According to an article in the Wall Street Journal Europe entitled, “These Days, Who’s Not a Millionaire”, the number of millionaires in the US reached record levels in 2004. The Spectrum Group, a Chicago-based wealth research firm stated that households with a net work of $1 million or more, excluding their personal residence was up 21% in 2004 over the prior year.

This seems contrary to everything we see and hear about these days. Turn on the world news and all you hear the cost of oil is rising again and unemployment is still very high. Real estate prices continue to rise while wages haven’t seen much, if any growth. The stock market was up, then down, now it up again. One might think that we were close to a complete economic meltdown. Yet, through all of the market volatility, through rising fuel costs, through a war on terror…..the wealthy are continuing to prosper. Why?

The Dow Jones Newswires reports that “for the third consecutive year, wealthy families favored alternative investments over stocks”. The Institute for Private Investors in New York found that the rich (who have in excess of 10 million dollars in assets) allocated only 37% of their portfolio to stocks as opposed to the 42% they placed in “alternative investments”. They site debt instruments, real estate and venture capital and hedge funds as some of their investments of choice. It appears that true diversification is the key to true wealth.