The U.S. stock market recently reached new peaks, yet Michael Sonnenfeldt, founder of Tiger 21, an exclusive network of ultra-high-net-worth investors, indicates that this elite group is not following the prevailing hype. Instead, there has been a notable shift in investment strategies among these investors.
Sonnenfeldt reported to CNBC that many Tiger 21 members have pulled back slightly from both the stock and real estate markets in the last quarter. He highlighted that these high-net-worth individuals, each controlling an average of more than $100 million, are reallocating their investments. “Private equity remains a strong holding, but members are starting to explore areas that were previously overlooked,” he noted. This includes increased allocations to cash, fixed income, gold, and Bitcoin, which suggests a more defensive investment posture.
The growing preference for cash and fixed income signifies an increased demand for liquidity and reliable yields after years of living in a low-interest-rate environment. Furthermore, the heightened interest in gold, as well as Bitcoin, reflects investors seeking alternative stores of value in turbulent times. Gold, in particular, has historically been a safe haven during economic downturns and geopolitical strife, and its value has surged by over 40% in the past year. Major financial institutions such as Goldman Sachs and JPMorgan even forecast that gold could reach $4,000 an ounce by 2026.
For those interested in investing in gold, opening a gold IRA presents significant tax advantages. These accounts enable investors to hold physical gold or related assets within a retirement plan, merging the protective attributes of gold with the benefits of an IRA. Notably, Priority Gold is currently offering up to $10,000 in free precious metals with qualifying purchases.
Bitcoin, on the other hand, is transitioning from a niche asset to something that is increasingly recognized within mainstream finance. While it remains a fraction of the size of gold’s market, Sonnenfeldt noted that it is now viewed as a secure asset rather than merely a speculative investment. With its capped supply of 21 million, Bitcoin’s scarcity adds to its growing temptation for investors.
Despite a minor pullback from equities, Sonnenfeldt reassured that his members are not abandoning stocks altogether. “We maintain a strong commitment to mid- and long-term equity investments,” he said, although he acknowledged that the current market presents some challenges. Many Tiger 21 members originally amassed their wealth through entrepreneurship and are now focused on preserving that wealth rather than merely generating high returns. For instance, Warren Buffett’s track record of sustainable investing over decades serves as a salient example of long-term strategy—he often recommends holding investments like the S&P 500 index fund. This approach offers broad exposure to top U.S. companies while requiring minimal maintenance.
Sonnenfeldt pointed out that while there’s a slight reduction in real estate allocations, this asset class is still seen as a dependable means of wealth preservation, particularly during inflationary periods. Real estate investment can provide steady cash flow that typically adjusts with inflation, making it a reliable choice for maintaining financial stability.
Platforms like Arrived are making real estate investments more accessible, allowing individuals to invest in rental homes with as little as $100, while First National Realty Partners provides accredited investors opportunities in grocery-anchored commercial properties without the usual landlord responsibilities.
In summary, as the ultra-wealthy recalibrate their portfolios amid shifting economic conditions, their increased caution reflects a broader trend of adapting to preserve wealth in uncertain times. With wealth preservation at the forefront, these shifts could have broader implications for various investment markets, blending traditional assets with innovative alternatives.
