How the Ultra-Wealthy Actually Invest: A Look Inside the Private Market Playbook

To build long-term wealth, most people recommend hiring a financial advisor and sticking to a diversified portfolio of stocks and bonds. For decades, this 60/40 split has been the industry standard. It is, however, only a starting point for those who have achieved significant wealth. It barely scratches the surface of what genuinely wealthy families do with their money.

Christopher Zook, founder of CAZ Investments, says the wealthiest individuals aren’t really “diversified” as we typically understand the term. Rather than invest in the same old deals that everyday investors hear about, they play a game grounded in private markets, focusing on long-term cash flow, and providing access to deals most everyday investors are unaware of.

Among investors, the public market, composed of publicly traded stocks and bonds, is the primary, if not the only, investment option. Wealthy families, however, typically allocate only 15%–25% of their capital there. Occasionally, this may rise to 30%, but most of their portfolios are heavily geared toward alternative investments. A few examples of these include real estate, private equity, private credit, and venture capital.

The reasoning behind this strategy? It’s simple and strategic. In public markets, volatility is common, correlations are strong, and the scope of the market is limited. According to Christopher, fewer than 1% of all companies are publicly traded. Therefore, investors who concentrate solely on public stocks are missing out on more than 99% of the market, including the vast majority of private companies with revenues over $100 million.

The Power of Private Markets

An alternative to the public market is the private market. Among ultra-wealthy investors, 44% to 59% of their net worth is now invested in alternative investments–a number that continues to increase. This trend is supported by the performance data. As a result of lower volatility and better alignment with long-term growth objectives, private equity outperforms public markets by a significant margin.

As Christopher points out, the public markets provide instant liquidity, but it comes with a price, which is the cost of daily liquidity. For those willing to lock up their capital for long periods of time, the rewards can be exponential. Due to this extended time horizon, private companies can mature and grow without the distraction of quarterly earnings reports.

Rethinking Diversification

To the ultra-wealthy, diversification goes beyond holding a variety of stocks. In essence, it’s about non-correlation – holding assets that behave differently in different market environments. In the tech sector, such as Apple, Amazon, Microsoft, and NVIDIA, owning shares is not true diversification; it is, as Christopher points out, “just concentration with a tech bias.” If the tech sector suffers, so will the entire portfolio.

A portfolio invested solely in technology stocks is analogous to a golf shop selling only umbrellas. It will thrive on a rainy day but perform poorly on a sunny one. In contrast, a portfolio that also holds private real estate or sports franchises is similar to a shop that also sells sunscreen. Holding assets that perform well in different economic climates it reduces volatility and enhances long-term returns.

Democratizing Access to Alternatives

Historically, wealthy individuals or large institutions have had access to these lucrative private market opportunities. However, Christopher and CAZ Investments are working hard to change this. To make the private market more accessible to everyday investors, they want to democratize the information and access.

Rather than basing accredited investors’ net worth on arbitrary thresholds, this effort involves education and advocacy for definitions that emphasize knowledge and competence. The goal is to make it possible for people to build wealth in a way that has existed for generations among truly successful families.

The Untapped Investment Potential of Professional Sports

In addition to private equity and venture capital, professional sports franchises are becoming increasingly powerful investment classes. A closer look reveals that team ownership presents a highly compelling investment opportunity due to media disruption and guaranteed cash flow.

From Vanity to Viability: A Shifting Landscape

In North America, owning a professional sports team was an exclusive club for decades. The “two-legged rule” stipulated that only individuals, not institutions, could own equity in sports teams like MLB, NBA, and NHL. As the costs of running and scaling these franchises soared in 2019, this changed. Leagues then recognized the need for new capital and began allowing institutional investors to purchase minority stakes. As a result, firms like CAZ Investments were able to enter the market and create a new investment class.

This shift was no accident. This was a direct response to cord-cutting, a cultural and technological trend. With consumers abandoning traditional TV in favor of streaming platforms, advertisers have lost the one thing they have always paid for: a captive, attentive audience. Among the last bastions of communal viewing is live sports.

There is no denying the data. Among the top 100 most-watched programs in 2005, only 15 were sporting events. As of 2023, that number had skyrocketed to 97 out of 100, but it dropped to 87 in 2024. Advertisers and streaming platforms have become non-negotiable when it comes to their strategy, granting sports franchises unprecedented leverage and value.

Institutional Access = Investment Opportunity

Investing in an NFL team today is very different from 30 years ago. Ticket sales and jersey sales are no longer the only sources of revenue. The real value of the league lies in its lucrative media rights, massive sponsorship packages, and revenue-sharing arrangements at the league level. Each NFL franchise is projected to receive $460 million in shared league revenue annually before it sells a single ticket.

Investors don’t just bet on one team’s success when they own a franchise. Through fan loyalty and insatiable media demand, they’re getting a legal monopoly that shares profits across the league, protects them from competition, and gives them incredible pricing power.

Contractual Cash Flow and Alignment

In addition to their downside protection, sports franchises offer upside flexibility for institutional investors. As a result of long-term broadcasting deals, they are supported by contractual revenue streams. The combination of this stable foundation with renegotiations of future media rights and a growing brand raises the possibility of upside. Basically, these assets are cash-generating machines with growth levers built in, not just passion projects.

In other words, some firms, such as CAZ Investments, own stakes in over 30 teams, including Liverpool FC, Paris Saint-Germain, and even Aston Martin F1. The idea is simple: own the content people still watch live and benefit as tech giants and streaming platforms compete for exclusive access.

The Bigger Picture

Diversification isn’t just a matter of owning different stocks, but also having different types of assets that produce cash flow differently. Thanks to recent rule changes, investors are finally gaining access to professional sports franchises, which are the last frontier for these legal monopolies. In the future, this investment class will grow tremendously.

Key Takeaways

• Redefine diversification. Diversification is about non-correlation, not just owning different public stocks. Essentially, it means holding assets that respond to market conditions differently, smoothing out volatility.
• Look beyond public markets. Only 15%–25% of the capital of the ultra-wealthy is allocated to public stocks. The real game-changing opportunities are found in the private market, which represents 99% of all businesses.
• Embrace private market opportunities. Real estate, venture capital, and private equity are not just for billionaires. The performance of these alternative investments over time tends to outperform that of the public markets.
• Understand the value of illiquidity. An asset can be sold every day, but at a price. You can access higher returns and better long-term growth by locking up capital for longer periods in private markets.
• Seek unique investment opportunities. Sports franchises are one of the best examples of non-traditional assets with built-in growth potential. From vanity projects to cash-generating machines, they have evolved into valuable assets.
• Recognize the power of media rights. There is more to sports franchises than just ticket sales. As live sports are one of the last forms of communal viewing, the real money is in media rights and league revenue sharing.
• Champion democratized access. By expanding access to private markets through education and regulation, the investment landscape is changing. As soon as these opportunities become available, look for ways to participate.

Featured Image Credit: Lukas; Pexels: Thank you!