Last week, an entrepreneur I know who’s worth hundreds of millions of dollars told me about his new investment philosophy.
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“I’m not looking for a big return on assets,” he said. “I just want my assets returned.”
So it goes for people with millions and billions of dollars to lose as they look out at careening stock markets, crises in Europe and a slowing Asia. Wealth management has become risk management, and the wealthy are all about preserving their fortunes, rather than making new ones.
According to an article in Reuters, some of the most fearful rich are creating “catastrophe portfolios.” Ivan Adamovich of the Swiss bank Wegelin said that the catastrophe portfolio is one-third gold, one-third blue chips and one-third debt in safe, developed countries (whatever those are).
Adamovich told Reuters the interest comes from the most “paranoid” clients in Europe, who hear about other periods in history with massive social breakdowns and financial collapse.
“It’s people who have been listening to their grandmother … They are not necessarily that old. It’s people who are really afraid,” he said.
Real-estate has also come back into vogue among the rich, since it won’t disappear over night like stock-market gains.
Who cares? Well, if the rich are putting money into gold bars, IBM stock and U.S. and Japanese treasuries, they’re not putting money into start-ups, business expansions or job creation. That’s going to make any recovery even weaker.
What else do you think should be included in a “catastrophe portolfio” for the rich?
This Article can be found at WSJ.com
