When you are investing it is good to see how high-net-worth individuals are doing with their money. One gentleman who writes about their doings is Thane Stenner (ThaneStenner@RichardsonGMP.com). He writes most of this group did not make their money in the stock market, they are current or former business owners – they sold their business and put the money into the markets. In business the goal of the owner is to build wealth by concentrating assets, in investing the goal is to preserve wealth by diversifying assets.

Mr. Thane recently talked to Richard Stammers of the CFA Institute and asked his opinion. The discussion lead to some points, that everyone can learn from:

They have clear investment goals  Besides to make money, they tend to have specific goals and through their backgrounds execute the goals better and gives them the discipline to stick to them.

They know when to delegate  The good news for Mr. Stenner is the group tends to delegate to professionals to manage their money. In business they did not do everything themselves, investing is no different.

They think risk first  If you think about wealth protection, the idea is not to lose money first or how do you make money back. This means you tend to avoid unnecessary risks and you tend to have a diversified portfolio.

It’s business  In business, decisions should be made on the facts, not gut decisions. In this fashion you are more likely to move on when ideas or investments do not work out.

They keep the news in perspective  Many are news junkies but the focus is not on the day to day, but the longer term trends. This means decisions take time to make based on the news of the day.

They seize the opportunity in crisis  This is when most make their money, in business they have gone against the grain to enjoy success. When the markets are down, they are looking to buy (remember the diversified portfolio with cashable assets) for they are looking to profit from volatility. Buy low, sell high.

Linking to dividend paying stocks, capital preservation should be the goal because stock markets go up and down. Not losing money is making money and dividend paying stocks allows you to have dividends to reinvest or buy the best companies at lower prices and wait till they go up in value.

There are more questions than answers, till the next time – to raising questions.