Wealth: Let’s talk about The Rich
They aren’t all the same
I’ve been associated with Wall Street since the late 1980s, and spent the bulk of my career working on or close to trading floors. Of course Investment Banking pays well so many of my colleagues could easily be described as rich. I invested for a long time and heavily — towards my the end of my career I was saving about 90% of every paycheque. So I guess I could also be described as rich. And during my time in banking I naturally met and got to know a very large number of people. Many of these individuals are entrepreneurial, and two in fact are now billionaires. While in banking I met lots of people in other industries, publishing, film production, music and television to name but a few. And yes, lots of them are rich. So
LOOKING AT THE RICH UP CLOSE
as I’m able to, the first thing you should know is they are just people, and susceptible to the same cognitive biases
that causes those in other fields to lose money. Another common reason I saw for the loss of wealth was perfectly described by the late Charlie Munger
“There is only three ways a smart person can go broke: liquor, ladies and leverage”
and to his list and based on my personal knowledge, I’d add drugs, gambling and profligacy. Lots of profligacy. Clearly in many ways The Rich aren’t really any different from other people. They are just people with more money. But let’s
TALK IN MORE DETAIL ABOUT THE RICH
I’m always confused when I see people using this term without definition and, being a retired Wall Street Quant I prefer to use numbers. If we look at US Census Bureau data
we see there are roughly 125 million households in America. A household in The United States has, on average, 2.6 people. Considering the Census’ data on distribution of wealth, we find the top 10%, 12.5 million households with a net worth of $1,623,000. Clearly a household with a net worth of over $1.6 million dollars is rich. But for some reason it is
INCREASINGLY COMMON TO REFER TO THE RICH
as if they were a single group of people. But that is a crude and ignorant perspective, as the data shows us there are roughly 32 million people in The United States that could be considered rich. So let’s look at
MY WEALTHY FRIENDS AND ACQUAINTANCES
which is, admittedly, a small sample. I see a very, very mixed group of people. First, there are representatives of every race falling into the rich bucket. In terms of gender it seems more women than men are rich. It likely has something to do with the factors cited in this research
Looking at politics, some of my rich friends and acquaintances are conservative while others are liberal, and more than a few far left liberal. However others are non political to the point of not even voting. Many donate to charity, while others are miserly in this regard. In terms of age, while a small number of my friends and acquaintances are very wealth below the age of thirty, of course it seems older people are richer, but that is to be expected as they’ve had longer to invest. Looking at physical appearances, some do dress rich while others purposely wear old clothing, not wishing to waste money. Some do in fact live in mansions, however we know a large numbers shun what is called “conspicuous consumption”.
You should be able to see where I’m going with this.
THE RICH ISN’T A SINGLE MONOLITHIC GROUP
The Rich are very, very diverse and certainly don’t have the same interests. Even stranger: some suggest The Rich want others to be poor. That most certainly isn’t true. While I personally know there are some bad actors, nasty rich people, in other words, the greater majority of wealthy people I know are pleasant to speak and spend time with. And finally,
I CAN ALSO TELL YOU THE RICH PEOPLE I KNOW
don’t waste any time thinking about people less money than they have. They are too busy creating more wealth for themselves and their families. And The Rich aren’t conspiring to keep people poor. It is ridiculous to the point of idiocy to suggest The Rich do this. Many rich share their wealth, either via philanthropy or donations of their personal time. And many rich people share their knowledge with the less well off. And finally, based on my own experiences, social and professional connections, most certainly, The Rich
aren’t all the same
I’ve previously mentioned a face to face seminar I used to offer before the pandemic, The Wealth Class. Many have asked if I will ever start these seminars again, and that looks unlikely. But I have decided to (re)launch a substack publication.
There isn’t any content there presently, but give me some time — I plan to fully launch in The New Year. So consider this a “soft launch”, like lots of restaurants do (yes, I used to cook in one so sorta know that biz)
I hope you enjoyed this article. If you are interested in Financial Independence, Finance, cryptocurrencies and the markets in general, please consider following me. All of my content is based on original Market Research I have been selling Investment Banks for years
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