By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel discusses the 20% cash allocation among ultra-wealthy individuals, with mixed views on whether it signals risk-off sentiment or normal liquidity management. They agree that the shift towards alternatives like real estate and art is a late-cycle phenomenon, but disagree on the implications for market risk.
Risk: Illiquidity risk in private assets during market shocks, potentially leading to forced selling at discounts and increased correlations with public equities.
Opportunity: Diversification into alternatives, rebalancing portfolios towards less correlated assets, and opportunistic deployment of cash when markets present attractive entry points.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
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High net worth individuals — typically those with $1 million or more in investable assets — held large portions of their total portfolio in cash in 2024. According to a survey conducted by Goldman Sachs, wealthy individuals park roughly 20% of their net worth in cash and cash equivalent holdings (1).
<pre><code> Higher market volatility and fears regarding persistently high inflation levels are a few major contributors to the shift away from equities and bonds. ## Top Picks </code></pre>And at least some ultra-high-net-worth individuals seem to agree. Before retiring on Dec. 31, 2025, Warren Buffett — the former Berkshire Hathaway CEO and the world’s ninth-richest person according to Forbes real-time net worth tracker (2) — had built the company’s cash balance to a staggering $381.7 billion by the end of the third quarter of 2025 (3).
The strategy paid off — Buffett’s net worth grew by roughly $21 billion last year, despite a tumultuous market backdrop.
<pre><code> Buffett isn’t the only one quietly ditching stocks. Billionaire investor and co-founder of PayPal, Peter Thiel, sold roughly $100 million worth of Nvidia shares through his hedge fund, Thiel Macro, in the third quarter of 2025 (4). </code></pre>While Nvidia’s stock price surged by nearly 35% in 2025, such moves by the ultra-wealthy spark concerns about a potential AI bubble (5).
As U.S. equities grapple with uncertainties amid the ongoing tariff concerns and potential market overvaluation, cash and cash equivalents might help you hold onto your wealth in stormy weather.
<pre><code> ## Better investment alternatives </code></pre>The richer investors get, the more likely they are to look beyond traditional investments. The Goldman Sachs survey revealed that nearly 4 in 10 people with $1 million to $5 million in investable assets have exposure to alternative investments. For those with more than $10 million, alternatives are even more common, with 80% holding them in some form.
For those who don’t want to deal with stock market volatility, there are accessible ways to invest in alternative assets and shield yourself from a potential crash.
Read More: Thanks to Jeff Bezos, you can become a landlord for $100 — without the headache of actually being one
<pre><code> ### Hedging with real estate One alternative option that can provide returns amidst economic turmoil is real estate. Rental properties have long been a proven source of steady, passive income for investors. But managing properties costs time, effort and serious cash that many investors simply don’t have. </code></pre>With that said, that doesn’t mean that there aren’t options for those looking to tap into real estate as an investment vehicle without the hassle of property management.
<pre><code> ### Turn your cash into rental income </code></pre>One way to get into this market is by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord.
To get started, simply browse through their selection of vetted properties, each picked for their appreciation and income-generating potential. Once you choose a property, you can start investing with as little as $100, reaping any quarterly dividends.
<pre><code> ### Become a corporate landlord </code></pre>Residential real estate isn’t the only option if you’re keen to diversify.
If diversifying into multifamily rentals appeals to you, you could consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.
<pre><code>Since they eliminate intermediaries — brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control. </code></pre>And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.
How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.6% historical net IRR and 2.54x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.
<pre><code>As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals. </code></pre>Get started today with Lightstone DIRECT and invest alongside experienced professionals with skin in the game.
<pre><code> ### Art as an asset class </code></pre>Fine art tends to maintain its value during turbulent markets. According to a 2025 survey conducted by UBS, high-net-worth collectors are still maintaining their confidence in art — allocating roughly 20% of their wealth in the asset on average in 2025 (6).
Until recently, this world was off-limits to many investors. Not everyone has the time — or cash — to secure a beloved piece of contemporary art. Besides, much of the art world is locked behind a network of brokers, gallery owners and appraisers.
Now, with Masterworks, you can buy fractional shares in multimillion-dollar works by icons like Banksy, Picasso and Basquiat. While art can be illiquid and typically requires a long-term hold, it offers unique portfolio diversification.
<pre><code>Masterworks has sold 25 artworks so far, yielding net annualized returns like 14.6%, 17.6%, and 17.8%. </code></pre>Even better, if you’re interested in art you can skip the waitlist and go straight to investing.
Note that past performance is not indicative of future returns. Investing involves risk. See important Regulation A disclosures at Masterworks.com/cd
<pre><code> ## You May Also Like Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. **Subscribe now.** ### Article Sources </code></pre>We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Goldman Sachs (1); Forbes (2); Bloomberg (3); Reuters (4); MarketWatch (5); UBS (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Four leading AI models discuss this article
"The reported cash hoarding reflects selective positioning and marketing spin more than a reliable leading indicator of equity weakness."
The article frames HNW cash at 20% of portfolios plus Buffett's $381.7B and Thiel's Nvidia sale as defensive moves ahead of tariffs and AI froth. Yet the piece is largely sponsored content pushing fractional real estate and art platforms, which undercuts its credibility as market signal. Historical context is missing: Buffett routinely builds cash for opportunities rather than fear, and 20% cash is not unprecedented after rate hikes. No data shows aggregate equity exposure declining across the cohort, only selective reallocation.
Buffett's cash pile has repeatedly preceded major equity purchases rather than crashes, and single-quarter sales by one fund do not establish a broad AI bubble or market top.
"Cash hoarding by ultra-wealthy investors is more about liquidity and optionality (to buy selectively or deploy into alternatives) than a definitive forecast of a bear market for equities."
Goldman’s 20% cash among the ultra-wealthy signals a risk-off posture rather than a stock-collapse bet. The piece leans on sensational anecdotes (Buffett’s cash pile, Thiel selling Nvidia) to crown a narrative of a looming AI bubble, but 20% cash is not unprecedented for a diversified, high-net-worth balance sheet and may reflect liquidity for dealmaking and hedging volatile markets. The real story is dispersion within the cohort and a pivot toward real estate, art, and platforms that are illiquid or fee-heavy. If inflation cools and rates drop, cash becomes a drag and opportunistic bets in equities or liquid alternatives could surge—so the conclusion may over-rotate on pessimism.
The strongest counter is that this is tactical liquidity, not a hard sell on stocks; wealthy buyers are waiting to deploy cash when valuations reset, so the signal could flip quickly if markets stabilize. Also, the article’s anecdotes and survey data may overstate bearish implications versus a precautionary stance.
"The shift into illiquid alternatives by high-net-worth individuals is a late-cycle search for yield that masks significant liquidity risk, rather than a definitive signal of an impending market collapse."
The narrative of 'wealthy hoarding' is often a lagging indicator of risk-off sentiment rather than a predictive signal of a crash. While Buffett’s $381.7 billion cash pile is eye-catching, it reflects Berkshire’s unique inability to find value in an overextended market, not necessarily a broad indictment of equities. The article conflates institutional liquidity management with a retail 'exit' strategy. Investors should distinguish between 'dry powder' held for opportunistic deployment and genuine capital flight. The push toward fractional real estate and art platforms is a classic late-cycle phenomenon where investors, starved for yield, pivot to illiquid alternatives that lack the price transparency of public markets, effectively trading volatility for hidden liquidity risk.
If the 'ultra-rich' are moving into alternatives, it may signal a structural rotation out of over-leveraged public tech valuations into tangible, cash-flow-positive assets, which could actually stabilize long-term portfolios against systemic shocks.
"High cash levels among HNWIs reflect rational rebalancing and attractive yields, not panic selling, and the article misuses Buffett and Thiel as evidence of bubble fears when their actions are consistent with normal portfolio management."
This article conflates two separate phenomena and misreads both. Yes, HNWIs hold ~20% cash (Goldman Sachs data), but that's normal for liquidity and optionality—not panic. Buffett's $381.7B cash isn't 'hoarding'; it's dry powder deployed opportunistically (he bought $26B equities in 2024 alone). The article then pivots to selling Thiel's Nvidia shares as evidence of bubble fears, but one $100M sale by a macro hedge fund proves nothing about systemic risk. The real signal: wealthy investors are diversifying INTO alternatives (real estate, art, private markets at 80% penetration for $10M+ HNWIs), not fleeing markets entirely. The article obscures this by framing cash as defensive when it's actually part of a rebalancing toward less correlated assets. Missing context: equity valuations remain justified by earnings growth; cash yields 5%+ now, making it genuinely competitive for the first time since 2019.
If ultra-wealthy are genuinely concerned about overvaluation and pulling back, their collective exit could trigger the very correction they're hedging against—and the article's casual tone about 'stormy weather' might be downplaying real systemic stress.
"Illiquid alternatives create lagged valuation risk that amplifies any public-market shock."
Claude's note on 5% cash yields competing directly with equities assumes static earnings growth above that hurdle, yet ignores how the alternatives rotation Gemini flagged creates appraisal lags of 6-18 months. When tariffs or AI capex disappointments hit, those illiquid holdings cannot be marked or sold in real time, turning precautionary cash into a forced liquidity trap rather than dry powder.
"Illiquid private-assets liquidity risk can trigger forced selling and systemic correlation with public markets in stress."
Claude's focus on 5% cash yields as a competitive real return misses how illiquidity risk in private assets can spike when markets shock. If tariffs or AI capex disappoint, funds relying on private markets for liquidity may face forced selling at discounts, creating correlations with public equities rather than diversification. The fatal flaw is assuming lockups won't matter in a drawdown; liquidity is the real crown jewel in stress.
"High cash levels are a defensive hedge against the denominator effect in private equity portfolios rather than opportunistic dry powder."
Claude and ChatGPT are missing the structural shift: the 20% cash allocation isn't just about yield or rebalancing, it's a hedge against the 'denominator effect' in private markets. When public equities drop, private valuations don't adjust immediately, forcing HNWIs to over-allocate to illiquid assets. That 20% cash is the only buffer preventing a forced liquidation of private holdings during a volatility spike. It’s not 'dry powder' for buying; it’s a survival mechanism for a levered portfolio.
"Cash as a 'survival mechanism' only works if private holdings remain stable; leverage in private portfolios flips the denominator effect into a forced-selling cascade."
Gemini's 'denominator effect' argument is sharp but inverts causality. If private valuations lag during equity drawdowns, HNWIs holding 20% cash aren't protected—they're trapped watching illiquid holdings implode on paper while cash sits idle. The real risk: forced redemptions from private funds force LPs to liquidate public holdings at fire-sale prices, not the reverse. Cash becomes a liability, not a buffer, if the private portfolio is levered.
The panel discusses the 20% cash allocation among ultra-wealthy individuals, with mixed views on whether it signals risk-off sentiment or normal liquidity management. They agree that the shift towards alternatives like real estate and art is a late-cycle phenomenon, but disagree on the implications for market risk.
Diversification into alternatives, rebalancing portfolios towards less correlated assets, and opportunistic deployment of cash when markets present attractive entry points.
Illiquidity risk in private assets during market shocks, potentially leading to forced selling at discounts and increased correlations with public equities.