Ten billionaires on the best advice and opportunities

December 10, 2011

Stock markets are down. Europe is gyrating. Cash generates minuscule returns. Commodities, especially gold, can soar or tumble in an instant. In these perplexing times, Bloomberg Markets asked 10 billionaires 14 questions covering their views on the global economy, where they see opportunities and who gave them the best advice.

We found much agreement: The billionaires say traditional indicators have little influence on their investment decisions. In fact, hair-care mogul John Paul DeJoria says salons are better indicators of economic health. The 10 largely agree that the euro will depreciate further and that keeping one’s portfolio in U.S. dollars is smart.

Lawyer Joe Jamail, with the bulk of his fortune in bonds and cash, expresses in colorful language a common tenet: Hedge funds are dangerous. “I’d buy cocaine rather than buy that,” he says.

They also diverged. The Standard & Poor’s 500-stock index may wind up anywhere from 1,200 (according to Jamail) to 1,400 (according to Rubens Menin Teixeira de Souza) at the end of 2012. It was at 1,195.19 on Nov. 29. Gold is an opportunity, an enigma and a bubble, they say.

Art collector Eli Broad says buying a prime Picasso is the safest investment. Pharmaceutical baron Patrick Soon-Shiong says he’d go with season tickets to the Los Angeles Lakers.

Russian metals mogul Mikhail Prokhorov offers advice that’s hard to beat: What to do with $1 million in cash? Spend it with pleasure, he says.

See for yourself:

Mikhail Prokhorov

Primary asset:36 percent stake in Polyus Gold International.

Residence: Moscow

Industry: Commodities

The mining mogul sold his 25 percent stake in OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, to fellow Russian titan Oleg Deripaska. The 2008 deal brought him more than $5 billion in cash and 17 percent of aluminum producer United Rusal. Today, his flashiest assets include Polyus Gold, with about $2 billion in annual sales, and an 80 percent cut of pro basketball’s New Jersey Nets.

Prokhorov, 46, told Bloomberg Markets in 2010 that the term “oligarch” doesn’t apply to him because he’s just a businessman. This year, he jumped into politics, taking control of a pro-business party called Right Cause.

What three economic indicators most influence your investing?

German IFO data on business expectations are best on global manufacturing. U.S. Conference Board data are the top measure of American consumer confidence. Chinese PMI manufacturing data are good for China’s growth and exports. In emerging markets, inflation, budget deficit, production growth index and retail sales are key.

What is the best investing advice you ever received?

“Keep your back straight and don’t fidget” — a piece of Russian folk wisdom.

What have been your best and worst investments?

My best was Norilsk Nickel. My team and I took a company in serious decay that hadn’t paid salaries for six months and turned it into the world’s biggest producer of nickel and other metals. It was like running a small government, with 300,000 people dependent on that company for their livelihoods. I hope my worst investment is yet to come.

What currency do you believe will depreciate the most in the next two years? What currency would you prefer to hold your portfolio in?

Hopefully, the euro. This would give the euro zone the chance to export its way out of slow growth. I keep my cash in U.S. dollars, and I keep shares of Polyus Gold as collateral. For the long term, my preference would be to keep my portfolio in currencies that offer high interest rates or high growth — a basket of emerging-markets currencies from Brazil to China to Russia.

Where are the best opportunities in global fixed income?

I see little value in 2 percent on U.S. Treasurys. Among developed markets, Canada, Norway or Finland have better debt levels and are less inclined to inflate away debt problems. A combination of Russian corporate bonds, some Brazilian or Turkish local-currency debt, with a sprinkling of less obvious African options would be an interesting combination.

Any money manager you would trust with your entire portfolio?

Yes. His name is Mikhail. I sign every check myself.

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