How the wealthy gain an edge in their portfolios

Link: How the wealthy gain an edge in their portfolios

The following three paragraphs are so concisely articulated it is not worth even paraphrasing.

“Those who have created the most wealth over time have been, from my experience, able to maintain their investments through market cycles. They’re often invested directly in stocks but are able to detach themselves from the emotions of market gyrations. They have that ability to buy when the market is weak, and because they don’t foresee a need for that money in the short term, they have the ability to do this more than others.

“The investing styles of high-net-worth individuals tend to be characterized by a greater attention to the downside risk of investments than perhaps some others would be. Their interests tend to lie in larger-cap securities, and they want to know that the companies they own are going to be around. Those with some investment acumen will tend to favour direct ownership of equities versus something like an exchange-traded fund (ETF).

“Their core portfolios tend to be made up of large-cap North American stocks. Then we build around that, adding international exposure and fixed income to the degree that each client requires. This is where it becomes very much dependent on their individual circumstances and timeline. With a small portion of their wealth they’ll often take a risk, but it’s usually a calculated investment – they aren’t particularly interested in the flavour of the week.”