High net worth investors v average retail investors

coyrls

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.

Was what you said, but now you say:

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

Aretnap

MK62 said

The equity "stock market" has never fallen to zero.....

Actually, the Russian stock market did fall to zero in 1917, and the Chinese stock market fell to zero in 1949. So there is a precedent of sorts.

Not that all these supposedly safer investments did much better. Russian bonds also went to zero when the Soviet Union repudiated the Russian Empire's debts. Russian land became worthless when it was expropriated by the new government (the notion that the government can confiscate shares but not land is rather amusing, to say the least). Cash was hyperinflated to nothingness if it wasn't expropriated. And gold, fine art etc only kept their value to the extent that you were able to smuggle them out of the country ahead of the firing squads.

Prism

Type_45 said:

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.

Sure...

You realise that the guy in that video is pretty much talking nonsense right?

If you want to be a HNW individual then invest like a HNW individual - what rubbish. Nobody becomes a HNW individual by investing, they typically become one by working hard and/or building a valuable company. They then might well preserve their money by investing conservatively, however a good deal of their wealth is still tied to their business - which can fail.

He recommends getting wealthy by investing in government bonds - again this is rubbish. US government bonds have a 2% real annual return over the last 50 years. Good luck getting wealthy with that. They preserve wealth not make it.

Gold has lost money over the last 40 years and squeaks in a return if we go back 50 years

bostonerimus

Type_45 said:

High net worth investment strategy v retail investors....

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)
- Invest in their own businesses, their own real estate, and rental properties
- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk
- They only have 20% of their money in equities.  That's the only risk part of their portfolio

The average retail investor:
- 80% equities

I'm doing it wrong then as my mid 7 figure net worth puts me in the top 10% of investors.
My home is a 2 family with a rental apartment in it and it is valued at just over $1M. I live off rental income and a DB pension and keep a lot of cash on hand, but the rest is 85% equities because my spending is such a small fraction of my invested assets that I simply don't worry about money anymore and can afford to take the risk. I got into the "top 10%" by saving lots and using a basic 60/40 portfolio for around 30 years. Nothing fancy or clever, just 30 years of frugality, saving and rebalancing through market turmoil.

MK62

Aretnap said:

MK62 said

The equity "stock market" has never fallen to zero.....

Actually, the Russian stock market did fall to zero in 1917, and the Chinese stock market fell to zero in 1949. So there is a precedent of sorts.

I did put that about Russia and China on the previous page, but the original comment was really about the global stock market.....

Aretnap said:.

Not that all these supposedly safer investments did much better. Russian bonds also went to zero when the Soviet Union repudiated the Russian Empire's debts. Russian land became worthless when it was expropriated by the new government (the notion that the government can confiscate shares but not land is rather amusing, to say the least). Cash was hyperinflated to nothingness if it wasn't expropriated. And gold, fine art etc only kept their value to the extent that you were able to smuggle them out of the country ahead of the firing squads.

Yep, the notion that the global stock market could fall to zero, but life would go on as normal, is fanciful at best......

Cus

bostonerimus said:

Type_45 said:

High net worth investment strategy v retail investors....

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)
- Invest in their own businesses, their own real estate, and rental properties
- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk
- They only have 20% of their money in equities.  That's the only risk part of their portfolio

The average retail investor:
- 80% equities

I'm doing it wrong then as my mid 7 figure net worth puts me in the top 10% of investors.
My home is a 2 family with a rental apartment in it and it is valued at just over $1M. I live off rental income and a DB pension and keep a lot of cash on hand, but the rest is 85% equities because my spending is such a small fraction of my invested assets that I simply don't worry about money anymore and can afford to take the risk. I got into the "top 10%" by saving lots and using a basic 60/40 portfolio for around 30 years. Nothing fancy or clever, just 30 years of frugality, saving and rebalancing through market turmoil.

Maybe you are doing it 'wrong'. Save $50k per year at 8% for 30 years you end up with a mid 7 figure savings. However at this point maybe you need to move to a HNW attitude of protection, rather than equities. Also, HNW individuals don't save the majority of their income, they spend and enjoy. So to be blunt you are not a true HNW individual with respect to the topic.  You are a retail investor who has been very frugal (rightly or wrongly) 

adindas

Type_45 said:

coyrls said:

Type_45 said:

High net worth investment strategy v retail investors....

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)
- Invest in their own businesses, their own real estate, and rental properties
- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk
- They only have 20% of their money in equities.  That's the only risk part of their portfolio

The average retail investor:
- 80% equities

Are you able to give any source for your assertions?

The points I raise are mentioned right at the end of the conversation:  1hr45m onwards.  But worth watching before that too.

https://www.youtube.com/watch?v=bQAC68MxahA&t=3069s 

Listening and learning from other people is a good thing, as there is always something new to learn. But following everything they say, random people on you tube, internet who are not billionaires, proven investors, well known professors in Economics and Finance, never writing well recognisable books in Investing, Finance and trading is insensible in my personal opinion.

Who is this guy "Lance Roberts & Adam Taggart"? Why would people want to listen to their advice especially if the advice is quite extreme, contrary to what many of proven investors, billionaires investors have been doing advising people to put 20% in equity aiming to beat the market.

Please provide any link to any of well known, proven billionaires investors who have suggested that strategy 20% in equity, or ever do that to outperform the market.

Just look at how the fund such as Vanguard 20/80 has been performing and compare it with Vanguard 100% equity in the last few decade.

Type_45

adindas said:

Type_45 said:

coyrls said:

Type_45 said:

High net worth investment strategy v retail investors....

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)
- Invest in their own businesses, their own real estate, and rental properties
- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk
- They only have 20% of their money in equities.  That's the only risk part of their portfolio

The average retail investor:
- 80% equities

Are you able to give any source for your assertions?

The points I raise are mentioned right at the end of the conversation:  1hr45m onwards.  But worth watching before that too.

https://www.youtube.com/watch?v=bQAC68MxahA&t=3069s 

Listening and learning from other people is a good thing, as there is always something new to learn. But following everything they say, random people on you tube, internet who are not billionaires, proven investors, well known professors in Economics and Finance, never writing well recognisable books in Investing, Finance and trading is insensible in my personal opinion.

Who is this guy "Lance Roberts & Adam Taggart"? Why would people want to listen to their advice especially if the advice is quite extreme, contrary to what many of proven investors, billionaires investors have been doing advising people to put 20% in equity aiming to beat the market.

Please provide any link to any of well known, proven billionaires investors who have suggested that strategy 20% in equity, or ever do that to outperform the market.

Just look at how the fund such as Vanguard 20/80 has been performing and compare it with Vanguard 100% equity in the last few decade.

How is your portfolio doing YTD?  

grumiofoundation

Type_45 said:

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.

How do you think that supports you? 

Do you think that 80 = <69???   


You: (note still no source/data provided to support this. 'Average' also not defined)
The average retail investor:
- 80% equities

Prism (for fairness also no source provided, 'average' also not defined)
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

ChesterDog

Type_45 said:

adindas said:

Type_45 said:

coyrls said:

Type_45 said:

High net worth investment strategy v retail investors....

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)
- Invest in their own businesses, their own real estate, and rental properties
- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk
- They only have 20% of their money in equities.  That's the only risk part of their portfolio

The average retail investor:
- 80% equities

Are you able to give any source for your assertions?

The points I raise are mentioned right at the end of the conversation:  1hr45m onwards.  But worth watching before that too.

https://www.youtube.com/watch?v=bQAC68MxahA&amp;t=3069s&nbsp;

Listening and learning from other people is a good thing, as there is always something new to learn. But following everything they say, random people on you tube, internet who are not billionaires, proven investors, well known professors in Economics and Finance, never writing well recognisable books in Investing, Finance and trading is insensible in my personal opinion.

Who is this guy "Lance Roberts & Adam Taggart"? Why would people want to listen to their advice especially if the advice is quite extreme, contrary to what many of proven investors, billionaires investors have been doing advising people to put 20% in equity aiming to beat the market.

Please provide any link to any of well known, proven billionaires investors who have suggested that strategy 20% in equity, or ever do that to outperform the market.

Just look at how the fund such as Vanguard 20/80 has been performing and compare it with Vanguard 100% equity in the last few decade.

How is your portfolio doing YTD?  

Why the intense focus on YTD?

I've been living off investments since around 2007 (yep, straight into the 2008 drop) and YTD is only ever of passing interest. Five-year, ten-year performance is what's important.