The 2009 World Wealth Report from Capgemini and Merrill Lynch, a survey of high net wealth backers around the globe that have US$1 million of net finance wealth excluding their primary residence, outlines where these folk invest their cash.
Typically the 10,000,000 folk worldwide that fit this definition of having 'high net wealth', have 29% of their capital invested in shares, 31% in bonds, 17% in notes, 18% in real-estate and 6% in options like hedge funds, commodities and personal equity. If the planet's wealthiest folk take such a diversified approach maybe the remainder of us should also consider it.
Diversification also is applicable to share portfolios. Own a selection of corporations, but do not over-diversify, or as Peter Lynch the great Fidelity fund boss, calls it de-worse-ification. Having mentioned that Lynch used to hold over 700 corporations in his fund, but endorses private backers hold maybe 20-40 firms.
Stressing fine quality shares is a tactic that continues to seem sensible. It is commonplace to see folk new to shares to head straight for the hopeful end of the market to buy little corporations or shares trading at a couple of pennies.
While not quite as exotic as this, high-quality firms, like bigger, blue chip corporations that have experienced management and have a record of delivering growing profits and dividends, do incline to outperform long shots.
When times are good and the market is rising, quality does have a tendency to lag, but when the inescapable hard times roll around, quality shines and long shots can regularly fall into deep black holes.
Selling is something financiers should be prepared to do, but only reluctantly. Warren Buffett has traditionally announced his preferred holding period for shares is for ever and ever. What this actually means is that long term speculators should sit thru times of short term share price weakness or volatility if they're ok with the fundamental basics of the business they own.
However, this doesn't suggest share speculators can ignore bad news. If a company seems to be facing hard long term issues, be ready to sell.
Include some smaller companies. While blue chips should make up the core of a share portfolio, leave a little bit of room for some fascinating little corporations. Though higher-risk, they offer more expansion potential. It can be wise to search for smaller corporations which have the features of blue chips in each way aside from size.
Buy integrity. As respected US investor Philip Fisher has expounded "there are too many decisions out there to trouble with firms that are not run by honest, tenacious folks".
Typically the 10,000,000 folk worldwide that fit this definition of having 'high net wealth', have 29% of their capital invested in shares, 31% in bonds, 17% in notes, 18% in real-estate and 6% in options like hedge funds, commodities and personal equity. If the planet's wealthiest folk take such a diversified approach maybe the remainder of us should also consider it.
Diversification also is applicable to share portfolios. Own a selection of corporations, but do not over-diversify, or as Peter Lynch the great Fidelity fund boss, calls it de-worse-ification. Having mentioned that Lynch used to hold over 700 corporations in his fund, but endorses private backers hold maybe 20-40 firms.
Stressing fine quality shares is a tactic that continues to seem sensible. It is commonplace to see folk new to shares to head straight for the hopeful end of the market to buy little corporations or shares trading at a couple of pennies.
While not quite as exotic as this, high-quality firms, like bigger, blue chip corporations that have experienced management and have a record of delivering growing profits and dividends, do incline to outperform long shots.
When times are good and the market is rising, quality does have a tendency to lag, but when the inescapable hard times roll around, quality shines and long shots can regularly fall into deep black holes.
Selling is something financiers should be prepared to do, but only reluctantly. Warren Buffett has traditionally announced his preferred holding period for shares is for ever and ever. What this actually means is that long term speculators should sit thru times of short term share price weakness or volatility if they're ok with the fundamental basics of the business they own.
However, this doesn't suggest share speculators can ignore bad news. If a company seems to be facing hard long term issues, be ready to sell.
Include some smaller companies. While blue chips should make up the core of a share portfolio, leave a little bit of room for some fascinating little corporations. Though higher-risk, they offer more expansion potential. It can be wise to search for smaller corporations which have the features of blue chips in each way aside from size.
Buy integrity. As respected US investor Philip Fisher has expounded "there are too many decisions out there to trouble with firms that are not run by honest, tenacious folks".
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