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Stock picks of the rich

By Judy Martel · Bankrate.com
Wednesday, October 31, 2012
Posted: 6 am ET

You might think that the wealthy invest their money in expensive hedge funds or individual stocks. But increasingly, they favor keeping it simple in ways that average investors can replicate.

The founder and chairman of Tiger 21, an investing club made up of 202 individuals with at least $10 million to invest, told Bloomberg that members are favoring exchange-traded index funds over private equity or hedge funds.

In its annual survey of members, the SPDR S&P 500 ETF Trust rose to the No. 2 stock pick. Overall, ETFs were more popular than equity hedge funds and mutual funds, with 23 percent of members preferring them for equity investments. Last year, 19 percent of the members preferred ETFs.

Individual stocks are still the No. 1 pick among members for the equity portion of their portfolio, but that method of investing fell by 7 percent, to 43 percent since 2011, while hedge fund investing dropped from 27 percent to 21 percent. Mutual funds are favored by 13 percent of the investors.

The typical portfolio for members includes 23 percent real estate, 22 percent equity, 15 percent private equity, 13 percent fixed income, 13 percent cash, 10 percent hedge funds and 1 percent commodities.

The move toward ETFs, which trade like stocks, and index funds is a sign that members see the market stabilizing and returning to normal, Michael Sonnenfeldt, founder of Tiger 21, told Bloomberg. "Members have crept, crawled and walked back to the kinds of investment portfolios they had before 2008," he said.

Do you believe the market is stabilizing, and have you adjusted your portfolio accordingly?

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11 Comments
TopCat
November 01, 2012 at 9:29 pm

Well it's true, you can gamble with the market, you can speculate with the market, or you can invest in the market. I think in the long run the investor is the one who comes out on top.

Tim
November 01, 2012 at 8:50 pm

the stock market has always been a casino. You put your cash in (buy)and hopefully when you cash out(sell) you have a pay out.

tom
November 01, 2012 at 7:42 pm

i've almost doubled my money with VISA. gobs of money never goes out of style.

Vintner Don
November 01, 2012 at 4:58 pm

Tom Egom-No, it is not investing, it is trading. That is what is done now.

Tom Egom
November 01, 2012 at 1:55 pm

The stock market will always be propped up either through wimps like this Bernake puppet or some other outside force. And it's NOT investing anymore. It's speculating and gambling. Just the facts mam.

tim holt
November 01, 2012 at 1:51 pm

I have been in the market for about 40 years and was pretty sold on the investment growth model of business for much of that period. In recent years I believe the SEC has not policed the market manipulators, the big bankers with government supported legal assistance have gotten away with highly risky schemes, making investment much more of a risk for the individual investor. I have violated the rule that you dont time the market because of the big crashes produced by the bigger Wall Street investors. A lot of smaller corporations are not guilty of any attempts to fix laws in their favor, but the bigger corporations that buy congressional favor with campaign funds can swing the markets up and down with smaller companies just following the trend.

When we stop the big companies and big bankers from manipulating the goverment and the markets, the marketss will return to rational behavior that used to be the case.

Kaylo
November 01, 2012 at 10:33 am

It's interesting that the expense ratio of an ETF is less than a corresponding mutual fund, and that many institutions are waiving brokerage commissions to buy them. This gives you maximum flexibility with lower overall cost. The only downside to EFT now is having to buy in whole shares, but that's not much of a downside compared to the significant cost savings. Vanguard even reinvests dividends and capital gains in fractional shares, if you choose this option.

TopCat
November 01, 2012 at 9:12 am

Up and down is the way of the stock market. The stocks of sound companies will always weather the storm. That my friend you can bet on.

Dan
October 31, 2012 at 11:50 pm

Unless you're an insider (crooks who bet on the destruction of America), keep your money in precious metals like Gold, Silver, and Palladium. They will always retain value in any economy. Investing in bubbles might get you to a certain point for awhile, but when you lose it all, the bank will come take your assets. If people didn't bet their money and could deposit their cash in savings accounts that accrued good interest payments year after year, people would be better off.

Ray
October 31, 2012 at 11:21 am

The market is never really "stable". Unless you are speculating, you cannot plan on it going in a particular direction except that in the very long run (5+ years), it tends to move higher.