High net worth investors v average retail investors

Type_45

MK62 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.

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. 

Can you explain why you think you can't do that with equities, but can do it with real estate and precious metals?

Incidentally, most major equity markets have at least a few companies who deal in.........real estate and precious metals (you need to join the dots here... )

Precious metals and real estate won't go to zero.  Or anywhere near it.  Equities can.  

Type_45

Linton said:

Type_45 said:

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?

The stock market is not the same thing as the real economy.  If the stock market crashes it doesn't mean there are no shops or private businesses.  It simply means the stock market has crashed.

A stock market is very much tied to the real world since what is being bought and sold is fractions of the total ownership of companies whose shares are quoted on the stock market.  If you have a broadly based investmnent you probably own a part of Microsoft, Amazon, Shell etc etc. You are positing a world in which the ownership of all major companies across the world becomes worthless.  

It really is not.  The stock market is like a video game. Look at what is happening in the world and look at the stock market.  Completely disconnected. 

jimjames

Type_45 said:

MK62 said:

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......

I don't agree with the premise of your argument.  That being that a collapsed stock market means Armageddon.  

What other scenario is there when index trackers have reached zero value as you've suggested?

Type_45

jimjames said:

Type_45 said:

MK62 said:

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......

I don't agree with the premise of your argument.  That being that a collapsed stock market means Armageddon.  

What other scenario is there when index trackers have reached zero value as you've suggested?

The scenario is that your portfolio is Armageddon.  And it wasn't me who suggested equities could go to zero.  It was the bloke in the interview.  But they can certainly lose the vast majority of their value.

coyrls

Individual equities can go to zero but you weren't talking about individual equities, you were talking about "the stock market"

MK62

Type_45 said:

MK62 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.

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. 

Can you explain why you think you can't do that with equities, but can do it with real estate and precious metals?

Incidentally, most major equity markets have at least a few companies who deal in.........real estate and precious metals (you need to join the dots here... )

Precious metals and real estate won't go to zero.  Or anywhere near it.  Equities can.  

AFAICT, the only stock markets which have ever fallen to zero are Russia in 1917 and China in 1948.......do you believe owning real estate or precious metals would have protected your wealth?
The biggest stock market "crash" was Wall St in 1929 in the USA........but the stock market recovered. Are you suggesting that global stock markets could all fall to zero simultaneously and never recover?......and that life would just go on as normal?

renegade1

don't feed it !!! RUUUUUUUUUUUUUUUUUUN

Prism

Section62 said:

Type_45 said:

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.

You acknowledge it is difficult to find out the extent of what one exceptionally high-profile individual owns. Yet confidently stated (without sources) -

The average retail investor:
- 80% equities

??

The average retail investor with Hargeaves Lansdown is invested 69% in equities apparently. If we include cash and property outside of their ISA and SIPP then I imagine it is much less as a percentage.

Type_45

Prism said:

Section62 said:

Type_45 said:

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.

You acknowledge it is difficult to find out the extent of what one exceptionally high-profile individual owns. Yet confidently stated (without sources) -

The average retail investor:
- 80% equities

??

The average retail investor with Hargeaves Lansdown is invested 69% in equities apparently. If we include cash and property outside of their ISA and SIPP then I imagine it is much less as a percentage.

"Type_45 is correct" is less wordy.

Type_45

MK62 said:

Type_45 said:

MK62 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.

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. 

Can you explain why you think you can't do that with equities, but can do it with real estate and precious metals?

Incidentally, most major equity markets have at least a few companies who deal in.........real estate and precious metals (you need to join the dots here... )

Precious metals and real estate won't go to zero.  Or anywhere near it.  Equities can.  

AFAICT, the only stock markets which have ever fallen to zero are Russia in 1917 and China in 1948.......do you believe owning real estate or precious metals would have protected your wealth?
The biggest stock market "crash" was Wall St in 1929 in the USA........but the stock market recovered. Are you suggesting that global stock markets could all fall to zero simultaneously and never recover?......and that life would just go on as normal?

Copy/paste of my previous answer:

I'm not interested in labouring over whether stocks go to zero, -90% or -80%.

The point of the interview I posted remains:  retail investors are taking those risks with the majority of their investable money.  The wealthy are not.

This smokescreen about how "if my portfolio goes to zero (or close to it) we're all going to be eating roadkill and fending off roaming gangs" is nonsense.