MUCH higher fees for sure. There is no proof that I know of showing higher risk adjusted returns. Wall street thrives on FOMO just like the Hi-Fi business.
-
Welcome to ASR. There are many reviews of audio hardware and expert members to help answer your questions. Click here to have your audio equipment measured for free!
The wealth-building thread
- Thread starter JeffS7444
- Start date
PristineSound
Major Contributor
Regarding the fees, that is not the case based on what I have seen.
Here is the thing, based on my little glimpse, all the stuff that you read about, how rich people have access to opportunities that poor people don't have access to? It's all true.
I was in the business and got a good look at it and it is all about fees. All studies show the public markets can't be beat on a risk adjusted basis and all fees do is lower returns. It is not worth it to pay attention to poor people so rich people get all the attention trying to convince them that they are special and are getting special information. It is all based on "confidence" and FOMO and hype.
Agree. There's no question it's true. My view: unless you're rich enough that hundreds of thousands or millions of dollars qualifies as "play money" to you, and unless you're knowledgeable enough in the markets and the efficacy of the investments (like, for example, being an angel investor in a start-up), IMO you should stick to conventional equities, funds, or debt instruments, and be happy you're not involved in these "special opportunities". It takes expertise or access to people with the expertise to know what you're getting yourself into. And the best opportunities take a special invitation. If you're wondering about how those people get that invitation, IMO you're not one of those people.
Last edited:
PristineSound
Major Contributor
I can say this, in the last 3 years, I came seen at least 4 opportunities that was very compelling, I'm not saying I was offer the opportunity to invest, but I have seen them. Yes, the risk is higher, but it beats the historical S&P500 by a far margin.
I also have been personally offered 5 to 6 opportunities for venture capitalism. Very high risk, but also VERY high reward, I declined it because I'm a conservative investor, but there is one opportunity that I am kicking myself few years later.
Also, some money managers (term for high net worth financial advisors), they offer investments opportunities for the same fees that they are already charging. However, those opportunities are for high net worth individuals.
I will say this. I been in the far orbit of private equity and investment bankers in my early twenties to early thirties, all that stuff you read and fantasized about, is all real.
PristineSound
Major Contributor
100%. Damn, every single word in this post is razer sharp accurate.
I don't have few hundred grand as play money and I don't get special invitations because I don't have that net worth, so my weapon of choice is very long term SPY. . .and because I have balls of steel, it's been wonderful to me.
One day, when I get there, if I get there, hopefully someone will give me that special invitation!
I have been around the industry for 50 years including working on developing statistics based options pricing models and based on science and not FOMO I respectfully disagree. There are many sayings on wall street with one of my favorites being "Don't confuse brains for a bull market".
OP
- Joined
- Jul 21, 2019
- Messages
- 3,667
- Likes
- 5,446
- Thread Starter
- #1,369
Oh yes, both Y2K and 2008. I probably mentioned earlier how I had been hankering after a secondhand Mini Cooper circa 2008, figured I had the funds available, but when I checked my balance, my Mini had evaporated!
One fund in particular had been bullish on the housing market, and it cost the fund manager his star status. But I survived by looking away, rather than trying to "fix" things. I consider myself a master at doing nothing. 
As in the dot-com crash, I remember that one. I learned fast to be very conservative.
Times are changing and you need to be all the more careful going forward. Your pensions are the exit strategy of all these bankrupt AI giants. Cash dollar itself is even no longer safe. And no I don't have the solution
Pre-QE period. Since the Fed will aggressively increase money supply no matter what now under the current regime you have to worry about stagflation now.
2 - 50+% drawdowns that offered (after completion) a few of the greatest investing opportunities in my lifetime
PristineSound
Major Contributor
I know people who have access to collateral loans at fed fund target +1%, I know people who brought into SpaceX pre-IPO in the private market, I know one of the investment bankers who was part of the Alibaba IPO, I know of people who are in private equity,. Albeit they are all far orbit.
I personally have been offered venture capital investments and real estate development projects.
So yeah, let's agree to disagree.
Spot on. Its clear to see (read) who has comitted the time to experience and learn (most important part) from the past
You are cherry picking the biggest winners and getting FOMO. Only around 5% to 10% of private equity backed firms go public, most just muddle by and some fail. The ones that do go public can be bought by anyone and some have done very well after the IPO and some not. SpaceX is a huge outlier/ experiment staying private so long and only having 4% float on its IPO. So far all the massive gains are on paper, almost no one has cashed out yet so it is too soon to tell how it really works out.
If you get an Interactive Brokers account they have low margin and commissions rates and pay very competitive rates on cash balances. You can do your own research and build your own portfolio and save all the fees which don't sound like much but add up over time.
I am not saying that it is not easier and better to be rich, but I don't see that the rich have a big advantage when it comes to investment opportunities if you are willing to do some work.
Again, spot on.
The problem is with most, they dont do the necessary work and rely on cherry picking, low number of data point conclusions. It doesnt mean they wont be right (there are no absolutes) just they have a lower probability of success.
PristineSound
Major Contributor
I think you've mistaken about risk, I never said the rich have lower risk, I said they have access to certain opportunities that the poors don't.
Let me give you an example, a real estate project opportunity came my way, minimum investment is $1m/lot. The person who broached me, is trying to get an LLC for about a hand full of investors. You think someone with a net worth of $200k will be offer this?
Another example, when the market had a dip due to the start of the tariffs, that was a great time to just buy SPY, people who already have assets can leverage a margin loan and only pay the interest while the loan is open, well that is an opportunity. Sure enough market bounced right back few months later.
To your example of private equity, why are you thinking that the only exit strategy is IPO? That's just silly.
Of course all of these carry risks, and greater risk that just a long term S&P500. My point is this is only available to rich people.
Now if you take exception to fees, that's fine, one can do a lot of it themselves to save on the fees. But to say that rich people don't have access to opportunities and financial engineering that the poor don't have access to, that's just unreal.
Similar threads
