Wealthy Americans Are Prioritizing Protecting Assets And Limiting Personal Taxes
2 min
Protecting assets and minimizing tax liabilities are the top priorities of wealthy Wall Street Journal and Barron’s Group readers, according to a recent personal finance study conducted by WSJ Intelligence.
Around 57% of the more than 3,600 respondents—who had an average net worth of just over US$3 million—said growing and protecting their wealth is their No. 1 priority going into 2024, the data showed. That stands to reason, as 55% of readers were most concerned about inflation and the rising cost of living, while 40% reported that market volatility was their biggest issue.
About 81% of participants were male, with 3,280 of them being over age 55—aka, Baby Boomers. The combined total of Millennial and Gen X respondents was 333. Across wealth bands, the largest number of participants—1,656—were high-net-worth individuals with assets between US$1 million and US$9.9 million, followed by 718 “emerging affluent” respondents (with a net worth of less than US$1 million) and 253 ultra-high-net-worth individuals, with assets of US$10 million or more.
“This study was really to understand the behavior of our financially savvy readers and explore how they improve their financial acumen and make informed investment decisions,” says Donna Zeolla, the associate director of Finance Intelligence for the Wall Street Journal and Barron’s Group.
Certain concerns are unique to those in the highest income bracket, the survey found. For example, members of that group are 22% more likely to be concerned about identity theft and financial fraud than emerging affluents, the data showed. Zeolla said that was a surprise, given how rampant it can be.
The wealthiest are also 28% more likely to be worried about cybersecurity risks in digital banking and three times more likely to be concerned with estate planning and inheritance, according to the report. They are looking to educate themselves on tax planning, private banking, and estate planning—and in turn seeking out content that helps them do that.
Survey participants across wealth bands use a variety of wealth management services, including brokerage, tax and estate-planning services. When selecting an investing company, key considerations are the fee and commissions charged (49%), expertise (44%), customer service (38%), and the company’s reputation (36%), the figures showed.
“Every survey we’ve done here, at least for the 18 years I’ve been here, it’s the same things that they’re looking for in the institutions,” Zeolla says. “They look at fees, right? I don’t care if you’re the wealthiest person, you’re looking at the fees…[and] they look at the trust and the reputation of the companies. That’s always on their minds.”
And while many are loyal to their financial institutions, the richest investors are more open to switching. Only 41% of ultra-high-net-worth individuals wouldn’t consider moving their money to a new company, versus 53% of high-net-worth individuals and 49% of the emerging affluent.
“Wealthier individuals use a variety of different services—they don’t just have one institution that they’re working with, they’re working with many,” Zeolla says. “But what we did find was that the wealthier people were, the more that they’re open for change. It could be because they’re not loyal to one institution.”
Other differences included their preferred credit cards—the wealthiest were concerned about foreign-transaction fees while low interest rates were more important to younger respondents—and the richest also craved the personal touch. About 47% of ultra-high-net-worth individuals don’t use an automatic investing service because it doesn’t cater to their needs vs. 27% of the emerging affluent.
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Nvidia’s earnings will test Wall Street’s confidence in the AI boom.
3 min
Chip makers are fighting to assure investors that the artificial-intelligence boom is racing forward. Wall Street might not believe it until Nvidia’s NVDA -0.98%decrease; down pointing triangle Jensen Huang says so.
When Huang steps up to the mic for his company’s earnings call Wednesday, he will have the world’s attention. What he says about Nvidia’s present will preview the future of AI, dictate the path forward for a tech-crazed stock market and influence an American economy increasingly tethered to hopes that the boom won’t go bust.
The $5 trillion chip maker has provided the key building blocks for AI since the launch of ChatGPT in 2022 set off a race for dominance among OpenAI, Anthropic and established Silicon Valley giants. Now, as Nvidia backstops sprawling data-center projects and an exotic money pipeline to boost chip demand, the company’s influence is arguably bigger than ever.
But there are signs of trouble ahead. Political pushback to AI is growing. A bond selloff propelled borrowing costs to their highest levels in years. The hyperscalers that include some of Nvidia’s key customers—once cash-printing machines—are relying more on debt. OpenAI recently told investors its revenue rose by a tepid 18% in the second quarter while its losses deepened.
Nvidia is increasingly stepping in to shore up potential weak points across the market. Earlier this month, the company teamed up with six of Wall Street’s biggest firms on a $500 billion AI-financing plan, pledging to backstop lending to customers that can’t afford its chips otherwise. The chip maker last week also took a stake in Cloverleaf Infrastructure, which arranges power for data centers, and struck a $6 billion deal with startup Poolside aimed at developing a powerful open-weight AI model.
After watching shares in other chip makers and the so-called Magnificent Seven tech companies swing wildly in recent months, Wall Street is hoping Nvidia can beat expectations—again. The countdown is on.
“It’s kind of becoming more and more like the World Cup final than the Super Bowl at this point,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “It’s just gotten to be that big.”
The company has smashed analysts’ earnings estimates for each of the 14 quarters since the AI boom kicked into high gear. Nvidia posted 210% annual growth in net income in its last three-month period, according to FactSet, making Wall Street’s 126% projection look pedestrian.
Expectations for a blowout second quarter have risen rapidly over the course of this year. All Nvidia will have to do to beat this target: outrun 95% annual earnings growth to more than $51.5 billion. Analysts project the chip maker will report record sales of $92 billion for the period, up from a forecast of $78 billion at the start of this year.
In July, big-tech earnings sparked volatility. Concerns about runaway capital spending spread across the sector after Alphabet’s and Tesla’s results, driving a $890 billion wipeout that contributed to the unwind of hedge fund Situational Awareness. Microsoft posted the largest one-day gain in market capitalization by any company, ever, after a quarter proving that it could still show investors the money. SpaceX rocketed higher after a record-breaking initial public offering, only to see $1 trillion in value evaporate.
Surging memory prices and borrowing costs have fueled fears that those and other companies will be unable to keep plowing more money into supplies including Nvidia chips. Shaia Hosseinzadeh, founder of OnyxPoint Global Management, has recently bought dips in AI-infrastructure stocks when Wall Street has strained to absorb massive debt issued by Silicon Valley.
“The macro data is really quite robust,” he said. “Of course, there’s a level at which everything breaks.”
Investors have kept pumping money into the AI trade despite concerns around chip consumers—and to the benefit of chip producers. That is why Nvidia’s outlook for semiconductor demand could send ripples through counterparts such as Micron Technology and Sandisk, developers of the data centers in which their chips reside, and a supply chain of power producers, contractors and other specialists that underpin the globe-spanning AI build-out.
“We joke internally that we’re all Nvidia analysts now,” said David Lefkowitz, head of U.S. equities at UBS Global Wealth Management.
The irony is that investors have tended to sell Nvidia stock immediately after blockbuster earnings, with shares falling each trading session after its four past quarterly reports. Some are betting that will be the case this time around, too.
The options market is pricing in a 5.3% swing, higher or lower, in Nvidia shares during the session following earnings, according to Option Research & Technology Services. That is higher than the 4.8% average move in Nvidia’s stock over the last 12 months after the company reports quarterly results.
In recent days, some of the most actively traded Nvidia options have been put contracts tied to the stock falling from its Friday value of $214.75 to $205 and $210 apiece, according to Cboe Global Markets data. Put options give the right to sell a stock by a set price and typically represent a bearish wager.
Many analysts remain optimistic. Frank Lee, global head of tech hardware and semiconductor research at HSBC Global Investment Research, recently raised his price target for Nvidia shares to $360 from $325, citing, among other things, Nvidia’s strategic partnerships with suppliers and its role as a top contributor to open-source AI.
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