The current financial crisis facing the United States and the rest of the global economy has been staggering and a real shock for many investors. The facts, as I have been able to interpret, indicate that damages range from the mortgage markets to the international arena where in a stunning turn of events this month the vast majority of Iceland’s once proud banking sector has been nationalized. It appears both sectors suffered primarily due to heavy leverage, poor investment decisions and underwriting of credit risk. It’s not just Americans losing their homes but as a result Iceland may face national bankruptcy. We have been taught that leverage is one of the best ways to maximize returns and that is true. Leverage is also defined as debt. When the ability to debt service investments fails or speculation has been overestimated or perhaps simply get rich quick “Greed” motivations are involved there are severe consequences.
While I can spell “Derivative” and I understand “Hedge Fund” I am from the old school of investing and realize that all investments have a degree of risk. The basic law is the higher the return, the bigger the risk.
A Basic Non Correlated Alternative Investment
As our investors understand, the investments in the Guardant Investment Fund LLC are used to purchase assets which are 100% owned by the fund with Zero leverage. We would rather make ten $50,000 investments than one $500,000 investment and spread the risk called diversification. Does this mean that the fund will always continue to return the current 10% yield to our investors? Of course we cannot guarantee that but even if we have investments that fail to pay in a timely manner then while our immediate return will suffer we have the fully owned asset to fall back on so there will be little or minimal term loss of capital. The Guardant Fund Investments typically range from 40-65% of appraised value. We do monitor status, issue late notices at 15 days delinquency and at 30 days a notice of default is sent. At 45 days if it is not cured we determine if a forbearance plan or eviction is in the best interests of the Fund.
Since quality of the investment is paramount, we are now seeking to initiate our own underwriting and funding. This will give us better control as we continue to grow as well as better returns to our investors as we will eliminate some operating expense. We anticipate opening this phase early 2009.
Guardant Investments, Inc. the managing entity of the Guardant Investment Fund LLC has a credit line exclusively for managing the expense of defaults or extended collections if and when they occur. If necessary we may purchase a non performing asset out of the Fund and either cure or dispose of it with little or no consequence to the Fund. Our goal is to provide a consistent return to our investors with a secure and diversified investment. The Fund will never provide 20%, 30% or 40% returns. In this market our goal is our current risk based return of 10%.
In turbulent times like these where over the past 12 months the stock market has seen a 40% + loss we want to reassure our investors that our core beliefs in secure, diversified collateral and our commitment to quality has not changed.
This entry was posted
on Wednesday, October 15th, 2008 at 3:54 pm and is filed under Blogroll, Self Directed IRA, Mortgage Pool, Trust Deed Investing, Mortgage Industry Crisis, foreclosure, Investment, Opportunities, California.
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