally in dog themed financial instruments and other such nonsense we got to talk about it before anybody else does something stupid so it's time to learn how money Works to find out just how risky these alternative Investments can be this week's
video is sponsored by Ridge I've always had a habit of carrying way too much in my wallet but switching to Ridge has really simplified things and they've perfected the art of a minimalist functional design their Flagship Ridge wallet is Slim secure and fully customizable it holds up to 12 carts has RFID blocking technology for extra security and comes with options like a cash strap or money clip all while fitting comfortably in your pocket plus with over 50 colors and styles there's something for everyone it's also made from premium materials like titanium aluminum and carbon fiber
for lasting durability personally I love how Ridge wallets make carrying Essentials simple without the bulk it's been a game changer for staying organized and secure on the go and with rid's Black Friday and Cyber Monday sale you can get up to 47% off whether you're gifting someone or treating yourself this is a great time to upgrade your everyday carry check out the sale and find a gift that's built to last at ridge.com money there is of course another reason why people are attracted to highly speculative alternative Investments and that's simply their potential to be a
lottery ticket out of poverty a well Diversified portfolio of stocks bonds and real estate is an incredibly powerful tool to build wealth but if you don't have any wealth to begin with even warn Buffet level returns won't make you wealthy within your lifetime unless you can make consistent contributions towards those Investments cryptocurrencies meme stocks trading cards and even straightup gambling is giving hope to a lot of people even if for most of them it will only make their problems worse but for the lucky few who did Time their purchases correctly they have turned incidental amounts
of money into very substantial positions the people that have sold out of these positions have a higher propensity to consume especially on luxury goods to show off their new fortunes which was in part why the aftermarket for luxury goods saw such a boom from 2020 to 2022 the trend was so strong that these items were seen as Investments themselves the brands themselves although they would never publicly admit it heavily played into this idea of scarcity by limiting their production of popular products and raising prices above the rate of inflation year after year to make it
seem like it was a privilege to pay the price of a family SUV for a watch at the end of the day these are companies with a profit motive and the only reason they would limit production is because it would increase the premium they could charge paying $50,000 for a watch seems stupid but if someone that just made a fortune on a monkey jpeg is willing to buy it off you for $100,000 then it's just responsible investing but what is particularly interesting is why this isn't happening again this time the price of Highly risky Investments
is up but the price of all the junk that people normally buy when their doggy coin moons has stayed down so what gives The Logical answer is that sports betting and meme coin speculators have suddenly become very fiscally responsible and instead of blowing their profits on babbling Goods to show off their new found wealth they are prudently investing it into a structure portfolio to provide them with a stable return yeah okay so there are actually three things that have happened here these dumb expensive trinkets that people insisted were great Investments are actually an indication of
a much bigger shift in the economy and habits of retail investors the first big change is that these markets which used to be made up of smalltime unsophisticated investors have become just as Consolidated if not more Consolidated than traditional equities markets with the largest wealthiest investors controlling a huge share of the total supply of things like cryptocurrencies Bitcoin going from 20K to 90k on a year will make people a lot of money but it's going mainly to the type of people that already had a lot of money to put into a risky investment it's a
huge return but to someone who only had $1,000 to invest it's not going going to make them life-changing amounts of money like it would have if they invested early in the 2010s if the winkl Vos twins make an extra billion dollars on the appreciation of Bitcoin they are not going to wear 100,000 PCH phips which means even though the net wealth creation might be the same the resulting propensity to consume is much lower when the rewards are going to people who could have already purchased any luxury good they ever wanted for many of the small
investors who want a chance to make life-changing amounts of money from their limited Capital the boat has already sailed on bitcoin which is why people keep falling for rug pull after rug pull on the promise that this time will be different because they simply need the chance the reason that people are making these gambles is also different a Wall Street Journal survey of investors with low FICO scores found that their primary reason for investing was not to build wealth but to pay off debt credit card debt is now approaching all-time highs and interest rates on
all kinds of borrowing is up so even when people are lucky enough to turn a profit on these extremely risky Investments they are just going back to square one not actually getting ahead four years ago dumb Investments were turning people's stimulus checks into enough money for a down payment on a Lamborghini Urus today they are lucky if it pays off their heavily underwater car loan people are no longer Being Greedy they are just being desperate now you have probably experienced this cultural shift from the pandemic era exuberance to the more cautious Financial environment today even
though most macroeconomic indicators are up and to the right but these Investments are also getting hurt by a market where none of you are watching from which hasn't even been able to make its broad economic indicators look good China has become the largest market in the world for luxury goods because the country has produced a lot of wealthy people very quickly and those people are eager to show off their new found fortunes with luxury goods unfortunately real estate the primary wealth generator in China and the single largest asset Market in the entire world has been
floundering since evergrand and other major property developers started failing and flooding the market with more apartments at fire sell prices this wealth destruction along with a strong Push by the government to crack down an extravagant displace of wealth has meant demand for luxury goods in the country has fallen at the same time as luxury good companies have expended to keep up with demand that has disappeared it should go without saying but even really smart people can do stupid things with their money if they want something to be true a lot of people want to convince
themselves that their new luxury purchase is not only a nice toy but a prudent investment when it simply isn't even if there is a premium between retail price and what it could be sold for in the gray Market you normally have to spend a lot of money at authorized dealers before you're allowed to get to the of the wait list after that the risk adjusted returns are probably very bad if not non-existent if you want to invest your money invest your money if you want to buy something nice to treat yourself by buying something nice
treat yourself don't compromise and do both poorly now the bonus fourth reason is the cultural shift away from conspicuous displays of wealth I am going to be writing an article on my completely free email newsletter about why role playing as a poor person has suddenly become the new trend amongst wealthy people especially in big cities and if all this has convinced you to stick with traditional Investments then go and watch my other video on why you are not actually an investor at all to keep on learning how money works
