After some small amount (5 million?) you are less interested in capital growth and more interested in protecting your capital. That’s what drives this the 0.001%
How the 0.001% invest
41–50 of 216 posts
Re: How the 0.001% invest
#42I've worked for a family office in Hong Kong. What was really telling for me was how the rate of return KPI was measured. We were not benchmarked against the S&P 500, or any index. We were measured directly against the fund of another frenemy family. So long as the fund outperformed the other family, all was good. It's crazy because you could be underperforming treasury bonds, and still be good because the other office was worse.
I guess when you that much money, more money means less than vanity and bragging rights.
Re: How the 0.001% invest
#43The article only considers new investment. Jeff Bezos may be worth $150bn, but approximately $125bn of that is in Amazon stock. He's 80% invested in Amazon. Does it really matter where the worlds richest man puts the other 20% when he could afford to lose it all on moonshots and not give a damn? The risk-reward trade-offs you and me make while investing just don't apply to Jeffs personal investment decisions, and the…
His wealth concentration is actually quite higher, around ~94.7% in AMZN stock. Bloomberg has him currently at a $132b net worth, with $125b in Amazon.
The rest is Blue Origin and The Washington Post, with his cash position at 'only' an estimated $2.45b.
Given the absurdly high valuation of Amazon - and as a fan of humanity pushing into space - I'd like to see him sell some larger blocks of Amazon while the stock market is so high, in order to secure funding for Blue Origin for a decade or more all at once. In terms of dilution, it's drastically better to yield ~$6b-$10b on a few sales out of a stake of $125b, than out of a position worth ~$65b (where he was at just two years ago) if the market is down for a long period of time. Especially true given he has recently indicated Blue Origin might demand even more than $1b per year.
Re: How the 0.001% invest
#44I'm not particularly convinced by the risks stated here. Yes Bill Gates could buy 65% of the Turkish stock market, but if he wanted power, there are surely cheaper and easier ways to do it. And regarding stability, you could make the case that these funds could increase stability. If you're in the 0.001% then surely you have the money to have a long term out look, which means they aren't going to worry about that sho…
> I'm not particularly convinced by the risks stated here. Both of your points are made in the article?
They mentioned presumably 'reasonable' risks, or else they wouldn't have mentioned them at all. I'm just not convinced they are even reasonable enough to bother mentioning.
The third issue (tax) is where the potential issues are, and got virtually the same length paragraph.
Re: How the 0.001% invest
#45Back when I was fantasizing about what I'd do if I won the lottery, I looked into family offices a bit and concluded that there's basically no point as far as the investing advice goes. It's still likely a good idea for some of the ultra-wealthy for estate, tax, and philanthropic purposes, but on the investment side? The standard passive indexing approach used by middle class individuals scales in a cost-effective ma…
Not refuting your assertion, but the concentration of power in tracking funds is a looming problem. The FT did a bit on it last week. Here's something similar from the motley fool:
https://www.fool.com/investing/2018/12/01/vanguards-founder-...
Re: How the 0.001% invest
#46The article only considers new investment. Jeff Bezos may be worth $150bn, but approximately $125bn of that is in Amazon stock. He's 80% invested in Amazon. Does it really matter where the worlds richest man puts the other 20% when he could afford to lose it all on moonshots and not give a damn? The risk-reward trade-offs you and me make while investing just don't apply to Jeffs personal investment decisions, and the…
His wealth concentration is actually quite higher, around ~94.7% in AMZN stock. Bloomberg has him currently at a $132b net worth, with $125b in Amazon. The rest is Blue Origin and The Washington Post, with his cash position at 'only' an estimated $2.45b. Given the absurdly high valuation of Amazon - and as a fan of humanity pushing into space - I'd like to see him sell some larger blocks of Amazon while the stock mar…
It doesn't matter as he can easily borrow tens of billions against his Amazon shares.
Re: How the 0.001% invest
#47I've worked for a family office in Hong Kong. What was really telling for me was how the rate of return KPI was measured. We were not benchmarked against the S&P 500, or any index. We were measured directly against the fund of another frenemy family. So long as the fund outperformed the other family, all was good. It's crazy because you could be underperforming treasury bonds, and still be good because the other offi…
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Re: How the 0.001% invest
#48Back when I was fantasizing about what I'd do if I won the lottery, I looked into family offices a bit and concluded that there's basically no point as far as the investing advice goes. It's still likely a good idea for some of the ultra-wealthy for estate, tax, and philanthropic purposes, but on the investment side? The standard passive indexing approach used by middle class individuals scales in a cost-effective ma…
Err no it doesn't for large amounts not losing money is as important - see the previous comment about RCP.
You can also get into special sits and arbritrage ala Elliot and partners
Re: How the 0.001% invest
#49The family offices I've worked with do pretty much everything. Part of the reason to do everything is that you have the freedom to do so. I literally called a friend on behalf of another friend to get him a bridge loan for a house once.
A free mandate makes for more interesting work, plus as the manager you can stick things in illiquids that have no mark-to-market. That's the uncharitable view, of course. The charitable view is that you are better at evaluating opportunities and are able to do things other institutions are not.
Main thing about FOs is they are just the article says, totally idiosyncratic. One FO I know is basically just a wily old guy who does all his business by phone, meets people to look them in the eye, that type of thing. Made a lot on crypto.
Another FO is basically a hedge fund. Bunch of different desks doing various things, a lot of focus on regulatory approval (that's still a thing, not sure why the article makes it look like there's no hurdles).
Re: How the 0.001% invest
#50The article only considers new investment. Jeff Bezos may be worth $150bn, but approximately $125bn of that is in Amazon stock. He's 80% invested in Amazon. Does it really matter where the worlds richest man puts the other 20% when he could afford to lose it all on moonshots and not give a damn? The risk-reward trade-offs you and me make while investing just don't apply to Jeffs personal investment decisions, and the…
His wealth concentration is actually quite higher, around ~94.7% in AMZN stock. Bloomberg has him currently at a $132b net worth, with $125b in Amazon. The rest is Blue Origin and The Washington Post, with his cash position at 'only' an estimated $2.45b. Given the absurdly high valuation of Amazon - and as a fan of humanity pushing into space - I'd like to see him sell some larger blocks of Amazon while the stock mar…
Alternatively he can just take loans against AMZN stock.
It's how Elon Musk finances his business. Musk has leverage ratio around 40% of his TSLA holdings.