Reaching For Yield: The High Risk of Investments

One of the most intellectual groups I belong to is the Counselors of Real Estate. It is an invitation-only group of 1,000 people all over the world. They vet each candidate extensively. Now that I write that, I’m wondering how I got invited to join.

Anyway, at the annual convention, they had one of the most interesting sessions I have seen. Below is a summary of each panelist and some of my highlights. Here are my takeaways:

–Seek to manage and mitigate risk, not eliminate risk.
–Avoid the tyranny of the averages
–Be local. Do not just fly in and out.
–Hire local if possible – they know the market.
–And my favorite comes from Roy Schneidermann of Bard Consulting talking about venture capital. Here is the breakdown of VC money returns:
30% of investments–No return at all
20%–Capital is returned, but no profit
20%–Return is two times invested capital
20%–Return is five times invested capital
10%–Return is 10-300 times invested capital Thus, the biggest risk in the VC industry is “missing the one big one.”


Reaching for Yield_The Counselor Article