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Rich people are hoarding cash, and


bostonangler
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Rich people are hoarding cash, and wealth managers are getting frustrated

A friend of mine has relatives in Germany who converted some of their not insubstantial family wealth into gold bars and buried them in the woods of Bavaria. This was at a time before negative interest rates so was not a reaction to today’s uncertain global economy, rather mistrust of the financial system in general. Yet it highlights a propensity on the part of the wealthy to hoard that is increasingly frustrating wealth managers.High-net worth individuals (HNWIs) — people with at least $1m in investable assets — are increasingly shunning equities.

 

In the first quarter of this year, HNWIs held nearly 28 per cent of their portfolios on average in cash, according to the Capgemini World Wealth report. A year previously, that figure was 27.2 per cent.Overall cash holdings of clients at UBS, the largest wealth manager in the world, are now 26 per cent, according to its quarterly investor sentiment survey — up from 25 per cent at the start of the year. Credit Suisse’s chief executive Tidjane Thiam told analysts in July that clients were holding 29 per cent in cash — albeit a slight dip from 30 per cent at the start of 2019. Wealth managers say the uncertain environment for the global economy and the outlook for equities are why clients are keeping their powder dry. More recently, fears over the trade war between the US and China have led some investors to increase their cash holdings: a third of investors in UBS’s quarterly survey thought the skirmishes could last a year or longer, and while 45 per cent thought diversifying their portfolio was the best solution to a prolonged trade war, 37 per cent said holding cash was the answer.Wealth managers do not like this trend, for understandable business reasons. Swiss banks in particular, where interest rates are negative at -0.75 per cent, have been passing on these rates to clients with high cash balances. Credit Suisse and UBS had held fire, but recently said they would have to start passing them on, too. If rich people do more with their money — investing in private equity or other alternative assets, buying property or even regularly trading equities, for example — wealth managers make more money from them. 3.9% The fall in the number of ultra-HNWIs around the world in 2018 To give them their due, it is not all about their bottom line.

 

Some wealth managers are genuinely frustrated that clients think cash is the safest bet in a world of negative interest rates. “In some ways it is heartbreaking to think about how much the markets have moved since the financial crisis,” UBS chief investment officer Mark Haefele told me recently, referring to investors who have stayed on the sidelines and missed out on the great bull run in equities.Yet perception of risk is an emotional thing. If people feel comfortable paying extra money in the form of negative rates for the known loss they will suffer on cash versus the unknown and potentially larger loss on riskier assets, it can be hard for wealth managers to talk them out of it. At least, unlike gold bars buried in the ground, finding where their money is will not be a problem, so in that respect the cash-rich could be doing worse in terms of portfolio protection. Wealth managers may need to respect that.Capgemini Global HNW Insights surveyOnly 44% of HNWIs interviews for the 2019 Capgemini Global HNW Insights survey said they connected ‘very well’ with their wealth managers“My wealth manager does not know me well personally”28% cited their adviser’s lack of emotional intelligence as the reason they did not connect well“My wealth manager uses too much technical lexicon that is difficult to understand”

 

https://finance.yahoo.com/m/761aba26-568f-3605-8c63-bd92b83694b9/rich-people-are-hoarding.html

 

 

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People who are aware clearly see what lies ahead......unless the PTB work a worldwide fix in the form of change/asset based currency reform.....something lies ahead.......hope everyone is prepared.....video below might be of interest to some.....about half way thru the debt clock is mentioned.....bottom center of it you will find unfunded Gov debt.........something like $125 trillion......simply unsustainable.....      CL

 

 

 

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2 hours ago, coorslite21 said:

People who are aware clearly see what lies ahead......unless the PTB work a worldwide fix in the form of change/asset based currency reform.....something lies ahead.......hope everyone is prepared.....video below might be of interest to some.....about half way thru the debt clock is mentioned.....bottom center of it you will find unfunded Gov debt.........something like $125 trillion......simply unsustainable.....      CL

 

 

 

 

Thanks for posting this, CL.  

So what do you think is the answer for us common folk?  Crypto?

 

 

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6 hours ago, Floridian said:

 

Thanks for posting this, CL.  

So what do you think is the answer for us common folk?  Crypto?

 

 

 

Good question......not sure the world is quite ready yet to go all digital......(crypto)......but just my opinion..

 

I still believe the fix will be something asset backed/based for right now.....the current fiat paper is just that......paper with no value to support it.....

 

China created the petroyuan... to compete with the petrodollar.....China's PetroYuan is 100% backed by gold.....or so they tell us......

 

For us common people.....you might read in many financial places they suggest a portfolio with 5% or more of physical metals as a hedge.......

 

Just a thought!

CL

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  • 3 weeks later...

Wealthy Investors Preparing for Meltdown With Stocks Near Records

Though stock prices are at an impressively high point, signs pointing to a recession have prompted the wealthiest investors to take 5 crucial steps to protect their investments going forward, according to wealth management advisors like Ashley Folkes at Moors & Cabot, per an in-depth report by Business Insider. These 5 steps include: selling off bonds, stockpiling cash in order to increase liquidity, turning to ETFs as a shield from potential market troubles, paying down debt and playing it safe in the market. Ultra-wealthy investors have taken these steps even as other investors have occasionally moved in the opposite direction; while many investors have rushed to buy bonds, wealth managers are encouraging a sell-off as a result of the inverted yield curve which has decimated many bonds' value

Steps to Prepare

In spite of recent stock market highs, prominent figures including Deutsche Bank Chief GLobal Strategist and Head of Asset Allocation Binky Chadha have pointed to increasing signs a recession is on the way. Chadha explains that his firm "would argue you want to be defensively positioned" and that "the U.S. equity market has run way, way ahead of growth," per a report by Barron's. Here are some steps investors may consider taking to protect their investments:

Sell Off Bonds

 

By limiting exposure to bonds, investors can also reduce exposure to interest rate fluctuations and general market turmoil. In a recession, these two elements will be abundant.

 

Boost Liquidity With Cash

 

In a recession, access to liquidity is essential. Keeping a more sizable proportion of your investments as cash holdings can help to limit overall portfolio risk and has the added benefit of providing a tool to capture investment opportunities that may be available at a bargain during a recession.

 

Embrace the ETF

 

For those investors who don't wish to give up too much of a stake in equities until a recession seems even more likely, index low volatility ETFs could be a good option, according to Folkes. Top-quality dividend-paying stocks with substantial histories of success may also be a safer bet.

 

Reduce Debt

 

Capitalize on relatively low interest rates by refinancing and paying off debts now, thereby allowing you to save more money.

 

Stop Trying to Play the Market

 

For all investors, ultra-wealthy or otherwise, a key to weathering a recession is to not game the system too much. Indeed, making too many significant changes to a portfolio can throw off risk tolerance, asset allocation and more.

 

 

What's Next?

Although a recent report by Barron's highlights "doomsday scenarios" including the ongoing U.S.-China trade war, the potential for major infrastructure damage as a result of cyberattacks, or widespread deflation, it's important to keep in mind that long-term investment strategies are typically designed to accommodate times of economic turmoil. Investors looking to follow the defensive strategies of the ultra-wealthy would be wise to keep that in mind before entirely upending an approach to investments.

https://www.investopedia.com/wealthy-investors-preparing-for-meltdown-with-stocks-near-records-4771242?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo

 

 

As they say "follow the money" or keep believing the con job coming out of D.C....

B/A

Edited by bostonangler
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