Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How the 0.001% invest

economist.com

Post reply on HN
Print view View original

81–90 of 216 posts

Re: How the 0.001% invest

#81

Post by desdiv »

CompelTechnic wrote: post #66
ThrustVectoring wrote: post #39

Back 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…

There is one point you haven't considered: Even though a pure indexing strategy is appropriate, it is not appropriate to use Vanguard for this. At the billion-dollar level, assuming that the index funds had an expense ratio of .05% (among the lowest out there) you would be paying annually: 1,000,000,000*.0005 = $500,000 For that level of expense, you could instead have a one-man office or other service provider that…

VIIIX's[0] Institutional Plus Shares (with a $100 million requirement) has an expanse ratio of 0.02%, so that's $200k.

It would be hard to find someone at this salary level who can match the tracking performance of Vanguard. If they achieve a tracking error that's 1% higher than that of Vanguard's, that would mean an annual loss of approximately $800k compared to Vanguard (1,000,000,000 * 8% * 1%).

[0] https://institutional.vanguard.com/VGApp/iip/site/institutio...

Re: How the 0.001% invest

#82

Post by shaki-dora »

pjc50 wrote: post #40
abledon wrote: post #6

[removed fun fact due to it being false and still being published in modern books .. sigh]

Thanks for voluntarily withdrawing this.

Yet even now the removal message refers to it as a “fun” fact, making me somewhat less enthusiastic about OP’s moral compass. Although, I guess, in the best possible light, and some squinting, one could consider this an artifact of inelegant phrasing, or anchoring on whatever the post previously said. Then again, when first told of the true nature of their post, the instant reaction was to defend it with pretend ignorance, not to do a quick search trying to verify it.

Meanwhile, that reply calling the original post anti-semitic propaganda remains gray. It’s somewhat telling that the community seems to consider a myth of jewish war profiteering more worthy than an abservant user calling it out.

But, to quote OP: anti-semitism, “no longer fun. lol”

Re: How the 0.001% invest

#83

Post by ataturk »

Gustomaximus wrote: post #79
mruts wrote: post #62

Earlier quoted context omitted.

I've seen the portfolio's of dozens of family offices (I worked at a portfolio analytics company so I had free reign to snoop around), and none of the offices seemed competent. The returns were terrible and the portfolio construction laughable. Instead of striving for out performance, the funds just catered to the whims and idiosyncrasies of the family. Also, many of these funds were too small to make sense, AUMs fro…

A friend of mine who manages ultra wealth people said most people who turn up don't say "How much can you make me" but say "Can you make sure I'm never poor". It's often about preservation of wealth more than gains for these people. That said I've discussed some returns they make and it's incredible. I don't want to say what I recall, as it was a couple years back and it sounds like an exaggeration. They said this is…

My take is that most of the action today is taking place in deals that the public can't access--look at how big universities are investing with private funds that just buy up the companies, take them private, or what have you. The public stock market is more just a cesspool of also rans these days. Look at GE . So yes, the "access to the deals" is key, and the rich are looking out for each other because they are politically aligned.

Re: How the 0.001% invest

#84

Post by [deleted] »

adventured wrote: post #58
charlesdm wrote: post #46

Earlier quoted context omitted.

It doesn't matter as he can easily borrow tens of billions against his Amazon shares.

Debt always matters when it's that large of a sum. If he borrows $10b over six years against $65b in shares, he would have been dramatically better off liquidating $10b worth of stock over ~18 months when it was worth $125b-$145b and having zero debt. He's 54, has been at the helm for 24 years and isn't going to run Amazon forever, the market isn't going to freak out if he sells a few points more of stock. Is Amazon…

[deleted]

Re: How the 0.001% invest

#85

Post by cik »

Gustomaximus wrote: post #79
mruts wrote: post #62

Earlier quoted context omitted.

I've seen the portfolio's of dozens of family offices (I worked at a portfolio analytics company so I had free reign to snoop around), and none of the offices seemed competent. The returns were terrible and the portfolio construction laughable. Instead of striving for out performance, the funds just catered to the whims and idiosyncrasies of the family. Also, many of these funds were too small to make sense, AUMs fro…

A friend of mine who manages ultra wealth people said most people who turn up don't say "How much can you make me" but say "Can you make sure I'm never poor". It's often about preservation of wealth more than gains for these people. That said I've discussed some returns they make and it's incredible. I don't want to say what I recall, as it was a couple years back and it sounds like an exaggeration. They said this is…

I deal with multiple folks who have them. This is the real goal, though tongue-in-cheek. Ultimately they want monies to increase as the family logically increases in size.

Re: How the 0.001% invest

#86

Post by Spooky23 »

ThrustVectoring wrote: post #39

Back 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…

It depends on your needs. You may recoup the perceived investment losses via tax savings or other factors.

Also, when you get into aging family members and generational wealth issues, you want to have controls to reduce your immediate control. Decades of accumulated returns can be wiped out by a bad decision.

If I had billions to worry about, I’d want to make sure I had assets that were more diversified than what Vanguard offers.

Re: How the 0.001% invest

#87

Post by aczerepinski »

j1vms wrote: post #64
hal-9-000 wrote: post #51

Earlier quoted context omitted.

I'm not so sure if he could easily liquidate larger block of stocks without affecting price/panic much. Maybe in long period of time by periodically selling minor amounts. Amazon is Jeff and Jeff is Amazon, I wonder what would happen and how markets would react if he disclosed even slightest hint of his exit intentions. Also fan of humans conquering space though, and would definitely love to see that happen.

> Amazon is Jeff and Jeff is Amazon True, and a scary thought for any heavy investors. That's why a company that size needs to have a publicly known succession plan given current valuation. There are people at Amazon who could take over but no one whom the market would trust with taking the reigns, right off the bat.

People were saying Berkshire needed public succession plans for several decades before Buffett eventually created/disclosed them. The stock did really well during those decades, and virtually every other public company turned their CEO over many times.

Re: How the 0.001% invest

#88

Post by joncrane »

code_duck wrote: post #69
ascar wrote: post #38

Earlier quoted context omitted.

> If there are several individually wealthy family members it's probably more likely due to dilution. While this is probably true in general, there are at least two famous exceptions from Germany. There is the notable case of Adolf "Adi" Dassler, founder of Adidas, and his older brother Rudolf Dassler, founder of Puma, who separated from their joined shoe manfucaturing business and independently built two of the larg…

In both of those instances, wasn’t there onebusiness that they split into two? That’s still one source of wealth. They just divided it earlier than death.

The point is that the vast majority of the wealth was generated after the split.

Re: How the 0.001% invest

#89

Post by IfOnlyYouKnew »

mottenkufelxx wrote: post #14
abledon wrote: post #6

[removed fun fact due to it being false and still being published in modern books .. sigh]

Love me some antisemitic propaganda on one of the most-read tech pages. Mods, delete this.

Why is (was) this entirely truthful objection (see other posts) flagged? Is it now offensive to call anti-semitic myths, well, that? Even the original poster was (eventually, sort of) convinced.

Re: How the 0.001% invest

#90

Post by xenophonf »

CompelTechnic wrote: post #66
ThrustVectoring wrote: post #39

Back 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…

There is one point you haven't considered: Even though a pure indexing strategy is appropriate, it is not appropriate to use Vanguard for this. At the billion-dollar level, assuming that the index funds had an expense ratio of .05% (among the lowest out there) you would be paying annually: 1,000,000,000*.0005 = $500,000 For that level of expense, you could instead have a one-man office or other service provider that…

a one-man office or other service provider that can buy the individual stocks

In the given scenario, you aren't just hiring a guy to buy stocks for the Vanguard expense ratio. You're also buying all their financial and information security processes. You're buying risk mitigations like regular audits and SOX compliance and SP800-53 controls. To safeguard a billion dollars, that overhead is totally worth it.

Post reply on HN