How the Very Wealthy Are Investing Now
The wealthiest Americans have lost between 20 and 40 percent of their assets over the last year and a half.
Michael Sonnenfeldt, founder of Tiger 21, a peer-to-peer learning group for high-net-worth investors, told CNBC that the very rich have responded by taking fewer chances.
"Wherever they can, they're trying to take some risk out of their portfolio in case the double-dip scenario unfolds," Sonnenfeldt said.
To do so, wealthy investors have switched to higher levels of cash, shortened the maturities on their fixed income and gone to more liquidity, he said. They're also looking for dividend-paying stocks, preferred stocks and corporate bonds.
In the aftermath of Bernie Madoff's billion-dollar Ponzi scheme, wealthy investors have also gone "back to basics," getting directly involved in their finances and eliminating intermediaries, Sonnenfeldt said.
"What it's made them realize is that for many years they were prey to sophisticated products that they really didn't understand," he said.
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The majority of Tiger 21's members don't see underlying reasons for economic optimism, citing competition from China and India, concerns over Iran, and most specifically, the U.S.' enormous deficit, Sonnenfeldt said.
"Many of our members think that the market has [gotten] ahead of the reality," he said. "They don't see on Main Street the turnaround that you see down on the floor... They just think the longterm trend for the dollar is difficult to predict, and it's not positive."
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Disclosure information was not available for Sonnenfeldt or his company.