Author Topic: Alternative Investments  (Read 4993 times)

Falconer

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Alternative Investments
« on: May 16, 2014, 12:15:45 AM »
Hi All,
So I have started my first investments. And not one of them is in the financial market or real estate. As some might know I am a falconer by trait and have decided to invest something that I know. Falcons. I have bought 6 very rare falcons for a very good price. I do not need to invest any time into them as they are with friends who will breed with them and we share the offspring 50/50. The breeder pays for all the food, takes care of them and provides the chambers. We only share the vet bills. The return on investment is very high. Likely one or two of them will never breed but the rest should give me a very high rate of return. I am talking 100% every year.

So I was wondering has anyone done any unusual investments?

Just a heads up. I am not american so no Roth IRA and 401k etc.

hodedofome

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Re: Alternative Investments
« Reply #1 on: May 16, 2014, 08:18:27 AM »
And here I thought it was going to be a post about managed futures...haha

I run an ETF strategy that is similar to managed futures strategies that trade in stocks/bonds/real estate/commodities. I'm of the opinion that if you are good, investing in what you know can make you more money than anything else. If you know falcons, then try it out and see how it works for you. If you know art, trade art. 

However, it's still not a bad idea to spread the risk around and use some or all of the profits of your 'passion' to fund traditional investments like stocks and bonds and real estate. As an example, Mark Cook http://markdcook.com/ is a farmer in Ohio who also happens to be a world class options trader (I'm talking he can average several hundred percent returns in a good year). He's used all the profits from his options trading to buy up thousands of acres of farmland that produces stable income, as well as collecting rare tractors.

foobar

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Re: Alternative Investments
« Reply #2 on: May 16, 2014, 08:58:10 AM »
It is a very concentrated portfolio. One bad virus can wipe you out.:) These type of opportunities tend to take up time and tend to have scalability limits. It seems to me like your breeder is get the bum end of the deal. In 1 year, he should buy you out and double his profits for the same amount of work.


Hi All,
So I have started my first investments. And not one of them is in the financial market or real estate. As some might know I am a falconer by trait and have decided to invest something that I know. Falcons. I have bought 6 very rare falcons for a very good price. I do not need to invest any time into them as they are with friends who will breed with them and we share the offspring 50/50. The breeder pays for all the food, takes care of them and provides the chambers. We only share the vet bills. The return on investment is very high. Likely one or two of them will never breed but the rest should give me a very high rate of return. I am talking 100% every year.

So I was wondering has anyone done any unusual investments?

Just a heads up. I am not american so no Roth IRA and 401k etc.

Falconer

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Re: Alternative Investments
« Reply #3 on: May 16, 2014, 11:40:12 AM »
My breeder is very glad that I am giving him the opportunity to even look at these birds every day. So he certainly is not at the bum end. When I say rare I mean there are not more than 10 people in Europe who have these. In the USA nobody has them. They are not rare in the wild by the way. Just not many people have them in their pure form anymore.

I have spread the risk by splitting them to 3 different locations at the moment. I am very much aware of the risks involved, it is my industry in the end.

What do you mean scale-ability limits? I must tell that my friends who make enough money in one year to retire on.

So anyone invested in something else?

hodedofome

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Re: Alternative Investments
« Reply #4 on: May 16, 2014, 01:28:04 PM »
He means that in general, if you can make $5k on one falcon, it doesn't mean you can breed 100 falcons in a year and make $500k. I don't know the industry so perhaps it's a possibility, but at some point there's a limit as to how many you can breed and how people will actually buy them from you. So you might be able to make excellent returns with a little bit of money, but you can't expect to build it into a million dollar business.

However, like I said I don't know the falcon business. We're just talking in general. If you can make it work and make a bunch of money from it, by all means do it. Don't waste your time trying to get a few anonymous internet users to validate your dreams :)

KingCoin

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Re: Alternative Investments
« Reply #5 on: May 16, 2014, 07:03:02 PM »
What we're talking about here is a private equity investment. You're really investing in a business, not falcons (at least not any more than a bar owner is investing in beer).

These investments are usually less about the idea itself than your belief in management's ability to execute and honestly disburse profits to stakeholders. As such, it's best to limit this type of investment to people with whom you have a personal history. I've invested in the start-ups of a former business associates (including one who started a distillery). This type of investment is usually risky and, even if successful, may take years to come to fruition.

Barring the presence of a manager in whom you have personal confidence, your best bet is almost certainly investing in public, regulated companies.

Mr Mark

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Re: Alternative Investments
« Reply #6 on: May 16, 2014, 07:08:38 PM »
I own a small share of a professionally managed forest investment.  The land is bought, planted, looked after, and the trees grow. Grow cycle is about 28 years or so. No matter what happens on wall st., it all comes down to the price of timber at harvest.

At current log prices I think compounded annual return is well over 10%. The growth is literal.

foobar

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Re: Alternative Investments
« Reply #7 on: May 16, 2014, 08:04:36 PM »
Why does your breeder need you? Why if he likes looking at the birds didn't he get his own. Right now the answer might be money but long term that will not be an issue.

The scalability limits are how many people in Europe want them and how often will they buy more birds. That the limit of your market. Maybe it is a big enough niche to support you. I will not pretend to be an enough of an expert to answer that. The other limit is how many birds can your friend raise? If it is a 5000/yr market and your friend can raise 50, the only way to build the business is to expand.  Maybe your friend is happy doing that  and your just the backing money but even their spending on more locations, staff, and the rest will cut your profit margin down from now when your friend is subsidizing those costs.

Concentrated investments can have excellent returns but the risks tend to be pretty high.

My breeder is very glad that I am giving him the opportunity to even look at these birds every day. So he certainly is not at the bum end. When I say rare I mean there are not more than 10 people in Europe who have these. In the USA nobody has them. They are not rare in the wild by the way. Just not many people have them in their pure form anymore.

I have spread the risk by splitting them to 3 different locations at the moment. I am very much aware of the risks involved, it is my industry in the end.

What do you mean scale-ability limits? I must tell that my friends who make enough money in one year to retire on.

So anyone invested in something else?

phred

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Re: Alternative Investments
« Reply #8 on: May 16, 2014, 09:15:41 PM »
Some people believe a diversity of investments is the key.

Both Mark Twain and Andrew Carnegie believed you should put all your eggs into one basket, and then watch that basket.

Falconer

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Re: Alternative Investments
« Reply #9 on: May 16, 2014, 11:27:40 PM »
Why does your breeder need you? Why if he likes looking at the birds didn't he get his own. Right now the answer might be money but long term that will not be an issue. 

Because he can simply not get these birds from anyone but me. Even if he had the money. Plus he could never sell the offspring without me. I am also the contact to the customers. A two person falcon farm can easily produce 150 falcons. The market for the right bred of falcons is totally under served. It is also not in Europe but the Arabian gulf. I could sell 1000 of them and would still get asked for more.

But also why do I need to go so big? I want to diversify my investments. So even 10 falcons are enough for me. He can keep doing it while working his day job and make his annual salary in 3 month work.

Some people believe a diversity of investments is the key.

Both Mark Twain and Andrew Carnegie believed you should put all your eggs into one basket, and then watch that basket.

It's funny you should say that, I learned never put all your eggs in one basket. With literal eggs and incubators. I will not invest more than 20000 $US in falcons. Its just to stop me from getting bored. At least I have something to think about. Investing with just ETFs seams so boring. I like some active management.

I own a small share of a professionally managed forest investment.  The land is bought, planted, looked after, and the trees grow. Grow cycle is about 28 years or so. No matter what happens on wall st., it all comes down to the price of timber at harvest.

At current log prices I think compounded annual return is well over 10%. The growth is literal.

That sounds like a great investment. I have some forestry experience from back in the day. I think I might do that in the future as well. There is always a need for wood. And with people becoming more aware of the need for loacally FSC wood I think it is a also a morally right investment. I presume it is in the USA?

What we're talking about here is a private equity investment. You're really investing in a business, not falcons (at least not any more than a bar owner is investing in beer).

These investments are usually less about the idea itself than your belief in management's ability to execute and honestly disburse profits to stakeholders. As such, it's best to limit this type of investment to people with whom you have a personal history. I've invested in the start-ups of a former business associates (including one who started a distillery). This type of investment is usually risky and, even if successful, may take years to come to fruition.

Barring the presence of a manager in whom you have personal confidence, your best bet is almost certainly investing in public, regulated companies.

I agree that this is best done with someone you know well. I have seen too many of these things go bad because people cheat each other. Luckily I am also in charge of sales and all the money goes through my hands first.

He means that in general, if you can make $5k on one falcon, it doesn't mean you can breed 100 falcons in a year and make $500k. I don't know the industry so perhaps it's a possibility, but at some point there's a limit as to how many you can breed and how people will actually buy them from you. So you might be able to make excellent returns with a little bit of money, but you can't expect to build it into a million dollar business.

However, like I said I don't know the falcon business. We're just talking in general. If you can make it work and make a bunch of money from it, by all means do it. Don't waste your time trying to get a few anonymous internet users to validate your dreams :)

you are right. I was just curios as to what others have done in the past. 500k for 100 falcons is only for the cheapest whole sale birds that nobody wants.

foobar

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Re: Alternative Investments
« Reply #10 on: May 17, 2014, 07:16:03 AM »
If you are the contact with the customer, you are no longer a passive investor but an active one. Nothing wrong with that but it is a different level of time commitment.

I will not pretend to understand the exact economics of the situation but lets run your numbers. You think you can sell 1000 birds for over 5 million dollars (that would be the value for birds no one wants. Yours would be easily worth double right?). Why haven't you quit your day job again?:)

Why does your breeder need you? Why if he likes looking at the birds didn't he get his own. Right now the answer might be money but long term that will not be an issue. 

Because he can simply not get these birds from anyone but me. Even if he had the money. Plus he could never sell the offspring without me. I am also the contact to the customers. A two person falcon farm can easily produce 150 falcons. The market for the right bred of falcons is totally under served. It is also not in Europe but the Arabian gulf. I could sell 1000 of them and would still get asked for more.

But also why do I need to go so big? I want to diversify my investments. So even 10 falcons are enough for me. He can keep doing it while working his day job and make his annual salary in 3 month work.



foobar

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Re: Alternative Investments
« Reply #11 on: May 17, 2014, 07:19:49 AM »
I am not sure I would take financial advice from Mark Twain:)  Concentrated bets are great for getting rich. But they are also a good way to go broke.


Some people believe a diversity of investments is the key.

Both Mark Twain and Andrew Carnegie believed you should put all your eggs into one basket, and then watch that basket.

Falconer

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Re: Alternative Investments
« Reply #12 on: May 17, 2014, 02:48:17 PM »
If you are the contact with the customer, you are no longer a passive investor but an active one. Nothing wrong with that but it is a different level of time commitment.

I will not pretend to understand the exact economics of the situation but lets run your numbers. You think you can sell 1000 birds for over 5 million dollars (that would be the value for birds no one wants. Yours would be easily worth double right?). Why haven't you quit your day job again?:)

Why does your breeder need you? Why if he likes looking at the birds didn't he get his own. Right now the answer might be money but long term that will not be an issue. 

Because he can simply not get these birds from anyone but me. Even if he had the money. Plus he could never sell the offspring without me. I am also the contact to the customers. A two person falcon farm can easily produce 150 falcons. The market for the right bred of falcons is totally under served. It is also not in Europe but the Arabian gulf. I could sell 1000 of them and would still get asked for more.

But also why do I need to go so big? I want to diversify my investments. So even 10 falcons are enough for me. He can keep doing it while working his day job and make his annual salary in 3 month work.



Because nobody breeds that many birds in one farm and most breeders are now contracted up. Also who says I have a proper day job? Plus selling falcons is commission based. If all I have to do is sell the bird I take 10%. Anything more than that I take a bigger cut. So I would never get the full sales price of a falcon I have not produced myself. Selling the birds is dead easy with the right contacts. In regards to time commitment, most of my customers are friends of mine. So it takes as much time as selling/buying stocks or buying ETFs.

rmendpara

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Re: Alternative Investments
« Reply #13 on: May 17, 2014, 03:12:32 PM »
The falconry is more of a business than an investment. An investment is passive. A business venture is hands on.

Regardless, what a fascinating idea! A business can give you returns that the public markets could NEVER make, so the two aren't really comparable.

foobar

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Re: Alternative Investments
« Reply #14 on: May 17, 2014, 07:25:37 PM »
Sounds like a scalability issue.:)



Because nobody breeds that many birds in one farm and most breeders are now contracted up. Also who says I have a proper day job? Plus selling falcons is commission based. If all I have to do is sell the bird I take 10%. Anything more than that I take a bigger cut. So I would never get the full sales price of a falcon I have not produced myself. Selling the birds is dead easy with the right contacts. In regards to time commitment, most of my customers are friends of mine. So it takes as much time as selling/buying stocks or buying ETFs.