Wallstreet Expert With More Real Estate than Stock

[Emily And Eric Erickson]

This weekend I sat through a Tony Robbins event and got to hear from his personal financial planner, Ajay Gupta. Really fascinating perspective coming from the world of dealing with UHNW (Ultra High Net Worth) individuals and trusts and to realize that his 4 primary rules to investing did not differ all that much from mine.

Here they are:

1. Don’t mess up!
2. Cash flow
3. Illiquidity premium
4. Keep up with inflation

I do feel like the 4th one was thrown in to be timely to current news cycles because honestly, if you do the first 3 right, number 4 is a natural consequence.

But I digress.

Two parts really shocked me. Since he came from the traditional world of Wall Street, I was ready to hear a full lecture on the in’s and out’s of small cap vs S&P 500 and the like. And there was some of that but I was super impressed when he shared his actual, current portfolio allocation. He gained tons of credibility by not talking theory and “if I were you” but rather just laid out what he was doing now and why.

Shock number #1: His largest holding – drum roll – NOT stocks. His stock holdings only made up 26% of his entire portfolio and he was a 25 year Merrill Lynch / UBS / Private wealth management stock broker! And not a single bond in any of his holdings. The traditional 60/40 stock/bond split has been thrown out the window!

His number #1 position? You can probably guess it since I am so intrigued. That’s right, real estate! Clocking in at 40% of his total portfolio which was almost double his stock position. And almost all of it was some variation of a cash flowing properties. He is the master of diversification so it was spread out over commercial and residential asset classes but they all cash flowed. A thing of beauty.

It’s a theme I wholeheartedly agree – real estate shouldn’t be all of your portfolio but if you don’t have any, you are missing the boat.

Taking it one step further, if you have any bonds or more bonds that real estate, maybe now is a good time to do some re-balancing.

Shock number #2: His alternative bucket was 13% of his total and had stuff in there I had never heard of, including MLP’s and Life Settlements along with a much larger stake in cryptocurrency than I would have imagined and made me wonder if my portfolio could use some out of the box thinking on some of that.

Well worth the listen and important enough for me to share it with you. 

[Taylor L.]

I wonder how much leverage his average real estate deal utilizes, and whether he's a guarantor on any of it? Did they address that at all?

[Mike Dymski]

Ultra high net worth individuals and family offices are all about wealth preservation rather than taking risky growth positions.