Billionaires are holding extraordinarily large amounts of their assets in cash this year, sparking a debate if they know something about the global economy that the general population doesn't.
The revelation –made in the Wealth-X and UBS' newly released Billionaire Census 2014 – notes that members of the highly exclusive billionaire club are keeping as much as $600 million each in liquid assets. What’s alarming isthat average liquid assets of billionaires were just $60 million in last year's report.
The ten-fold increase in this trend is baffling, as no major event of any economic significance has taken place in the past 12 months, nor are any forecasted in the near future. Such a major shift in money management habits of the wealthiest could be motivated by an opportunity for major investment, which the study believes could be the case.
"This increased liquidity signals that many billionaires are keeping their money on the sidelines and waiting for the optimal moment to make further investments," the study states.
However, the knowledge of any looming financial disasters can also not be discounted. The signs of impending gloom in money markets were there years before the global financial crisis of 2007–2008fully set in. They were ignored, and then what transpired was a Godzilla of an economic crisis that we hadn't seen since the Great Depression.
Among the worst hit were some big name billionaires like James Packer and Roman Abramovich – both of whom saw their net worth decrease by several billions in one swift market plunge. In fact, the 2007 crisis cost some 332 billionaires their financial titles.
This small 1,645-member group has since gotten back on its feet and is actually thriving, but always remains proactive to dodge potential financial landmines.To avoid getting hurt in trying economic times, the super rich often exit money markets too. Could this be the case this time too?