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How The Rich Play The Market

Tuesday, May 14, 2013 - 7:25 AM
It turns out that - other than having more money - the rich aren't that different from the rest of us. 

From The Wall Street Journal:
A new study offers a comprehensive look at the portfolios and investment decisions of several hundred of the wealthiest families in the U.S. Every investor, rich or otherwise, can learn from how these people make the most of their advantages—and from how they mess up.

These households, with an average net worth of roughly $90 million, invest intelligently, for the most part, spreading their bets widely, seldom trading and keeping their investing taxes to a minimum.

But the superrich also commit rookie mistakes.

Read more

The article concludes that the rest of us are better off doing what Wall Street can't:  cultivating patience, trading as seldom as possible, focusing only on those rare companies where you might know something everyone else doesn't and, finally, rebalancing when it is hardest. 

With regard to rebalancing, it can be hard to sell (judiciously) when everyone else is buying, and to buy (carefully selected equities) when everyone else is rushing for the exits, but it has worked well for me.
pearlbrownpearlbrown1,491 posts since
Nov 2, 2010
Rep Points: 6,486
1. Tuesday, May 14, 2013 - 4:49 PM
Now that the 'secret' is out I'd better increase my cash positions. :-)
ShorebreakShorebreak2,700 posts since
Apr 6, 2010
Rep Points: 14,633
2. Tuesday, May 14, 2013 - 5:40 PM
Without reading the article (no access from my computer), I have to say that the super-rich all have hired top-gun (e.g., hedge fund manager) to manage their portfolios for them.

The rest of us are playing in a casino with a bad odd against us all the time. 
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
3. Tuesday, May 14, 2013 - 5:51 PM
Re: 51hh @ 2. Tuesday, May 14, 2013 - 5:40 PM

Here you go. Now you can enjoy the article. You are parially correct. "The ultrawealthy keep about 20% of their assets in hedge funds and various forms of private equity, much of it in "angel investments," or fledgling companies to which they supply both capital and management advice in exchange for potentially higher returns."

How the Rich Play the Market - Yahoo! Finance
ShorebreakShorebreak2,700 posts since
Apr 6, 2010
Rep Points: 14,633
4. Wednesday, May 15, 2013 - 7:18 AM

Thanks for the article.

I like Jason Zweig and am actually following one of his tactical investing strategy: it happened that my strategy coincided with his tactical strategy.

It is more interesting to find out how these filthy rich people made their money.  Also many of these rich people may have disappeared during the 2008 bear market era.

The lesson I learned from this artcile is to develop my own optimum strategy and stick with it. 


51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427