Alternative Access - March 2020


A “black swan” is an event you never saw coming. COVID-19, commonly known as the coronavirus, could be considered a black-swan event. It will devastate a portion of the world before we know it, and perhaps the equity markets as well. That’s why we like real estate or fine art. They’re protected against any black swans. For my 30th birthday, my girlfriend at the time took me to Paris, and we went to the Louvre. Standing in there for hours, I looked at pieces of art that have survived the Black Death, locusts, bird flu, tsunamis, any war you’ve read about, and any other human-culling catastrophe you can think of. Fine art is a liquid asset and is often more valuable than a kilo of gold. You can insure art; it’s secured. This is exactly why we slowly rolled out a well-established, bespoke, fixed-income product that pays

a much higher interest payment and gives you that coveted liquidity.

the markets. That goes for oil too. These galleries have reputations on the line, and any murmur of impropriety will cause them certain and irreparable harm. Speaking of which, here’s who you don’t lend to: people who are too wealthy. Those, like Steven Cohen or Steve Wynn, can afford to tie you up in court just because they want to. Again, it’s about risk. Necessity is the mother of invention, and there is nothing out there that is as secured, insured, and liquid as art. If you must wait a whole year and you’re getting paid to wait, that’s great. Fine art won’t catch the coronavirus or diseases or get slapped with tariffs, and it won’t go out of style if a tweet targets it. Alan has done a great job of putting this platform together, and the best part is that by spending a small fortune on lawyers to get this whole structure IRS-compliant for ERISA-based pension plans, it’s designed to be used with self-directed IRAs. Investors in this fund will receive more information about the launch of the Beverly Hills Fine Art Society (BHFAS) later this year, and you will be invited to become a part of it. It’s going to be a lot of fun and include fun people, maybe even someone you recognize from TV. Otherwise, what’s the point really? We have also culled our list for nominees who will be invited onto the Board of Advisors for the BHFAS organization. Emails will be sent announcing the nominations.

It really feels great to say this. We’re very happy we’ve started working with and investing into Alan Snyder via his formidable fine art-based lending fund. I’ve known Alan for over 10 years. He’s a straight shooter and a New Yorker who has run the venerable Shinnecock Partners (now out of Beverly Hills) for over 40 years. He’s a mentor of mine and a world-class guy. One of the more impressive things I’ve seen Alan do is influence the entire fine art insurance industry with his white paper “Disaster Strikes Your Fine Art! R U Truly Protected?” Somehow it feels like his art has better insurance than the FDIC does, but I don’t want to get into that here. Back when Americans with marginal credit were having problems getting credit cards, it was Alan’s team that created the Discover Card at the firm known today as Morgan Stanley.

By watching a family office create a fixed-income alternative for

other family offices, I’ve seen how exhaustive this world-class team’s attention to detail is and how much experience they have in structuring the risk as far away as possible.

We don’t own the art. We lend against it and receive interest payments while it’s kept in a bonded warehouse deep inside Manhattan’s granite crypt, as we wait for that next disaster to be born. I’d rather lend to gallery owners at 50% than, say, risk my liquidity on a bad pullback in

Current investors, be on the lookout for your Wonka golden ticket.

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