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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".

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 partly because they get access to deals that don't hit the wider market and you need serious cash to get in the room to have that chat. And I guess these manager have a bunch of the right people attached to them so it makes an easy stop.

ataturk 8y ago
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 <facepalm>. So yes, the "access to the deals" is key, and the rich are looking out for each other because they are politically aligned.
cik 8y ago
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.
savanaly 8y ago
>They said this is partly because they get access to deals that don't hit the wider market and you need serious cash to get in the room to have that chat. This is something I hear a lot and I just don't get. Are the people on the other side of those deals just...not greedy? After all, you are implying that the deal has better expected returns than what people are buying on margin in public markets, so why doesn't the person on the other side of the deal take a little more for themselves by selling there instead (at a slightly more favorable interest rate)? Is it because the rich investors are needed to bring some level of expertise or connections to the investment to make it work? If that's the case, and it seems likely, I would not say they are getting "access to better deals" per se. More like they are getting a normal rate of return and they have a valuable asset that they are renting out as well (their expertise or connections), and it all gets rolled into one number. But complaining about the rich having valuable assets is different from complaining about them having access to better investment opportunities.
- whatok 8y ago
  The sole reason that the path to public markets is a long and compliance-ridden one is enough to seek private investment. It's much harder to raise money in public markets than private ones.
  - Scoundreller 8y ago
    But far cheaper to raise money in public markets than private. Once you’re big enough, IPOing makes sense, unless you just want to maintain control or those pesky compliance requirements will reveal some harsh secrets.
- toast0 8y ago
  Deals outside the wider market likely carry more risk, but when they work out, more reward. The other side of the deal may have time pressure and also doesn't have so many investors to shop their deal to, so they may not be able to be that agressive either.
- cascom 8y ago
  you're missing a couple of other factors, one is timing and being bale to move quickly, a perfect example is the warren buffet's investment in GS during the financial crisis [1]. GS didn't show that deal to the world - it went to someone that they knew could act quickly (one decision maker) and stroke a big check.... [1] https://qz.com/67052/heres-how-warren-buffett-made-3-1-billion-on-his-crisis-era-bet-on-goldman-sachs/ https://qz.com/67052/heres-how-warren-buffett-made-3-1-billi...
  - jjeaff 8y ago
    As the articles alluded to, buffets investments during the crisis (I think he also took a big bet on BoA), were not a result of him being able to move quickly. They didn't need the money as badly as they needed the good PR. If the headlines read that GS had raised some capital from a bunch of "no name" investors, that wouldn't have had nearly the impact of their press release that THE Warren Buffet just invested billions in GS - so obviously he thinks we are a good bet. Now of course, buffet also needed timing and the ability to act fast, but lots of people had money to invest then.
vernie 8y ago
I'd love to know what those people consider being poor.
red_phone 8y ago
As one of our clients at the private bank where I used to work put it, “Don’t try to make me rich, I’m already rich.”

ataturk 8y ago

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 <facepalm>. So yes, the "access to the deals" is key, and the rich are looking out for each other because they are politically aligned.

cik 8y ago

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.

savanaly 8y ago

>They said this is partly because they get access to deals that don't hit the wider market and you need serious cash to get in the room to have that chat. This is something I hear a lot and I just don't get. Are the people on the other side of those deals just...not greedy? After all, you are implying that the deal has better expected returns than what people are buying on margin in public markets, so why doesn't the person on the other side of the deal take a little more for themselves by selling there instead (at a slightly more favorable interest rate)? Is it because the rich investors are needed to bring some level of expertise or connections to the investment to make it work? If that's the case, and it seems likely, I would not say they are getting "access to better deals" per se. More like they are getting a normal rate of return and they have a valuable asset that they are renting out as well (their expertise or connections), and it all gets rolled into one number. But complaining about the rich having valuable assets is different from complaining about them having access to better investment opportunities.

whatok 8y ago
The sole reason that the path to public markets is a long and compliance-ridden one is enough to seek private investment. It's much harder to raise money in public markets than private ones.
- Scoundreller 8y ago
  But far cheaper to raise money in public markets than private. Once you’re big enough, IPOing makes sense, unless you just want to maintain control or those pesky compliance requirements will reveal some harsh secrets.
toast0 8y ago
Deals outside the wider market likely carry more risk, but when they work out, more reward. The other side of the deal may have time pressure and also doesn't have so many investors to shop their deal to, so they may not be able to be that agressive either.
cascom 8y ago
you're missing a couple of other factors, one is timing and being bale to move quickly, a perfect example is the warren buffet's investment in GS during the financial crisis [1]. GS didn't show that deal to the world - it went to someone that they knew could act quickly (one decision maker) and stroke a big check.... [1] https://qz.com/67052/heres-how-warren-buffett-made-3-1-billion-on-his-crisis-era-bet-on-goldman-sachs/ https://qz.com/67052/heres-how-warren-buffett-made-3-1-billi...
- jjeaff 8y ago
  As the articles alluded to, buffets investments during the crisis (I think he also took a big bet on BoA), were not a result of him being able to move quickly. They didn't need the money as badly as they needed the good PR. If the headlines read that GS had raised some capital from a bunch of "no name" investors, that wouldn't have had nearly the impact of their press release that THE Warren Buffet just invested billions in GS - so obviously he thinks we are a good bet. Now of course, buffet also needed timing and the ability to act fast, but lots of people had money to invest then.

vernie 8y ago

I'd love to know what those people consider being poor.

red_phone 8y ago

As one of our clients at the private bank where I used to work put it, “Don’t try to make me rich, I’m already rich.”