If there’s anything Heather Loomis Tighe has learned in more than 20 years managing money for the ultra-rich, it’s that there is no single portfolio allocation that all billionaires employ. Tighe, who has traded stocks, managed a bond portfolio, and served as CIO, is now a family office advisor and venture capital partner based in Jackson, Wyo. Her guidance and expertise come from a mentality of building, but also maintaining wealth, leveraging concentrated risk against deep expertise. “You’re watching both sides of the balance sheet,” she says. “You’re not just watching how you invest, but you worry about keeping that money. Investing like the one percent is difficult. If you look across the portfolios of the top one percent investors, they’re all strikingly different.” Still, says Tighe, even with so much variation across portfolios, there are valuable constants to glean from the country’s wealthiest investors. Her best advice for anyone hoping to apply her clients’ expertise to their own much smaller honeypot is to lean on these six tenets to manage investments, and maintain and build wealth.
“A common thread present among the wealthiest people that I have worked with over the years is that they are inherently optimistic people,” says Tighe. “While this doesn’t not imply that they turn a blind eye to risk, they do believe that reward over the long term will outweigh risk. They are excited about the future and see potential where others see ruin.” This comes down to erring on the side of ingenuity, entrepreneurship and sheer hustle. They believe that when push comes to shove the people who know how to get the job done, will adapt and evolve over time to meet market demands, grow and thrive. “If you think of the stock market as a collection of people who are just trying to make businesses work, they believe in the power of these business leaders and CEOs to make it work,” says Tighe. “In many cases, they have been in those positions before and they’ve made it work. That gives this segment of investors tremendous staying power to weather storms.”
“I would venture to say that the top one percent investors have the highest levels of self-confidence I have ever seen, life to date,” says Tighe. “This does not mean they lack humility.” Instead, she says, confidence comes in the form of self-assurance and the ability to know what they don’t know. The richest people Tighe knows, she says, didn’t become rich because they operate in a vacuum. “They listen to the opinions of a wide cross-section of people, they ask questions.” This also plays out in how they operate as business owners, too. They trust their own abilities to solve problems and rely on other smart, capable people in their corner to support them and their plans. “Importantly, they run their businesses and their investment portfolios not for the love of money, but for the love of the game,” she says. “As a result, they know, deep down, that if they lost it all they could do it again. They invest and conduct their lives without fear of losing, there is no gripping. The market, over the long term, is the playground for confident investors. It is the opposite of Vegas. It rewards them, over all others.”
Become an expert
Tighe is clear that her clients are often experts in a specific area or two. That doesn’t mean their expert investors, she says. “They are truly subject matter experts, and within this area of expertise, they are very hands-on,” says Tighe. “They typically own or operate companies or large investments in their area of expertise.” For that reason, they’re able to take big, calculated bets in the space, framing it up as the nucleus of their wealth: a collection of hotels, a tech company, oil wells, a fashion brand. In each case, they know the space inside and out, allowing them to build wealth and hold insight others might not. Those insights are valuable to other parts of the market, says Tighe. For instance, supply-chain dynamics inform decisions across global investing, while trends in global oil consumption and production can be felt by certain people before others, which can inform other macro and micro decisions. She says: “Combining that with an open mind and talking to others in different industries, that allows them to glean insights.”
“I have never met a billionaire who will willingly pay an ATM fee or spend $35 for a hamburger without wincing,” says Tighe. “The one percent watch the back door. If you spend what you make, or more than you make, you will not harness the full power of compounding.” The end goal, she says, is to work less, allowing your money to work for you. Tighe jokes that the strategy could almost be interpreted as “Save like a pessimist; invest like an optimist.” Despite the fact that the one percent typically enjoy the process of making money, they also know that money can be seductive, says Tighe. The best investors, she says, postpone indulgent purchases in the name of honoring money’s value and potential future growth. “If your investment portfolio makes 8% a year, after taxes you have not made 8%; it’s closer to half of that,” says Tighe, noting the pull of inflation. “And if you want your money to start working for you, you want to keep most of that invested.”
Tighe has long made a practice of showing up for client meetings ready for just about anything. “I realized, over two decades, the questions infrequently were about the Fed dot plots or the forward P/E ratios of different sectors,” says Tighe. “They were about issues infrequently spoken about in the financial press or on TV: the future of water rights, the changing patterns of the jet stream, niche private investments, a discussion on the future of the reserve currency.” They don’t think like financial advisors, but more out of the box in order to be entrepreneurs, solving problems others yet weren’t or launching companies that hadn’t previously existed. Her clients are interested in understanding how the world works today and what factors and problems will influence the way it works in the future? Being able to explore answers to those questions has allowed her clients to anticipate opportunities.
When things are tumultuous in the market, the wealthiest investors step into the spotlight and truly shine. “The top one percent investors are not afraid to be the salmon,” says Tighe. “These investors wait and watch, and if they know they are able to buy something at an attractive price, they are not worried if it falls another 10 to 20 percent before the bottom or they miss the first 10 to 20 percent of upside.” This tenet is most true in their specific areas of expertise: If they know a specific property, a type of technology, a business or sector, they’re incredibly familiar with the patterns that emerge in the market over time, having watched and studied it endlessly. “They have the internal confidence to say, let’s step in here as everyone is stepping out,” she says. “Throughout history, some of the greatest innovations have been born in a time of crisis.”
This article is part of Fortune’s quarterly investment guide for Q3 2023.