High net worth investors v average retail investors

Section62

Type_45 said:

Section62 said:

Type_45 said:

....

This, I feel, is why the transfer of wealth from bottom to top keeps happening.

I knew that was coming from the very first post in the thread.

The 'poor' are exposed to all the risk, the 'rich' sit fat and happy, and protected.  Same tune, just a different video.

The poor aren't exposed to risk because they don't have any money to invest.  I am talking about retail investors such as you and I.  I don't consider myself poor.

And neither did I refer to the "rich".  I referred to the "wealthy".  The top 10%.

So you meant 'middle' rather than "bottom"?

Type_45

Linton said:

Type_45 said:

MK62 said:

Type_45 said:

coyrls said:

Type_45 said:

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

Why?  Did they invest that way before they were wealthy or after?  Before they were wealthy they would have been in the 80% who invest differently or were they perhaps born wealthy?  In which case the advice should be to be born wealthy.

Take from it whatever you want.  What I took from it is:  What the wealthy invest in can never go to zero.  What the average retail investor invests in CAN go to zero.


This, I feel, is why the transfer of wealth from bottom to top keeps happening.

Investing in something which "can never go to zero" is not the same as risk free.....unless you are claiming that these assets cannot fall in value either.......
Also, investing in bonds does not necessarily mean getting your money back........and it's certainly not risk free.....especially when you also factor inflation in.

It kind of is.  Real estate, precious metals etc will never go to zero.  And if their value drops you just hold on to it and it will go back up again.  It's as risk-free as it gets.  

Why not?  If no-one wants them they have no value.

Do you know what shares are?  Companies are owned by their shareholders.  The only way a company's shares could be of zero value would be if the company had no assets and was not able to make a profit which implies the company would either be nationalised or cease to exist.

Are you really forecasting a world where no private sector businesses exist?  In such a world where would wealth come from? How will the rich become richer if all they can do is to trade gold and land between themselves?

Land will always have value. It's where people live. It where energy comes from. It's where food comes from. Even animals fight over territory. 

MK62

The thing is, all this is armageddon talk......for a well diversified equities portfolio to fall to zero, as Linton said, would mean a total collapse of the world as we know it......no more companies, no supermarkets to buy anything in, nothing for them to sell even if they did still exist as there'd be no companies left to make anything for them to sell......
Individual companies will rise and fall, some will disappear......nobody would argue otherwise..... that's why you don't invest in just one or two companies.
Incidentally, a US investor who bought gold in 1980, would, on an inflation adjusted basis, still be waiting for it to go back up today, 42 years later. A UK investor would have fared better, but this would have been mostly down to GBP v USD, rather than gold itself......

Exodi

Type_45 said:

Invest in assets which go up in value

Doh, why didn't I think of that?

Exodi

Another thing to be clear on, is that the pendulum swings from wealth generation to wealth preservation the richer you get.

I don't think there's any reason to assume from Type_45's original post (which for the record, I think is total nonsense) that a HNW investor would generate greater returns than the average retail investor.

This is why hedge funds, which command eye-watering fees and almost always underperform the market, are interesting to HNW investors - because they are not interested in maximising their returns, they're interested in minimising their losses.

GazzaBloom

You only need to get wealthy once. After that you take as much or as little risk as you like.

Prism

Bill Gates is a good example of a HNW individual - net worth around $130bn

Real estate - $166m 
Cars - $650k
Art - $130m

Cascade - $30bn - mostly equities
Bill and Melinda Gates Foundation - $50bn - charity
Microsoft stock - $26bn
Other stuff - $19bn - this bit is vague, but could be cash.

Still looks like a high equity exposure to me and very little in real estate, cars and art

MX5huggy

Bill is the biggest private agricultural land owner in the us £690m (still loose change).https://amp.theguardian.com/commentisfree/2021/apr/05/bill-gates-climate-crisis-farmland

Type_45

Prism said:

Bill Gates is a good example of a HNW individual - net worth around $130bn

Real estate - $166m 
Cars - $650k
Art - $130m

Cascade - $30bn - mostly equities
Bill and Melinda Gates Foundation - $50bn - charity
Microsoft stock - $26bn
Other stuff - $19bn - this bit is vague, but could be cash.

Still looks like a high equity exposure to me and very little in real estate, cars and art

Bill Gates is also the largest owner of farmland in America.  

We don't know what he owns.  That breakdown of his assets isn't worth a fig.

Type_45

Exodi said:

Type_45 said:

Invest in assets which go up in value

Doh, why didn't I think of that?

How's your portfolio doing YTD?

Mine is up.