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Alternative Investments: Are You Riding the Wave or Facing the Risk? with Keith Black
Episode 918th June 2022 • The Capital Club • Brian Adams
00:00:00 00:43:37

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Keith Black has over thirty years of financial market experience, serving approximately half of that time as an academic and half as a trader and consultant to institutional investors. He currently serves as Managing Director and Program Director, at FDP Institute. During his most recent role at Ennis Knupp + Associates, Keith advised foundations, endowments, and pension funds on their asset allocation and manager selection strategies in hedge funds, commodities, and managed futures. Prior experience includes commodities derivatives trading, stock options research and Cboe floor trading, and building quantitative stock selection models for mutual funds and hedge funds. Dr. Black previously served as an assistant professor and senior lecturer at the Illinois Institute of Technology.

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Key Highlights:

[00:01 - 09:30]  The Shrinkage of the Number of Public Companies

  • The market for special purpose acquisition companies (SPACs) has exploded in recent years, with a record number of companies going public.
  • When the SPAC finds a merger partner and acquisition target, there is no need for disclosure since it is regulated under the merger laws rather than the IPO laws.
  • There is a trend of private companies staying private longer, and this is due to the size of private equity today.


[09:31 - 20:33] SEC Updates Rules for Accredited Investors in Pre-IPO Arrangements

  • Under the Investment Company Act of 1940, mutual funds can invest up to 15% in private companies.
  • There is liquidity available for employees without going public because people in that private equity venture capital space are anxious to get shares before that IPO event.
  • 13.1 million Americans have credit card debt, and they hold the vast majority of the wealth in the U.S. today
  • There has been poor performance for SPACs since their inception, with many companies trading below their initial price.

[20:34 - 41:54] Alternative Investments: What to Look for When Trading These Cryptocurrencies

  • Crypto is very similar to the dot-com bubble of the late 1990s, with prices going up rapidly and then crashing
  • There is no scarcity in the crypto world, and the value of these assets is not based on real companies or anything tangible.
  • Inflation is a concern for some people due to the high rates of inflation in some countries. Cryptocurrencies may be better suited to handle inflation than traditional assets.
  • Bitcoin and other cryptocurrencies may hold their value better in an inflationary environment than fiat currencies.

 [41:55 - 43:37] Closing Segment

It's always great to have a knowledgeable financial expert by your side.

Key Quotes:

“13.1 million creditors for households in America…have the vast majority of the wealth today.” - Keith Black

“At the end of the day, we're not going to have 400 decentralized exchanges. At the end of the day, it's going to be a relatively small number of an oligopolistic practice. - Keith Black

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