By "long-short funds," do you mean like the 130/30 funds that were all the rage circa, I dunno, 2007-2008 or so? I haven't heard much about them lately, have you? I betcha a nickel it's because they haven't been doing so well, but I haven't checked and I'm too lazy to check.
Some obvious points. First of all, "Bob Rice is Bloomberg TV's Alternative Investments Editor," what do you expect
him to say? Second, I have great respect for The Only Guide to Alternative Investments You Will Ever Need: The Good, The Flawed, the Bad, and the Ugly
, by Swedroe and Kizer, and you should probably read it, too. Third, all the stuff about "alternative investments" is driven in part novelty and the need for something to write about and the urge to launch and sell new products. And recency. Whenever stocks and bonds aren't doing so well, it creates an opportunity so sell any old weird stuff with the sales pitch that "it isn't stocks or bonds."
Very slightly less obvious: the blurb on Amazon says "The Yale Endowment keeps only 6% of its investments in US stocks, but its portfolio has produced a 100% gain over the past decade. Indeed, the world’s elite investors have long relied on alternative investments to produce their superior returns. Until now those options were the exclusive purview of institutions and the super wealthy, but today any informed investor can play the same game." There is so much wrong with this, so much obvious "spin," that it would lead me not to even read past the blurb. Rick Ferri wrote a caustic pieces about The Cure of the Yale Model
As for "ideas to mitigate some risk," I think that's barking up the wrong tree (and leaving yourself open for snake oil). I believe that you don't get the risk premium unless you are willing to take the risk, and that one should simply accept the risks, e.g. of stocks.
One of the reasons I'm a relative fraidycat is that I think that I actually do accept those risks--and that many "less risk-averse" investors are not really less risk-averse at all, they have simply kidded themselves into believing there's less risk. Be a big boy, take the risk. Accept that fact that sometimes there are just lousy periods for stocks, and sometimes lousy periods for bonds, and sometimes lousy periods for both. There's no reason why there has to be an "answer." Nobody ever promised investors were entitled to win all the time.
The great virtues of the traditional investments--securities
--is that while I don't profess to understand short-term market movements, there is a very direct, simple explanation of why I should expect them to make money at all. Both stocks and bonds derive their returns from the actual business operations of endeavors that in at least some cases honestly creates actual value (yes, I include government in that). Even if you feel that the value-creation story for stocks is a mostly a fig leaf intended to give respectability to what is at heart speculation, it's still seems valid. All of the "alternative" investments are somewhat weird. I can't quite convince myself that I deserve to earn a return simply for sitting on top of a bar of gold, for example.
The other virtue of the traditional investments is that however imperfect it is, there are at least long-term records that are pretty easy to dig up. That makes it pretty easy to assess the risk. And, in the case of both stocks and bonds, the long-term risk/reward study is good, and not unreasonably long-term. Stocks, if you look at the total market, have a fair amount of risk and a fair amount reward and your chances of catching some of that reward over three or four decades look pretty good. Bonds have less risk, less reward, and to me it looks like your chances of catching that reward over any single decade look pretty good. A lot of the alternatives seem to have low reward, so it is all a correlation story--or, if they have a reward, they have peaks and valleys that take a century to average out. Real estate, represented by the almost four centuries of data for Herengracht, crashed and stayed down for well over a century.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.