The Rich are not like the rest of us

They are more delusional.

Why do we pay any attention to the investment mores of the rich? Are they really anymore informed than the small odd-lot investor? Aren't their financial advisers and brokers just as likely to give them self-serving advice? Didn't they get burned by the tech bubble too?

This MSNBC story claims that the rich are feeling the effects of the reeling economy just like everybody else. I'm not doubting its veracity, but there's a big difference between having to go on a less expensive vacation and facing foreclosure. So what if they are more pessimistic about the economy? They have the means to ride out a downturn and pick up some incredible bargains to boot.

This passage from the article is particularly illustrative of the disconnect between their perceptions and reality:

'Tellingly, about 19 percent of the people surveyed do not consider themselves wealthy, even though they have, on average, $3 million to invest and earn at least $270,000 a year.'

This reminds me of a Steve Schwartzmann's quote from a February 2008 profile in The New Yorker:

'I don't feel like a wealthy person. Other people think of me as a wealthy person, but I don’t. I feel the same as when I was a fifth-year associate trying to make partner at Lehman Brothers. I haven’t changed. I still think of Blackstone as a small firm. We have to prove ourselves in every deal. Every piece of paper is important. I’m always still trying.'

I can't make up my mind about this quote. Either a)his publicist told him to say something self-effacing,or b)he is one of the most ambitious/paranoid people on the planet. Remember, this was coming on the heels of his 60th birthday party that was something straight out of ancien régime France and the $700 million he had selling shares in the Blackstone IPO.

So I'm going to start ignoring the results of the latest survey about what the rich are doing. These people are no better at market timing than the rest of us.

P.S. This is what the other of the two Americas that John Edwards spoke of thinks.