Saturday, July 28, 2007 2 comments ++[ CLICK TO COMMENT ]++

All-time Wealthiest Americans

I ran across a good interactive display showing the wealthiest americans of all time. You may find it worthwhile to take a quick look. I find a couple of interesting things. A lot of the wealth charts just plot net worth in inflation adjusted terms, but this New York Times analysis measures inflation-adjusted wealth as a percentage of the economy. The top 5 according to this are:

1. John D Rockefeller (1839-1937) - $192 billion
2. Commodore Cornelius Vanderbilt (1794-1877) - $143 billion
3. John Jacob Astor (1763-1848) - $116 billion
4. Stephen Girad (1750-1831) - $83 billion
5. Bill Gates (1955-present) - $82 billion

(Source: New York Times, July 15 2007)

The interesting thing to note--something that most people probably already know--is that most of the wealthy people are self-made entrepreneurs. Many on the list seems to have cornered a market, whether it is computer operating systems, or railroads, or steel. Some of these people used unethical and possibly illegal means (fortunately, ethics has significantly improved in the developed world). There are no investors on the list other than Warren Buffett. Even on the present day Forbes list, showing the wealthiest Americans (or other nationalities), there are only a few investors. The lack of investors sort of alludes to the difficulty of investing (at least at high-wealth levels). It is difficult to continuously make investments over time, and to grow large sums of money by reinvesting at high returns. Warren Buffett has mentioned this many times and it is something that actually benefits the small investor. Small investors have many disadvantages but one of their big advantage is that we can go into areas that the wealthier people can't. This is one reason I have changed my strategy to focus on smallcaps and microcaps. Once upon a time, I avoided these small issues like the plague (Pink Sheets, OTC stocks, and anything below $100 million market cap were scary to me); but these days I actually consider them (they are very risky so I still rule out most of them if I'm not comfortable).

Furthermore, most of them on the list are from the late 1800's and early 1900's. This was arguably the best period for USA, when businesses were growing, the average citizen's life was improving, and cities like New York City became the #1 city in the world (in my opinion). Even though many people consider the peak of USA to be much later on, the late 1800's was perhaps the best period for entreprenurs and investors, and the time when great fortunes were made.

I would say China is almost--but not quite--in this phase right now. Barring some massive disaster of epic proportions, the largest fortunes in China are going to be made in the next 50 years--even though China will keep growing for 100+ years. Someone looking at the wealthiest Chinese in a 100 years (using a list like this that measures wealth realtive to the economy) will probably see most of the wealthiest Chinese of all time coming from the next 50 years. I'm actually bearish on China right now (too many bubbles) but it is probably the place to be over the next 100 years.

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2 Response to All-time Wealthiest Americans

Anonymous
July 30, 2007 at 9:21 PM

siv, forget the contrarian bs for now. i don't get why your not interested in learning more and stick to proving this point. do a simple statistical analysis on history and you will see that buying stocks that are getting smashed has really shit probability, your not going to out smart the market that much. The markets are not effecient but they are not that ineffecient.
I found your blog from whatever that new fsn board is sopposed to be. There is nothing for me to say there, those guys are a total joke, clueless.
come to dark side :)
this my total board of choice right now
traderslaboratory.com
you could be a great trader if you would understand you don't know shit and need to learn from people who do as i have.

nate / darthtrader :)

July 31, 2007 at 9:50 AM

Hi Nate! How's everything going?

I don't know man... I just don't think I'm into the trading stuff. Everything I look at seems to imply that trading is a losing game--unless you are extremely good. If it works for you, that's cool but I'm trying something that I think can work for me...

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