For the super-rich, it’s possible to make money even in terrible markets

It pays to be super-rich. Literally. Across the world, but especially in the West, markets are going through extraordinary swings as they head down. Yet, recent reports suggest that uber-wealthy investors have managed to do quite well even in these markets, thank you. What is it, you wonder, that these guys know that we don’t? Nothing, really. Where the rich have the edge is that they have the ability to write million dollar cheques and forget about losses that would vapourise most other investors.

This ability to take losses puts them on a rare plane where they can invest in instruments or funds that are deemed too risky for ordinary mortal investors. For example, property in central London, as well as south Mumbai or Delhi is still appreciating, but it’ll take millions of dollars to buy into the stuff. That’s because in recent years, places like Mumbai and Delhi have entered the pantheon of cities with the most expensive real estate in the world. Central Delhi’s Khan Market is reckoned to be among the costliest commercial real estate on the planet.

Then, there’s the regulation. Intermediate to small investors worldwide aren’t allowed to enter markets where potential losses from short selling can be gigantic. This opens new doors for creatures like hedge funds and specialised derivatives created around esoteric stuff whose value might actually go up when markets are volatile or equities tank. The rich, able to bear losses as well as write huge cheques, aren’t barred from these markets.

And because the number of players here is small, the potential profits can be great indeed. No wonder that a Citibank division dealing with very rich clients had no trouble raising about $500 million to dabble in commercial real estate recently. Not there yet? Stick to fixed deposits.