The ultra-rich are investing differently in 2019.
SOURCE: Michelle Fox // CNBC // 31 January 2019
The must rich investors are making some changes to their portfolios for 2019. They now include Cannabis, gold, and fixed incomes.
Investors are increasing their cash holdings and reducing their equity exposure. They are also cutting back on some of their real estate investments and finding a “short-term solution” in fixed income, according to Michael Sonnenfeldt, founder of investment club Tiger 21.
He explains that Cannabis is one growing trend since the industry has seen a big boost when Canada legalized for recreational use. While marijuana use is illegal in the U.S. on a federal level, several states have legalized it for recreational and/or medical use. The stocks of Canadian pot companies like Tilray, which debuted on the Nasdaq last year, and Canopy Growth have since taken off — although not without a lot of wild swings.
The rich, though, are looking at more than just public equities when it comes to cannabis.
“Sometimes it’s owning the land that cannabis is grown on, sometimes it’s owning the real estate where there are factories, if you will, and sometimes it’s owning the companies and then of course there’s the public market,” Sonnenfeldt said.
Another place the wealthy is investing these days is gold. The precious metal has been in a long sump, but prices are now hitting eight-month highs.
For one, there has been no new supply of gold in the last eight years, Sonnenfeldt noted. Then, there is the fact that investors need an alternative to the volatile stock market.
“Typically people first think of gold as an inflation hedge but over history it’s really been an instability hedge,” he said.