By Robert Frank
How afraid are the wealthy right now?
- Buena Vista Pictures/Everett Collection
According to a report from Scorpio Partnership, the world’s high-net-worth investors (with $1 million or more) have an extra $10 trillion lying around that they refuse to turn over to their wealth managers.
Granted, these investors have $16.5 trillion invested with private banks and wealth-management firms–up from $14.5 trillion at the end of 2008, largely reflecting market gains.
But Scorpio, a London consulting firm, says wealthy investors actually have more than $26 trillion that they could be giving the banks and wealth-management firms to manage. “This implies there is approximately $10 trillion of high-net-worth assets that could be advised by banks,” the firm says. “Capturing these assets is the real answer for industry recovery.”
That could take a while. The wealthy were burned so badly in the past three years from bad advice and bad investment decisions that they are unlikely to hand over their extra cash anytime soon. And can you blame them?
The banks surveyed in the Scorpio report won on average about $900 million each in new-client assets–a 60% drop from 2008. And that is despite the flood of millionaires created last year.
“Our global HNW data show there are strong signs of wealth creation even in these complex markets and yet new clients are still holding back from opening accounts with the industry,” said Sebastian Dovey, managing partner of Scorpio.
Not all of the blame goes to wealth-management firms. The world’s governments and volatile financial markets are probably the main causes of fear in the rich right now. Still, the industry hasn’t done itself any favors with its performance and lack of transparency.
What do you think is making the wealthy keep their $10 trillion under the mattress?
What Four Bullish Billionaires Are Buying
Bill Gates Just Poured ANOTHER $54 Million Into This Stock
Conviction.
It’s a concept that is rarely heard in investment circles these days, but is still one of the key traits of top investors.
When they have conviction, they stick with an investment idea for the long haul, undeterred by any near-term concerns that may shake their faith.
Indeed, many investors will book profits if a stock has had a strong run. It’s human nature — for most of us. Microsoft (Nasdaq: MSFT) co-founder Bill Gates does the opposite.
He continues to buy into his favorite ideas even after they’ve been powering higher.
Case in point: AutoNation (NYSE: AN).
I told you about his interest in the company three months ago when shares traded for about $26. His bullishness came at a time when many analysts thought that shares were fully-valued on the basis of near-term operating metrics.
With shares up about 42% to almost $34 since then, you’d think Gates might be content to book his profit. But he’s buying even more. In fact he’s made three huge purchases, boosting his holdings by roughly 1.7 million shares to about 13.7 million. All told, Gates’ stake is worth about $468 million.
The perils of myopia
Gates sure has the magic touch. The top 15 holdings in the foundation that he runs with his wife Melinda are all up during the past six months.AutoNation, Caterpillar (NYSE: CAT), ExxonMobil (NYSE: XOM), and Costco (Nasdaq: COST) are all up more than 30% in that time frame. Hiis investments in McDonald’s Corp. (NYSE: MCD), Wal-Mart (NYSE: WMT) and FedEx (NYSE: FDX) have barely budged, though. Perhaps his Midas Touch will work similar magic on these names as well.
– David Sterman
By James Altucher
I’ve been taking a lot of heat for being bullish. At least I’m not alone.
There’s Warren Buffett. Among other purchases, Buffett over the past year has spent $30 billion on a railroad (Burllington Northern) and has called it a “bet on the US economy”. So far so good, rail traffic is up 20% from a year ago. Buffett has also bought 2.5 million shares of waste management firm Republic Services. The interesting thing about garbage is that it’s directly correlated to the economy. Garbage goes up when we consume more.
Then there’s Ken Fisher, who runs Fisher Investments. He’s son of noted investment writer Phil Fisher, who was a notable influence on a younger Warren Buffett (next to the influence of Ben Graham). A recent Fisher quote: ““I think most people are caught up in this period that I view as the pessimism of disbelief. I challenge people to find a period in the last 100-plus years where, looking at total returns on a global basis, you had a bear market followed by a positive 12 months where the second 12 months was anything other than up.”
Fisher has recently been bullish on innovative ways to extract more gas and coal out of the ground. In particular, he’s been bullish on Carbo Ceramics (CRR), Haliburton (HAL), and Baker Hughes (BHI).
There’s also Leon Cooperman, one of the most successful investors of all time. He runs Omega Advisers. Recently on CNBC he was saying that stocks are cheap and that the bottom set in March 2009 will probably last for decades. What’s Cooperman been buying? Last quarter he bought 3.3 million shares of Microsoft (MSFT), 1.2 million of Ford (F) and 720,000 of Bank of America (BAC) among others.
And, finally, John Paulson. who was made famous by his multi-billion bet against the housing market, as documented in Greg Zuckerman’s excellent book, The Greatest Trade Ever. Paulson has recently been very bullish on gold, which might make you think he’s bearish on the U.S. economy, But it seems the reverse is true: He’s also been buying up tracts of raw land, so presumably he thinks land prices are coming back (which is often hand-in-hand with housing prices coming back) and he’s been bullish on U.S. financials. His latest 13F filing shows Paulson buying up 40 million shares of MGM Mirage (usually someone doesn’t buy shares of a casino if they think the economy is going down) and three million shares of XTO Energy (XTO).
By SERENA NG And ERIK HOLM 3-1-11
Warren Buffett's Berkshire Hathaway Inc. has spent tens of billions of dollars on railroads, machine tools and utility companies in recent years. But Mr. Buffett's 2010 annual letter, to be released Saturday, is likely to emphasize just how much Berkshire's core insurance business is still driving its growth.
Berkshire, where Mr. Buffett serves as chairman and chief executive, is likely to report improved fourth-quarter earnings and an increase in book value, a performance yardstick Mr. Buffett uses to measure the company's growth.
Warren Buffett has previously described investing with Berkshire's 'float' as using other people's money without having to pay interest.
Results will be buoyed by rising stock markets that helped Berkshire's large stock portfolio and its derivatives contracts. The company's manufacturing and retail operations, and its February 2010 acquisition of railroad Burlington Northern Santa Fe, likely boosted net income, as did insurance underwriting. Berkshire's net earnings through the first nine months of 2010 totaled $8.6 billion, already exceeding reported net income for the whole of 2009.
Of importance, Berkshire's pool of funds from insurance—something known as "float"—could have swelled to roughly $67 billion at the end of 2010 from $63 billion a year earlier. It is poised to rise further in 2011 despite Buffett Just Sold Out of These EIGHT Stocks and Bought Another 6.2 Million Shares of His Favorite bank. February 15, 2011 By Daily Trade Alert
Warren
Buffett’s holding company, Berkshire Hathaway, has just released its
latest portfolio changes for the quarter ended December 31, 2010.
Here’s a summary of what he’s been buying and selling…
Buying
- Added another 6.2 million shares of Wells Fargo (WFC)
Selling
- Sold out of Nike (NKE)
- Sold out of Fiserv Inc. (FISV)
- Sold out of Nalco Holding Company (NLC)
- Sold out of Lowes (LOW)
- Sold out of Becton Dickinson (BDX)
- Sold out of Bank of America (BAC)
- Sold out of Comcast (CMCSK)
- Sold out of Nestle (which trades as an ADR)
Bill Gates Just Poured ANOTHER $54 Million Into This Stock
Conviction.
It’s a concept that is rarely heard in investment circles these days, but is still one of the key traits of top investors.
When they have conviction, they stick with an investment idea for the long haul, undeterred by any near-term concerns that may shake their faith.
Indeed, many investors will book profits if a stock has had a strong run. It’s human nature — for most of us. Microsoft (Nasdaq: MSFT) co-founder Bill Gates does the opposite.
He continues to buy into his favorite ideas even after they’ve been powering higher.
Case in point: AutoNation (NYSE: AN).
I told you about his interest in the company three months ago when shares traded for about $26. His bullishness came at a time when many analysts thought that shares were fully-valued on the basis of near-term operating metrics.
With shares up about 42% to almost $34 since then, you’d think Gates might be content to book his profit. But he’s buying even more. In fact he’s made three huge purchases, boosting his holdings by roughly 1.7 million shares to about 13.7 million. All told, Gates’ stake is worth about $468 million.
The perils of myopia
Gates sure has the magic touch. The top 15 holdings in the foundation that he runs with his wife Melinda are all up during the past six months.AutoNation, Caterpillar (NYSE: CAT), ExxonMobil (NYSE: XOM), and Costco (Nasdaq: COST) are all up more than 30% in that time frame. Hiis investments in McDonald’s Corp. (NYSE: MCD), Wal-Mart (NYSE: WMT) and FedEx (NYSE: FDX) have barely budged, though. Perhaps his Midas Touch will work similar magic on these names as well.
– David Sterman
Gold TGLDX.| Company (ticker) | Market cap. ($M) | Description |
| Exxon Mobil Corp. (XOM) | 396,900 | World's largest non state-owned oil and gas firm. |
| Apple Inc. (AAPL) | 313,751 | Nine straight years of at least 28% sales growth for this tech giant. |
| Ind. and Comm'l Bank of China (HK) | 261,039 | Largest of China's four quasi state-owned banks. |
| PetroChina Co. Ltd. (PTR) | 254,610 | Aggressive acquirer of foreign oil fields. |
| BHP Billiton Ltd. (BHP) | 252, 323 | Aluminum, copper, gold, silver, nickel -- they mine it all |
