Tag Archives: wealth

morning-coffee

Money, Money, Money…But Is It A Poor Man’s World?

The press has been dominated this week by the subject of wealth. Many of the world’s most influential business leaders, politicians and celebrities will descend on the Swiss Alpine resort of Davos tomorrow, where the annual meeting of the World Economic Forum is due to commence. Pertinently, it was also revealed that the World’s 85 richest people have as much wealth as poorest 3.5 billion with Oxfam warning Davos of ‘pernicious impact’ of the widening wealth gap.

Still, our fascination with wealth knows no bounds and despite this frightening data, addiction to wealth is certainly not unheard of. Take for instance, the story of the former hedge fund trader reported earlier this week in the New York Times. He argued that earning multimillion-dollar bonuses causes something akin to an alcohol or drug addiction, prompting rage and an uncontrollable desire for more, where people seem willing to destroy themselves and their companies rather than be satisfied with the millions or billions they already have. The trader in question was one amongst many who have been inspired to head to Wall Street to seek their fortune. After spending several years working towards that goal, he eventually became a bond and credit-default-swap trader who made a fortune when the economy crashed, earning a $3.6 million bonus in 2010.

Still, that wasn’t enough. The fact that his fellow traders sitting next to him had made more drove him crazy and in the months before bonuses were handed out, he was quoted as saying “the trading floor started to feel like a neighbourhood in The Wire when the heroin runs out.” While there may be similarities between the behavior of a junkie and some of the traders on Wall Street, chemical addiction has both physiological and genetic roots, while the uncontrollable desire for is more environmental. It’s called greed.

We live in a world of extremities…as the wealth gap widens, the rich get richer and the poor struggle to survive. Money does indeed make the world go round but sadly for the poor, it’s a rich man’s world.

million dollars

How much are the world’s top 300 billionaires worth?

Have you ever wondered what might be the collective worth of the world’s top billionaires? According to the Bloomberg Billionaires Index, which measures a daily ranking of the world’s 300 wealthiest individuals, the richest people on earth got even richer last year, raising the total of their worth by as much as $524 billion. Their combined net worth in 2013 stood at $3.7 trillion at the market close on December 31st. The biggest gains were rooted in the technology industry, which soared 28 percent during the year.

It is no wonder therefore that the world’s biggest gainer was Bill Gates, the founder and chairman of Microsoft, the world’s largest software maker. The 58-year-old tycoon’s fortune increased by a staggering $15.8 billion to $78.5 billion, according to the index, as shares of Microsoft rose a whopping 40 percent. Sheldon Adelson, founder of Las Vegas Sands Corp., the world’s largest casino company, was the second-biggest gainer in 2013, adding $14.4 billion to his net worth as the company’s shares rose 71 percent. Gates used to be the world’s richest person, then lost his title to Mexican investor Carlos Slim, but then gained it back again last May.

Surprisingly, less than a quarter of Gates’s fortune is held in Microsoft. Most of Gates’s assets are held in Cascade Investment LLC, an entity through which he owns stakes in about three dozen publicly traded companies and several closely held businesses, including Four Seasons Hotels and Resorts and Corbis Corp., a photo-archive company. Gates’s fortune has also benefited from a rally in stock holdings that include the Canadian National Railway Co. and sanitising-products maker Ecolab Inc., which rose 34 percent and 45 percent respectively. Gates may be the wealthiest man alive but he does his part to help the less fortunate, as he also donated $28 billion to the Bill & Melinda Gates Foundation.

So what might be the cause of such astounding gains? Well, 2013 has seen the best annual gain in global stocks since 2009, with the MSCI World Index advancing 24 percent during the year to close at 1,661.07 on December 31st, and the Standard and Poor’s 500 Index rising 30 percent to close at 1,848.36 - its best yearly gain since 1997. The Stoxx Europe 600 also gained 17 percent to close at 328.26. Companies in the S&P 500 are now worth $3.7 trillion more than they were 12 months ago following a year when Federal Reserve Chairman Ben S. Bernanke signaled the curbing of economic stimulus. The depths of the credit crisis gave birth to a bull market, entering its sixth year fueled by near-zero interest rates and conviction among investors that it is finally safe to own equities again.

The question remains: will the rich keep getting richer in 2014? John Catsimatidis, the billionaire founder of real estate and energy conglomerate Red Apple Group Inc., seems to think so. “Interest rates will remain low, equity markets will keep rising, and the economy will grow at less than 2 percent,” he says. All good signs for Bill Gates and the other 299 richest people on this planet! Let’s just hope some of their good fortune rubs off on the rest of us!

morning-coffee

Living In A Material World?

Are we living in a material world? To a larger or lesser degree, the answer has to be ‘yes’ but it does seem that to what degree depends on where you live.

In a recent poll of 20 countries conducted by global market-research company Ipsos regarding their attitudes toward wealth and success, findings were that those in China were the most likely to equate success with material possessions, with 71 percent agreeing with the statement “I measure my success by the things I own.”

Perhaps it’s no coincidence that the next three countries were also large emerging markets, implying that people’s views may be shaped not only by culture, but by stage of national development: 58 percent of respondents in India agreed with the same statement, while 57 percent in Turkey and 48 percent in Brazil. In the more affluent US, the figure was 21 per cent.

People in China were also the most likely to say “I feel under a lot of pressure to be successful and make money,” with 68 percent agreeing. A separate global poll last year by U.K office-space company Regus, found that Chinese workers were also the most likely to report increasing stress levels over the past year.

Meanwhile, people in India were the most likely to be hopeful about their country as a whole over the next year, with 53 percent expressing optimism. Forty-six percent of people in China expressed optimism, well above the global average of 32 percent. The most pessimistic were those living in Spain, Italy and France, perhaps not surprisingly considering their recent financial woes.

So, does being well-off financially equate with success? That depends on how you measure your own personal success. What do you think?

morning-coffee

Putin’s Pet Project: The 2014 Winter Olympics

The 2014 Winter Olympics are coming up in the Black Sea resort of Sochi, where Russia is spending a record $48 billion on the event. It will be a mad rush to the opening ceremony on February 7th, while headlines are being dominated lately by concerns about terrorist attacks, lack of snow and anti-gay laws. Yet another, potentially longer-lasting battle is playing out behind the scenes, involving Putin’s government, some of Russia’s wealthiest industrialists and a state-owned bank. The government is demanding that the country’s biggest companies stand firm on commitments to bankroll the games.

State-owned Vnesheconombank, known as VEB, lent $7.4 billion to a who’s who of Russia’s elite, in order to finance venues and apartments in the Caucasus Mountains and along Sochi’s seacoast. The moguls say skyrocketing costs and restrictions on commercial activities mean they risk losses on their investments unless the government helps. They want extended tax breaks and subsidies on the interest payments they owe VEB for Sochi assets.

Sochi 2014 might as well be renamed Putin 2014, says Scott Antel, a partner at DLA Piper LLC in Moscow, who has worked on hotel projects in the region. Antel says Putin twisted billionaires’ arms to get the Olympics off the ground in return for letting their companies run their quasi-monopolies. “This was a deal with the devil,” Antel says. “You will do your civic duty and build facilities in Sochi so we can have this coming-out party for the new Russian state. This is your indirect taxation to be allowed to continue with your main business activity.”

As Putin flies to Sochi today for three days of meetings to check on construction projects, the question remains: could Putin be staking his legacy, and Russia’s image, on his pet Olympics project?

morning-coffee

How far are you willing to “Push The Boat Out”?

Have you heard this phrase before: “a boat is a hole in the water you pour money into”? Well it’s true. Approximately 95 percent of vessel owners have boats which are 26 feet or less but cost an average of 18 grand, according to Ellen Hopkins at the National Marine Manufacturers Association – and believe it or not, more than 80 percent of those buyers parted with their money for pre-owned boats. What’s more, the actual purchase of a boat is only the beginning when it comes to spending. Kim Kavin, the charter editor at Yachting magazine and editor of CharterWave.com, and Gianluca Fenucci, the founder and director of ISA Yachts, both agree that it would be wise to budget 10 percent of the boat’s value annually to cover additional expenses.

Luxury yachts take things to a whole new level; they are complex, floating machines that require a crew, huge amounts of fuel, docking, and maintenance. Kavin says that marina docking fees for a week at an event like the Monaco Grand Prix usually run in the six figures, and that fuel is commonly the biggest expense a yacht owner faces. Then there are the people who must be paid to sail the yacht, clean it, and feed everyone on board. An experienced captain makes about $1,000 per foot of yacht annually, according to Kavin, which means the captain of a 150-foot yacht can set an owner back $150,000 every year!

History Supreme is currently the World’s Most Expensive Yacht with a price tag of over $4.5 billion. So what makes this 30m long yacht more expensive than all the others? How about the 100 000 kg of gold and platinum used to plate the exterior of yacht, and the fact that part of the interior is made out of bits of meteorite.

People have for centuries built boats that were too large for an individual to move. Helping a seaman to “push the boat out” was an act of generosity - today that exact same phrase means to spend generously, more than one is normally accustomed to doing… which is exactly what you’ll be doing if you become the owner of a large boat!