The investment strategies of the ultra-wealthy might have some benefits for the average retail trader. TIGER 21 Founder and Chairman Michael Sonnenfeldt breaks down how members of its peer advisory network are investing.
Sonnenfeldt says TIGER 21 members are looking for “competitive momentum” and examine “characters of the leaders, root to cash flow, and what the market looks like”.
According to Sonnenfeldt, the ultra-wealthy are invested in private equity, real estate, and public equity. Surprisingly, ultra-wealthy investors aren’t looking to make big bucks on investments. According to Sonnenfeldt, they’re looking for “8 to 12% on sustainable returns,” but advises that “anybody who reaches for more, might get it, but they’re taking risks they better be aware of.”
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
This post was written by Nour El Hoda Seleem.
Video Transcript
Nvidia share is slightly higher today, but still down from August ties.
So is now the time to buy into the chip giant as buy on the dip mentality certainly has started to permeate a little bit more on the street.
A majority of ultra wealthy investors on Tiger 21 a membership organisation for wealth creators and preservers, expect NVIDIA to be successful for the next decade.
That’s according to the company’s data and joining us now you can and to discuss how you can invest like an ultra wealthy person.
You’ve got Michael Sonnenfeld there on the screen.
Tiger, 21 founder and chairman, joining us in studio.
Great to see you once again.
Michael.
Thank you, Absolutely.
So let’s talk about this.
I mean, even if we think about how ultra wealthy people are looking across the market landscape and identifying specific names that are of interest to them, how far out are they looking?
We just heard a decade for NVIDIA is where they’re believing in how far out they’ll believe they’re believing NVIDIA will be successful.
You know Tiger, 21 members are entrepreneurs who built businesses over 1020 30 years when they sell their businesses.
They don’t become traders.
They become investors.
Wealth preservers.
So a decade is a short period of time for making a A plan.
Unless you’re trading.
A small number of our members are traders, but the majority are looking out over the decades.
What are the attributes that they look to to determine whether or not a company is a decades long successful company?
So obviously competitive Moats momentum?
One thing most people don’t realise is our members tend to look at the character of the leaders, uh, without great character.
Very few companies succeed, and, uh, most people don’t look enough at that.
But of course it’s competitive mode technology, uh, momentum cash flow route to cash flow.
And, uh uh, what the what the market looks like.
What is the type of character you think they see in some of the executives leading these major companies right now?
Well, clearly, we’re not seeing them in all the characters we’re seeing on the press these days, but our members, I think, by and large, uh, want to see somebody of unusual.
You can’t.
You can’t lead great groups.
You can’t lead teams unless they can believe in you.
There’s lots of different ways to get your teams to believe in you.
Uh, some members, uh, don’t like Elon Musk.
Some do.
But what he’s done is extraordinary.
And he’s inspired a lot of people.
Uh, that doesn’t make make our, uh, members a universal fan of his.
But in a general business, unless you can get the trust of your employees and the trust of your customers, uh, it’s hard to build a long term, uh, franchise with that sentiment.
Do you think some of your your high net worth ultra high net worth members have soured on a name that was sexy for many years, And Tesla is an investment.
So we have.
Actually, uh, we’ve now grown large enough with 1500 members around the world, uh, managing 100 and 65 billion to have subgroups that focus.
We actually have a Tesla investors group.
It’s called a network in Tiger 21.
And these are people who collectively have maybe hundreds of millions of dollars, if not more of Tesla stock.
Some have been in the stock for 30 years.
Uh, for 20 years.
Excuse me, but however long it’s been public, uh, long term holders.
I’m thinking of the Apple holders who’ve been in for 20 years.
But the Tesla holders, uh, have seen an extraordinary franchise, and some of them think it’s not just an auto company, but it’s a data company and a I company.
So, depending on how you analyse the prospects, uh, we have some members who still think there’s a long way to go.
How do you think wealthy investors are thinking about rate cuts and trying to position their portfolio not just for one or two rate cuts, but but a pathway in an entire cycle that could stretch over years, even well, if you look at the sentiment that is talked about in our groups, the question would be what a small cut or a big rate cut.
Be a good thing, And absent the jobs report, it might have been different.
Now, jobs look a little weak, so people are concerned whether a rate cut would just be about inflation coming down, a positive or more concern about a soft landing or worse, if the jobs situation gets worse and they try and see what the Fed thinks by looking at the rate cut uh, but our members are split, You know, Real estate represents about 28% of our assets.
Real estate owners are much more concerned about rate cuts than technology owners because the franchise of a technology, um, Microsoft is not that sensitive to rate cuts other than technologies are valued through rate cuts.
But the prospects are much more about the fundamentals.
You just mentioned real estate being about 28% of the representation.
The asset of the assets location here, Where else are some of the ultra wealthy looking for opportunities to invest alternative investments, Uh, outside of the equities market.
So, first of all, we Although our members, uh, have extraordinary wealth, they’re all wealth creators, Which means our portfolios look different than somebody who inherited wealth or got it through a divorce or maybe made it.
But our number one asset is private equity.
It took 15 years for it to rise.
The top number two asset is public.
Uh, is, uh, real estate and number three is public equity at about 22% of what’s amazing is if you add those three up, it adds up to 76%.
That is a long biassed portfolio.
It shows tremendous long term perspective.
It’s not a traders portfolio.
It’s an investor and wealth preservers portfolio.
What kind of returns are are kind of the rule of thumb that they’re looking across for investments that long term, You know, anybody who who wants a well diversified portfolio, uh, wants to have cash so they’ll have 12% cash.
They’re looking for 8 to 12% sustainable returns.
Anybody who reaches for more might get it, but they’re taking risks that they better be aware of.
Michael Sonnenfeld, Who is the Tiger?
21 founder and chairman.
Great to have you here in studio with us.
Thank you.
