Gold, Bitcoin and alternatives: Justin Lin on the portfolio sleeve investors misunderstand most

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Justin Lin (1:00)

What is really powerful about gold is that it's not just sitting there doing nothing and smoothing out your volatility. It's actually matched the performance of the S&P 500 over the past 20 years.

Owen Rask (1:09)

Crazy.

Justin Lin (1:09)

You compare the weakest quarters in MSCI world over the past 20 years. Gold has almost always outperformed. You can't say the same for Bitcoin.

Owen Rask (1:20)

Welcome to episode 6 of our Portfolio Construction Series. If you can count, and I'm sure you can, this is the last episode of the series, and maybe it's the most exciting because we're joined by Justin today to tell us about alternative investments. If you don't know what that means, that's okay. That's why we're here. We're going to talk about that part of your portfolio that is probably really exciting, but you just don't know how to treat it. We're going to talk about gold, crypto, and Bitcoin. We're going to talk about all those things today, and maybe, or maybe not, how they may or may not fit in your portfolio. So if you are looking for some good examples of different ETFs that might fit the bill, we're going to cover all that and more in this episode of the Portfolio Construction Series.

Hey there, here's a quick note. This podcast contains general financial information only. That means it's not specific to you, your needs, goals, or financial objectives. So don't act on the information until you've spoken to your financial planner. You'll find our full disclosure, disclaimer, and link to our financial services guide in the show notes. Justin, how are you, mate?

Justin Lin (2:20)

Good.

Owen Rask (2:21)

Yeah. I'm going to just start this completely differently because you just gave us a bit of an insight into your life, which I may bring on to the podcast if I may.

Now, I am an electric vehicle driver. You are a commodity specialist. You came on the show not too long ago and you said you're a diesel driver at the time, and you are an expert in commodities. So, copper, lithium, all the ingredients that go into batteries and electric vehicles. What's changed in your life lately?

Justin Lin (2:51)

Yeah.

I made a big pitch around our fund ACDC, which is obviously the battery tech and lithium fund. I decided to follow through and I purchased an EV myself, and it's been fantastic. So go out there and buy EV guys.

Owen Rask (3:07)

Okay. So you eat your own cooking is probably what we would say in finance. Okay. I really like that. Now we are talking about ETFs, we're talking about portfolio construction. But importantly, within the overall pie chart of people's investments, we're talking about this thing called alternatives.

I want to ask you a very straight up question. What is an alternative? How do you define that?

Justin Lin (3:31)

That's a great question and it's actually quite a tough question to answer.

Because there is no strict definition in finance around what an alternative asset is. And if you talk to 100 people in finance, they'll give you 100 different examples. But just to really frame it and the way that I think about what alternative assets are, they are two main criteria. Number one is it needs to be uncorrelated to the rest of your portfolio in terms of your traditional assets like equities and fixed income. Now, why should it be uncorrelated? Because namesake is alternative. It's not traditional. So therefore, it has to provide a little bit of that difference in movement in terms of price action to the rest of your portfolio. That makes it a diversification play, it makes a bit of a hedge against downturns.