When it comes to investing, one is always eager to know what the ‘smart money’ is up to. The smart money — for those who came in late — is an elite set, always clued in to the ebb and flow of economic activity. It is quite another matter that there is a world of difference in the way the smart (also usually super-rich) set invests, compared with a person of ordinary means.
And the difference is not just in terms of corpus, it’s also about the investment opportunities that are available to them. They also have to deal with a problem of plenty. Most times, finding good alternatives to deploy a large hoard of cash is far more difficult than finding parking space for a small corpus.
But our idea of tracking where the rich are investing — and the advice they are getting from their managers — is to simply get a sense of the investment climate. Where do they find value? Is it in the stock market or in buying businesses? Or fixed income securities that these days seem to be giving better returns than equities? Or would they simply like to hold cash in what everyone agrees is an uncertain world? And where exactly are they looking to get that extra kicker for their corpus?
The takeaway from the super-rich we have profiled is not surprising — mostly they would like to put their money where their mouth is, that is, their own businesses. But someone like an Ajay Piramal, with loads of cash, is scouting for businesses across the spectrum in his pursuit for value.
And as for the wise men who advise the wealthy, there is a dangerous consensus in their strategy for 2013. We can sit down and debate this time next year whether consensus is always wrong.