The impression most people get of the superwealthy is that they're fantastically good at managing their money - or at least they can hire the best people to manage it for them. But a new study from several major universities looked at the portfolios of the 115 wealthiest families in the U.S., with an average net worth of $90 million, and found that they make many of the same mistakes that ordinary investors do.
Their asset allocation isn't much different from the rest of us. The superwealthy families put 50 percent of their assets in stocks and 30 percent into bonds, although they also put 10 percent into private equity and 10 percent into hedge funds. Hedge funds turned into an investment fad around 2005, which is when so many of these wealthy investors put money into them - and just before they turned south during the financial meltdown.
Poor timing seems to be their biggest mistake. When the stock market started collapsing in 2008, the wealthy investors were very slow to sell their shares, then didn't take advantage of the low stock prices to scoop up bargains. Oddly enough, the median member of the superwealthy group had just as much in cash in 2007 as they did in 2009 - in two very different market environments. Fortunately, they had plenty to lose.
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