Wealthy investors are turning back to stocks, according to the owner of an elite membership club, with one sector in particular being regarded as the biggest opportunity “in human history.”
Members of Tiger 21—a network for ultrahigh-net-worth entrepreneurs, investors, and executives—are pivoting toward stocks despite concerns about the shape of the economy.
“Just in the last two quarters, public equities have become our largest category. That’s never happened before—typically, real estate has been our largest holding,” the organization’s founder and chairman, Michael Sonnenfeldt, said in an interview with CNBC on Thursday.
He noted that the widespread selloff across stock markets meant Tiger 21’s wealthy members were seeing “some real bargains” becoming available—but said stock picking was “not their focus.”
“It’s a lot of exchange-traded funds and indexes, [and] in terms of sectors, you have a lot of the FAANGs that have come in from much higher prices; we’re thinking there’s a lot of benefit there,” Sonnenfeldt said.
The term “FAANG” refers to American tech giants Facebook (parent company Meta), Apple, Amazon, Netflix, and Google (parent company Alphabet).
‘Biggest investment theme in human history’
“Of course, one of the big areas is energy,” Sonnenfeldt told CNBC. “Not only on the oil and gas side, but the much bigger growing interest in renewables and how to play the solar opportunities, the wind opportunities:[Our members] know this is the biggest investment theme perhaps in human history, and it’s getting a lot of their attention.”
He added that cash holdings had declined slightly, indicating that Tiger 21 members were bullish on equities over the long term—but they were holding enough cash to allow them to “pounce” on investment opportunities.
“They have recession fears—a majority of our members think we’re going into recession—and still between real estate, public equity, and private equity, it’s a 76% allocation, so that’s pretty confident in the long term,” he told CNBC.
Tiger 21 has more than 1,100 members across the globe, whom Sonnenfeldt described as “wealth preservers.”
Stocks have rallied in recent weeks after hitting their lowest point of the year in mid-June, with cooling U.S. inflation easing investors’ concerns about the state of the American economy.
J.P. Morgan Asset Management’s chief global strategist, David Kelly, told Bloomberg on Thursday that stocks could rebound to all-time highs within three years.
“I would be fully invested in equities at this point,” he said.
However, some investors may need more encouragement before they feel ready to share the bullish sentiment.
Bank of America’s most recent Global Fund Manager Survey, published in July, reported a “dire level of investor pessimism” and revealed that the allocation of assets to stocks had hit the lowest level since October 2008—the height of the Great Recession.
