Secrets Of The Super-Rich: How Are They Investing?

Wednesday, 5 Aug 2009 | 5:51 PM ET

They say the rich aren’t like you and me. Well guess what? They’re not investing like we are, either.

As you might remember from Monday’s Fast Money, the traders talked about how sentiment in the market has turned from broadly bearish to broadly bullish. Karen Finerman said she was afraid to be short. “As a hedge fund manager I can’t risk being under-invested and missing the moves,” she explained.

Steve Grasso, managing director of institutional trading at Stuart Frankel told the panel his money manager clients feel the same way.

Perhaps this quote from Angel Mata of Stifel Nicolaus sums it up best. “The one thing that's driving this market more than anything is the fear that as an investor, you're missing out on something big."

Well guess what? The rich don’t exactly feel that way.

In fact, you might say they don’t feel that way at all. And from how they’re investing, they’re not nearly as bullish as the rest of us.

Mark Axelowitz, director of wealth management at Morgan Stanley Smith Barney advises some of the richest people in the world. And he’s spotted three trends among the ultra high net worth crowd.

High Net Worth Investors
Why high net worth investors aren't chasing the rally, with Mark Axelowitz, Morgan Stanley Smith Barney and the Fast Money traders.

The high net worth are:

1. Cautious and not chasing the rally

2. Heavy into fixed income, only moving some into equities

3. Not ready to trust the system enough to dive in with both feet.

It’s ironic. The wealthy could probably afford to be a little more aggressive in this market. We mean, losing a million or two on a wrong-way bet wouldn’t seem like a big deal to these folks.

Yet from what Axelowtiz tells us, it’s just the opposite. The super-rich appear to be super-conservative and more important, unwilling to bet on this bull. Perhaps that’s why they’re so rich.

"When you’re a high net worth investor, you win by not losing,” says Axelowitz. Are they onto something. What do you think? We want to know!

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Trader disclosure: On Aug 5th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (MSFT), (RIMM), (JPM), (MS), (ABT), (MCD), (AMZN); Terranova Works For (VRTS); Terranova Is Short (TM), (WFC), (WYNN), (F); Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (PDE), (TBT), (WMT), (TGT); Finerman's Firm Is Short (USO), (IJR), (IYR), (IWM), (MDY), (SPY); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares; Finerman's Firm Is Short (WFC); Finermna's Firm Is Long (WFMI) Puts; Najarian Owns (AET); Najarian Owns (BAC) Call Spread; Najarian Owns (BX) Call Spread; Najarian Owns (BUCY) & (BUCY) Call Spread; Najarian Owns (FCX) & (FCX) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & (JPM) Call Spread; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian OWns (YHOO) Call Spread ; Najarian Owns (SYNA) Calls; Najarian Owns (CSCO) Call Spread; Najarian Owns (SWNA) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU)

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