Smart Money Sheds Stocks

A recent survey from Harrison Group and American Express Publishing found that the wealthy have cut back their allocations to stocks dramatically since the economic crisis. In 2007, the top one-percenters (by income) invested 76 percent of their savings into stocks and financial investments. Now, it’s closer to 46 percent.

This article from CNBC (thanks to Michael Panzner of Financial Armageddon) piqued my interest. According to the piece, it says that the super rich are investing in hard assets such as real estate (luxury Manhattan condos), art, wine, collectibles, jewels:

Investors with $5 million or more have become the most conservative. The Spectrem study showed that 84 percent of the $5 million-plus crowd is now taking a moderate or conservative investment posture. That compares with 79 percent in 2009 – in the middle of the economic crisis.

So what are the wealthy doing with their money?

Increasingly, they’re looking for hard assets, collectibles and real-estate. Just consider the headlines from the past week. Two trophy apartments in Manhattan sold for more than $50 million.

Yesterday, Sotheby’s sold $108 million worth of collectible jewelry in Geneva. The chart-topper was the $9.7 million sale of the Beau Sancy diamond, a 34.98 carat diamond that was first worn by Marie de Medici in 1610 at her coronation as Queen Consort of Henry IV.

I will count the One Percenters are being mostly very bright people. Is smart money abandoning the stock market? The article notes that the One Percenters own more than half of the individually held stocks in the U.S. I just looked at a list of wealthy art collectors and a large percent were hedge fund/investment adviser types. Besides the snooty status art brings them, they must be telling us something about the future.