By that logic there would be no individual traders reaching 20, 50, 100mm. Yes, you might scale down your day-trading strategies but if there is liquidity without eroding the edge, you wouldn't just switch to low return long term investing.
How do very high net worth accounts trade?
- Thread starter arden123456
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By that logic there would be no individual traders reaching 20, 50, 100mm. Yes, you might scale down your day-trading strategies but if there is liquidity without eroding the edge, you wouldn't just switch to low return long term investing.
Quite a few people around have had several careers over the course of their life, beeing succesful in more than one of those careers. Real big entrepreneurs seem to diversify their endehaviours through setting up corporations in different sectors in a similar way middle size investors diversify across asset classes through their retail brokerage.
Just on this thread there seems to be several posters who would qualify as having had several moderately succesful careers.
I'm one of them btw, and still looking out for new opportunities, early retirement sucks with a tennis elbow
Just on this thread there seems to be several posters who would qualify as having had several moderately succesful careers.
I'm one of them btw, and still looking out for new opportunities, early retirement sucks with a tennis elbow
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There's no "by that logic..." to my statement.
I'm (unfortunatley) not one who is in that postition of having many millions to worry about. But I do know people who are and I also know brokers who manage those types of account.
That's how it works. All effort goes towards preservation of capital, and as I said, those types of people spend more time with accountants and lawyers than they do with brokers.
Sure, if you are that type of person, you might put aside a small portion of your assets for use in day-trading etc. but believe me, the vast majority of your hard earned wealth will be handled in a far more cautious manner.
Admittedly the aforementioned people are not based in the US, and given the stereotype of the Americans being driven by money, I can see how a US millionaire might want to continue fighting for growth instead of toning down the risk because they desperatley want a seat at the Billionaire's table next to Bill Gates or whoever !
P.S. d08, bear in mind I am talking about people who have earnt (or inherited) their wealth. I'm not talking about those rare people who've got wealthy through day trading, obviously those sorts of people will probably never stop trading !
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That's where the confusion stems from. It makes sense that if you make a fortune in say making coffins then you don't start day-trading when you reach millions as that would be foolish.
As I read the OP's question, I understood he meant the account is built on trading or investment returns and not in some other sector.
Bloody hell, I hope people don't trade like that. It's always about preservation of time and capital, even if you don't have any.
Once you're neutral, ie. preservation, you can expend energy on growth. It's the fundamental reason everyone fails to generate capital and promptly loses whatever they have.
So has anyone actually ever had lunch with a billionaire or spent time with a $10s to $100s million net worth wealth manager.
No to the former, but yes to the latter, on multiple occasions. Hence the post I made !
If you are a wealth manager in that sort of bracket (at least outside of the money-driven US), then your job description will be very much as I described. You will very much be acting out the role of tortoise rather than the hare ! Slow and steady wins the race.
And if I were ever in the shoes of someone with many millions and didn't have the time or inclination to manage it myself, then that's exactly what I would expect of my portfolio manager. A nice balanced portfolio, perhaps with an income element .... but my days of chasing the market and seeking large returns would very much be over.
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That is correct is many cases, but as always there are occasions where that does not work, one of them being trying to change the yield curve too rapidly, unfortunately those exceptions often cause a catastrophic event.
This is the OPs question paraphrased, how does one transition from logarithmic wealth creation to exponential compounding. The answer is you can't in a generation, Livermore is an example of this, even in a lifetime is beyond reach for most as you have to fundamentally change the yield curve and therefore your complete view on life.
Most aristocrats will have 300-400years of experience handed down to them, there's only one other way to compress that much knowledge in to a generation or a lifetime. The other method is for someone to be a fantastic pathological liar creating themselves a logarithmic curve but pretending it's an exponential curve, Maxwell is an example of this.
The tools used, the professional advisers employed, they will all be based on how fast and how large the spread of the yield curve you are trying to change, most get it wrong when they try and revert back to their original starting point, the smart ones don't bother trying to change it and go and live on a Caribbean island or run a charity.
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