Being Born Rich

By James Pynn

My friend, Jim, loves to manage other people's money. That is, he loves to manage rich people's money. Most of his client would be considered part of the nouveau riche -- they have worked hard to become rich. But, from what Jim tells me, more upper-crust families in America have inherited fortunes rather than actually creating new ones. He would know -- in order to become one of his clients you have to have a net value of at least $1 million. It does boggled the mind to think there is more so-called "old money" in the market than there is "new" money.

This begs the question: if old money drives the economy, how does new money ever enter the picture? Where does the average working Joe fit into the picture? What about the middle class? When does the middle class get to ante up to the investment table? During the 1990s we saw more day traders buying and selling in frenzy to make it into the top 10 percent. Of course, only 1 percent of those people ever made the grade.

So is it the privilege of the rich to only get richer? How can an eager entrepreneur break into the top ten percent of the world's wealthiest people? Enter the corporation. Why is the Western World replete with so many corporations? Because it takes a whole board room of upper-middle-class business men to front the start up money. Venture capitalism is a powerful counter-balance to inheritance.

J.P Morgan didn't fall from a money tree. Steve Jobs didn't just open a window and let money fly in. "It takes money to make money" is a truism for a reason, but not for reasons most people with inheritances think. It takes venture capital to start a business -- it takes seed money to get an idea off the ground. Where this money comes from is not as important as what is funds and who benefits from its investment.

Here is a fun fact: the richest people on the planet become even richer during economic downturns and depressions. How is this? Recessions and depressions have a tendency to destroy competition, therefore consolidating the wealth of the super rich. Competition is not in the best interests of the super-rich. Consequently, it is the corporate structure -- justifiably attacked for its lack of transparency -- that allows new wealth to be created and more people to participate in that wealth. Most corporations are started by venture capitalists and entrepreneurs -- and that entrepreneurial spirit is what has made the middle class and nouveau riche possible. - 23196

About the Author:

Joining the Ten Percent Club make take a good amount of shrewd, savvy day trading. Don't trade stocks online without a great team of people behind you.