Personal FinancE
Millionaire Investments
for the ThousandaIre
All this recession talk got you in a depression? Don’t despair;
some of the nations top financial planners say the investing
strategies of millionaires can even apply to thousandaires.
It’s true: Some financial plays can be traditional hedge fund tactic. And “I continue to believe the best
managed, or risked, only by people who millionaires know that the hedge opportunity to earn longer-term
have seven figures to spread around. fund strategies often score big returns is to hold a diversified mix of
Still, there are plenty of other millionaire bucks in confusing markets. quality long-term investments without
investment opportunities that operate “You can [also] get efficient and trying to time the market,” he adds.
the same on a smaller scale and, as simple-to-implement access to
a result, can be applied by small commodities through exchange traded
Market neutral funds
retail investors. funds (ETFs) and exchange traded
Less exotic but still attractive are
Although most advisors are telling notes (ETNs) for as little as a few
market neutral funds that act like hedge
their clients to collect cash for the time hundred dollars if you want it, from
funds, says Ray Mignone, chairman
being, they are optimistic about the firms like Barclays and State Street,”
of the Long Island Financial Planners
options for those who want to find an Roe says. All types of commodities
Association. He’s recommending the
investment opportunity now. There are have been going through the roof based
Calamos Market Neutral Income fund,
plenty of power moves for the rich and on unprecedented global demand.
which specializes in shorting stocks.
wannabe-rich, despite the gloomy
According to Mignone, another
reports in the financial press.
Shorting the market goodie is the Leuthold Asset Allocation
“For the same investment dollars,
Fund, which has delivered returns of
hedge fund strategies and one can also get leveraged products
10 percent to 12 percent. “Seventy
commodities that provide double exposure to certain
percent of the portfolio is hedged; it acts
“Investment strategies and products areas of the market from a firm like
like a hedge fund, but you’re not paying
formerly reserved for the wealthy are ProShares,” says Roe.
hedge fund prices,” he says. The Leuthold
now available for relatively small Smart investment in ProShares will
Asset Allocation Fund follows a mix
balances,” says Daniel Roe, the chief pay off returns if the market performs
of 30 percent equity exposure balances
financial officer of $1.4 billion wealth poorly, and it’s a good way to hedge
with 70 percent mixed-income exposure.
management firm Budros, Ruhlin & an investment. Investors can even
Mignone is also bullish on the Merger
Roe in Columbus, Ohio. “There are ultrashort the market, where there
Fund, which invests about 80 percent
hedge fund strategies — like Hussman is a payment of two points for every
of the assets in companies involved in
and Absolute Strategies funds — point the market decreases.
activities such as mergers, takeovers,
that anyone can buy with a few But that move may be too risky for
and buyouts.
thousand dollars.” the unsophisticated investor.
All of these options, he says, will cost
Hedge funds, of course, require “I wouldn’t recommend the average
retail investors as little as $3,000 to $5,000.
investors to have at least a net worth of investor shorting the market. If you
$1 million or an annual income of more short something, hypothetically your global investing
than $200,000. But funds like Hussman loss is unlimited. Your loss could go One hot area, says Walter Gerasimowicz,
Funds, a no-load or no-fee mutual fund, on forever. Be very cautious with that,” founder and CEO of Meditron Asset
invest in common stocks while selling says Marc Pico, chief financial planner Management in Manhattan, which
short major market indices — a of Lenox Advisors in Manhattan. manages $1 billion for individuals and
40 I July 08 I Growing Wealth I growingwealthmag.com
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