Alternative investments are investments that are less correlated with the public capital markets by the nature of their investments and have asymmetric risks. They are geared for more sophisticated investors and often restricted to accredited investors only.

Within the broad category of alternatives I include, real estate (direct/indirect), hedge funds, venture capital, credit/lending products, and direct business investments.  In general, the goal of an allocation to alternative investment is to improve the overall risk/reward profile of the overall portfolio.  When the markets fall, and they do, this asset class category should provide some level of insulation while targeting above average returns over the long term.