high net worth

200 results back to index


pages: 358 words: 104,664

Capital Without Borders by Brooke Harrington

banking crisis, Big bang: deregulation of the City of London, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, complexity theory, corporate governance, corporate social responsibility, diversified portfolio, estate planning, eurozone crisis, family office, financial innovation, ghettoisation, haute couture, high net worth, income inequality, information asymmetry, Joan Didion, job satisfaction, joint-stock company, Joseph Schumpeter, liberal capitalism, mega-rich, mobile money, offshore financial centre, race to the bottom, regulatory arbitrage, Robert Shiller, Robert Shiller, South Sea Bubble, the market place, Thorstein Veblen, transaction costs, upwardly mobile, wealth creators, web of trust, Westphalian system, Wolfgang Streeck, zero-sum game

In response to this common obstacle to the formation of trusting client relationships, wealth managers—along with professionals in allied realms—have sought to institutionalize solutions. There has been particular interest in accommodating the cultural preferences of high-net-worth individuals in the Asia-Pacific region, who share norms of patriarchal authority with Latin Americans but represent a much bigger client base: Asians are the fastest-growing population of high-net-worth individuals in the world, and already possess more than twice the wealth of the high-net-worth population of Latin America.59 In response to this growing market power, some jurisdictions have purposely created laws to address the conflicts over control that have been so problematic with Asian clients. Frank, an English practitioner who draws on thirty years of international experience in teaching the STEP training courses, observed that “the British Virgin Islands developed the VISTA [Virgin Islands Special Trusts Act] corporation expressly to attract Asian high-net-worth clients, because the rules created firms held by a trustee, but in which a trustee was not allowed to make any inquiries into the underlying firm—the nature of its business, how it operates, who operates it, et cetera.”

In fact, recent crackdowns on offshore tax avoidance have resulted in a record number of citizenship renunciations.42 Just like firms that give up their onshore incorporation in order to reincorporate offshore and save on taxes, an increasing number of high-net-worth individuals have responded to states’ efforts to impose the duties of citizenship by fleeing the “sovereign national cage.”43 In a process usually directed by wealth managers, high-net-worth individuals simply acquire a more convenient citizenship, usually in low- or no-tax jurisdictions.44 Thus, through the intervention of professionals like Louis, high-net-worth individuals gain many of the same tools for avoiding tax and regulation as multinational corporations, and therefore the ability to amass power rivaling that of nation-states. Croesus unbound The power struggle between states and their wealthiest citizens is nothing new.

In addition to the liability and compliance issues, the size of the client base itself presents a risk. Simon only works with ultra-ultra-high-net-worth clients, each of whom brings him “an absolute bare minimum” of $50 million in investable assets; “otherwise my fees are not economical for them,” he said. Such clients are relatively rare, so if one of them takes his or her business elsewhere, the consequences could be devastating for Simon’s income. In contrast, Luc’s firm can take on more work from a broader client base (one that includes somewhat less wealthy people), so the loss of any individual account will not threaten the company’s stability. The sole practitioner model also has downsides for the client. The typical ultra-high-net-worth individual owns a complex multinational portfolio of assets requiring expertise in numerous domains of practice.


pages: 363 words: 28,546

Portfolio Design: A Modern Approach to Asset Allocation by R. Marston

asset allocation, Bretton Woods, business cycle, capital asset pricing model, capital controls, carried interest, commodity trading advisor, correlation coefficient, diversification, diversified portfolio, equity premium, Eugene Fama: efficient market hypothesis, family office, financial innovation, fixed income, German hyperinflation, high net worth, hiring and firing, housing crisis, income per capita, index fund, inventory management, Long Term Capital Management, mortgage debt, passive investing, purchasing power parity, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, Sharpe ratio, Silicon Valley, stocks for the long run, superstar cities, survivorship bias, transaction costs, Vanguard fund

Today I advise a committee that has the fiduciary responsibility over portfolio design for a large number of clients, both institutions and individuals. For the last dozen years, I have been academic director of a unique program at Wharton for ultra-high net worth investors, the Private Wealth Management Program. In this program, which Charlotte Beyer of the Institute for Private Investors and I founded in 1999, the investors themselves come to Wharton for a week to learn about how to invest their wealth. As of 2010, almost 600 ultra-high net worth investors have taken part in this program. This program has given me perspective from the investor’s side of the advisor-investor relationship. I have also had extensive experience as an advisor to the family offices of ultra-high net worth investors and as a consultant to pension funds and endowments. What I have learned is that investing isn’t easy. But as shown in this book, thoughtful asset allocation provides discipline to the investment process and gives the best chance of building and safeguarding wealth.

When alternative assets are added to the portfolio, domestic and foreign stocks remain in the same proportion as in the benchmark portfolio. HIGH NET WORTH (HNW) PORTFOLIOS Several portfolios with alternative investments are examined. The first two portfolios are designed for high net worth investors who are willing to invest in hedge funds and commodity futures as well as in real estate, stocks, and bonds. Both HNW portfolios have 25 percent invested in bonds, 50 percent in stocks, and 25 percent in alternative investments (including real estate). The first of these portfolios has 10 percent in hedge funds, 5 percent in commodity futures, and 10 percent in REITS. This portfolio is illustrated on the right side of Figure 13.3. The second HNW portfolio excludes commodity futures with the REIT allocation increased to 15 percent from 10 percent. The other portfolios are designed for ultra-high net worth investors who can cope with the illiquidity of venture capital and private equity investments.

Now it is time to consider how well they perform in a portfolio. The first section of the chapter considers what we might term alternative investments for the ordinary investor as recommended by a leading institutional investor. The second section then introduces what we might term more exotic alternative investments, namely hedge funds, commodity futures, and private equity. The investments are evaluated in portfolios designed for high net worth and ultra-high net worth investors, respectively. The third section then examines the extraordinary record of one institutional investor, the Yale University Endowment, over the period since 1985 when David Swensen took over its direction. The analysis of the Yale endowment will be designed to disentangle the effects of asset allocation from the superior access to managers provided by the Yale Endowment.


The Handbook of Personal Wealth Management by Reuvid, Jonathan.

asset allocation, banking crisis, BRICs, business cycle, buy and hold, collapse of Lehman Brothers, correlation coefficient, credit crunch, cross-subsidies, diversification, diversified portfolio, estate planning, financial deregulation, fixed income, high net worth, income per capita, index fund, interest rate swap, laissez-faire capitalism, land tenure, market bubble, merger arbitrage, negative equity, new economy, Northern Rock, pattern recognition, Ponzi scheme, prediction markets, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, short selling, side project, sovereign wealth fund, statistical arbitrage, systematic trading, transaction costs, yield curve

He is manager of the Trust department and has worked as a Client Manager for over five years, administering trusts for high-net-worth donors. CAF is a charity whose mission is to create greater value for charities and social enterprises. This is done by transforming the way donations are made and charitable funds are managed. CAF’s core activity is to provide innovative financial services to charities and their supporters. Philip Watson assumed the position of Head of Investment Analysis and Advisory Group (IAAG) at Citi Private Bank EMEA in April 2006, having previously been a senior portfolio analyst since 2003. He oversees a team of 12 professionals who manage the asset allocation and portfolio construction of the Bank’s high-net-worth clients. The work of IAAG is a competitive differentiator for Citi Private Bank, contributing to its intellectual leadership and forming the cornerstone of investment conversation with clients.

When Mr Market makes that difficult, capital-protected instruments that can generate returns on flat, falling or rising markets have provided, and continue to provide, a useful alternative to cash. 45 1.5 Advisory services Mary Schwartz, Jonathan Binstock and Glenn Kurlander, Citi Private Bank Introduction In addition to offering standard investment advice, wealth managers often serve the needs of their high-net-worth clients with distinctive advisory services. These services are established to harmonize the clients’ personal and professional wellbeing while maximizing their financial assets. Clients benefit from a ‘one-stop shop’ enabling them to manage their affairs quickly and efficiently through a small group of people. Family advisory services Family advisers provide clients with access to professional advice and expertise on inheritance, succession planning, issues of family unity, raising children in affluence, and supporting foundations, all of which may affect a high-net-worth individual’s long-term financial strategy. When most wealthy individuals and families think about intergenerational wealth planning, they think, first and foremost, about the effective disposition of property and the minimization of taxes.

Consequently, however expedient the arrival of the private foundation may seem from a fiscal point of view, it is an innovation whose place in our statute book could soon seem to be an appropriate expression of the natural order of things. 57 Part 2 Real estate and forestry 58 59 2.1 UK commercial property review Tim Bowring, Citi Private Bank Why high-net-worth individuals invest in real estate as an asset class Real estate is tangible. In times of great uncertainty the lure of ‘bricks and mortar’ is stronger than ever, and even though the market has recently seen a dramatic collapse high-net-worth investors (HNWIs) still feel comfortable with this asset class. And rightly so; even if the let investment loses value they will always have the value of the land, which remains in limited supply. Real estate has been a ‘fashionable’ asset class globally. Whether one is looking for a trophy asset to add to a collection or an addition to a portfolio for succession purposes, the asset remains highly fashionable.


pages: 273 words: 78,850

The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas Stanley, William Danko

affirmative action, estate planning, financial independence, high net worth, index fund, money market fund, mortgage tax deduction, the market place, very high income, Yogi Berra

Never start a conversation with “When I was your age, I already had …” To many successful, achievement-oriented children of the affluent, accumulating money is not the superordinate goal. Instead, they want to be well educated, to be respected by their peers, and to occupy a high-status position. For many of these sons and daughters, the variations in income and wealth among occupations are much less important than they are for their parents. The typical first-generation affluent American is a business owner. He has a high net worth but often low self-esteem. The low-status, high-net worth parent often livesvicariously through his well-educated adult children who occupy highstatus professions. Ask a self-made millionaire a simple question: “Mr. Ross, tell me about yourself.” A prototypical multimillionaire (a high school dropout) recently answered this way: I was just a kid, a teenager, when we got married … never finished high school. But I started a business….

THE RESEARCH The research for The Millionaire Next Door is the most comprehensive ever conducted on who the wealthy are in America—and how they got that way. Much of this research was developed from the most recent survey we conducted that, in turn, was developed from studies we had conducted over the previous twenty years. These studies included personal and focus group interviews with more than five hundred millionaires and surveys of more than eleven thousand high-net worth and/or high-income respondents. More than one thousand people responded to our latest survey,* which was conducted from May 1995 through January 1996. It asked each respondent about his or her attitudes and behaviors regarding a wide variety of wealth-related issues. Each participant in our study answered 249 questions. These questions addressed topics ranging from household budget planning or lack of it to financial fears and worries, and from methods of bargaining when purchasing automobiles to the categories of financial gifts, or “acts of kindness,” wealthy people give to their adult children.

Given his age and income, he should be worth more than $3 million. With his high-consumption lifestyle, how long do you think Dr. Ashton could sustain himself and his family if he were no longer employed? Perhaps for two, at most three, years. HOW TO DETERMINE IF YOU’RE WEALTHY Whatever your age, whatever your income, how much should you be worth right now? From years of surveying various high-income/ high-net worth people, we have developed several multivariate-based wealth equations. A simple rule of thumb, however, is more than adequate in computing one’s expected net worth. Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be. For example, if Mr. Anthony O. Duncan is forty-one years old, makes $143,000 a year, and has investments that return another $12,000, he would multiply $155,000 by forty-one.


pages: 121 words: 34,193

The Hidden Wealth of Nations: The Scourge of Tax Havens by Gabriel Zucman, Teresa Lavender Fagan, Thomas Piketty

Berlin Wall, Bretton Woods, British Empire, Capital in the Twenty-First Century by Thomas Piketty, dematerialisation, Fall of the Berlin Wall, financial innovation, financial intermediation, high net worth, income inequality, means of production, new economy, offshore financial centre, transfer pricing

Out of this total, I estimate that 8%, or $7.6 trillion, is held in accounts located in tax havens. This is a large sum. As a point of comparison, the total public debt of Greece—which plays a central role in the current European crisis—is about $350 billion. As we have seen, the assets held in Switzerland are as high as $2.3 trillion—or close to a third of the total amount of offshore wealth. The rest is located in other tax havens that provide private banking services for high net-worth individuals, the main players being Singapore, Hong Kong, the Bahamas, the Cayman Islands, Luxembourg, and Jersey (see fig. 3). Remember, though, that the distinction between Switzerland and other tax havens doesn’t really make much sense: a large part of the assets registered in Singapore or Hong Kong are in reality managed by Swiss banks, sometimes directly from Zurich and Geneva. Figure 3: Financial wealth in tax havens (2014).

First, the figure of $7 trillion greatly overestimates the value of the bank deposits held by households in tax havens. It includes many legitimate corporate bank accounts: German companies sometimes need to have an account in Paris, and hedge funds in the Cayman Islands often keep their cash in London or New York. This may represent spectacular amounts of money, but it has nothing to do with the tax fraud of high net-worth individuals. The BIS doesn’t tell us what percentage of the $7 trillion in international bank deposits belongs to potential defrauders. This is unfortunate, but it is not a reason to ignore the problem or assume that 100% of the money belongs to them. Financial globalization cannot be summed up by tax evasion. The most rational way to proceed consists of consulting the data published by the central banks of each country.

Last, my estimate says nothing about the amount of nonfinancial wealth in tax havens. This includes yachts registered in the Cayman Islands, as well as works of art, jewelry, and gold stashed in freeports—warehouses that serve as repositories for valuables. Geneva, Luxembourg, and Singapore all have one: in these places, great paintings can be kept and traded tax-free—no customs duty or value-added tax is owed—and anonymously, without ever seeing the light of day. High net-worth individuals also own real estate in foreign countries: islands in the Seychelles, chalets in Gstaad, and so on. Registry data show that a large chunk of London’s luxury real estate is held through shell companies, largely domiciled in the British Virgin Islands, a scheme that enables owners to remain anonymous and to exploit tax loopholes. Unfortunately, there is no way yet to estimate the value of such real assets held abroad.


pages: 162 words: 50,108

The Little Book of Hedge Funds by Anthony Scaramucci

Andrei Shleifer, asset allocation, Bernie Madoff, business process, carried interest, corporate raider, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, fixed income, follow your passion, Gordon Gekko, high net worth, index fund, John Meriwether, Long Term Capital Management, mail merge, margin call, mass immigration, merger arbitrage, money market fund, Myron Scholes, NetJets, Ponzi scheme, profit motive, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, Silicon Valley, Thales and the olive presses, Thales of Miletus, the new new thing, too big to fail, transaction costs, Vanguard fund, Y2K, Yogi Berra, zero-sum game

The same technique is needed to provide a definition of hedge funds. But instead of dissecting an animal, we are going to dissect the colloquial and controversial definitions presented over time by the experts. Let’s start with a technical definition provided by Jack Gain, president of the Managed Fund Association: A pragmatic definition would be a private investment pool with a limited number of high-net-worth individual and institutional investors on the one hand and, on the other, a manager with the utmost flexibility. Hmm . . . that definition doesn’t say much, now does it? Besides, I’ve never been one for pragmatism. Let’s keep moving. According to the Alternative Investment Management Association’s Roadmap to Hedge Funds: A hedge fund constitutes an investment program whereby the managers or partners seek absolute returns by exploiting investment opportunities (taking risk) while protecting principle from financial loss.

And when they do, there will be countless stories written about his investing genius, skillful prowess, big and contrarian trades, overabundant and luxurious real estate, one-of-a-like art collections, and board memberships. Against this backdrop, the industry will continue to grow; the best and the brightest from top-tier Ivy League business schools will continue to flock to an industry that was started by a mysterious journalist who developed a legendary investing (and payment) scheme; high-net-worth investors will continue to pour money into these private pools in the hopes of achieving alpha-like returns that will fulfill their champagne wishes and caviar dreams; and mainstream Americans will continue to be fascinated by a cloaked industry whose mystique paradoxically lures the attention it was intended to avert. And through it all, hedge funds will remain the alternative investment that not only makes money, but perhaps more important, rationalizes the irrational market by flattening out the kinks in the global market.

Yale, in particular, was successful, generating $7.8 billion of the $14 billion in its endowment from hedge fund investments by 2005. (In 1999, David Swensen wrote a groundbreaking book entitled Pioneering Portfolio Management, where he shared his insights and careful analysis with fellow investors.) And so, higher education administrators, who now saw hedge funds as a legitimized and credible cash cow, saved the day. As a result, hedge funds began to see a shift in audience—no longer were they only used by high-net-worth, wealthy individuals; institutions wanted a piece of the action, too. And who can blame them? While the market fell approximately 40 percent after the dot-com collapse, the average hedge fund did not lose money. Still sore from these self-inflicted wounds, institutional investors were happy to pay the notoriously high “two-and-twenty” hedge fund fee for downside protection against market turbulence.5 A Piece of the Pie Since then, a rising number of institutional investors—such as public pension funds, endowments, private pension funds, and foundations—have been allocating larger portions of their portfolios to hedge funds so as to improve returns while reducing systematic risk.


pages: 233 words: 64,702

China's Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies Are Changing the Rules of Business by Edward Tse

3D printing, Airbnb, Airbus A320, Asian financial crisis, barriers to entry, bilateral investment treaty, business process, capital controls, commoditize, conceptual framework, corporate governance, creative destruction, crowdsourcing, currency manipulation / currency intervention, David Graeber, Deng Xiaoping, disruptive innovation, experimental economics, global supply chain, global value chain, high net worth, industrial robot, Joseph Schumpeter, Lyft, money market fund, offshore financial centre, Pearl River Delta, reshoring, rising living standards, risk tolerance, Silicon Valley, Skype, Snapchat, sovereign wealth fund, special economic zone, speech recognition, Steve Jobs, thinkpad, trade route, wealth creators, working-age population

economist Lawrence Tian, the founder of China’s first futures company: In China, Lawrence Tian is known as Tian Yuan. even by 2010, the CEF only had 50 members: For a full list of the CEF’s early members, see the Harvard Business School case study “The China Entrepreneurs Forum” by William C. Kirby, G. A. Donovan, and Tracy Yuen Manty, revised May 14, 2012, pages 10–12. Current estimates of high-net-worth individuals (HNWIs) in China: For estimates of the numbers of China’s high-net-worth individuals and their wealth, see http://www.bain.com/about/press/press-releases/chinese-high-net-worth-individuals-shift-wealth-management-focus-from-growing-to-preserving-assets.aspx; http://ex[prt.gov/china/build/groups/public/@eg_en/documents/webcontent/eg_cn_036898.pdf; http://www.prweb.com/releases/2013/11/prweb11353349.htm (all accessed October 13, 2014). One study of Chinese television and online video habits in 2013: See “China TV and Online Videos Report 2013: Almost Half Don’t Watch TV Any More,” China Internet Watch, October 22, 2013, available at http://www.chinainternetwatch.com/4254/china-tv-online-videos-report-2013/ (accessed October 13, 2014).

Yet in each of these industries, despite continuing restrictions, entrepreneurs are finding opportunities and reworking regulatory boundaries in ways that advance the government’s broader goals for developing China. REACHING CHINA’S NEW RICH In finance, we have already seen how Alibaba is transforming saving and widening the lending opportunities available to small and medium-sized businesses. Another company changing this sector is Noah Wealth Management, a Shanghai-based money-management firm serving China’s fast-growing high-net-worth population. Noah’s founder, Wang Jingbo, was born in 1972 in Sichuan. After completing a bachelor’s degree in economics and a master’s degree in management at Chengdu’s Sichuan University, she moved to Shanghai in 1992 to work in the city’s financial industry, which had recently opened its first post-Mao stock market. In 2000, she joined Xiangcai Securities, one of China’s leading securities firms, first to head up its asset management department, then as deputy head of its joint-venture fund management business, formed with Holland’s ABN AMRO.

Using this money, she expanded the company’s network by more than 60 branches over the next six years, which in turn enabled Noah to sign up more than 50,000 of China’s rich, who have invested 113 billion yuan (about $18 billion) through her company, almost all in China. To protect itself from the possibility of handling money acquired from graft, Noah does no business with officials. Instead, it focuses on the fast-growing segment of self-made businesspeople and traders, mostly in their 40s, 50s, or 60s. Current estimates of high-net-worth individuals (HNWIs) in China put the total at between 700,000 and 1.4 million people, with estimates of their total wealth ranging from $3.5 trillion to $5 trillion. The number of HNWIs has doubled since 2008, and is now increasing by around 20 percent a year, while their wealth is growing even faster. They can be found across China (some 20 provinces have more than 10,000, according to Bain & Co.), but Shanghai is home to their biggest concentration, with about 30 percent of the national total.


pages: 215 words: 59,188

Seriously Curious: The Facts and Figures That Turn Our World Upside Down by Tom Standage

agricultural Revolution, augmented reality, autonomous vehicles, blood diamonds, corporate governance, Deng Xiaoping, Donald Trump, Elon Musk, failed state, financial independence, gender pay gap, gig economy, Gini coefficient, high net worth, income inequality, index fund, industrial robot, Internet of things, invisible hand, job-hopping, Julian Assange, life extension, Lyft, M-Pesa, Mahatma Gandhi, manufacturing employment, mega-rich, megacity, Minecraft, mobile money, natural language processing, Nelson Mandela, plutocrats, Plutocrats, price mechanism, purchasing power parity, ransomware, reshoring, ride hailing / ride sharing, Ronald Coase, self-driving car, Silicon Valley, Snapchat, South China Sea, speech recognition, stem cell, supply-chain management, transaction costs, Uber and Lyft, uber lyft, undersea cable, US Airways Flight 1549, WikiLeaks

Sweden’s negative interest rates, which had been expected to rise in early 2018, were instead extended, which suggests that overpayment of taxes will also go on longer than expected. It sounds like the sort of problem a government in southern Europe would be delighted to have. In Sweden, however, officials would much prefer taxpayers to cool it – and pay a bit less in tax. Mapping the world’s mega-rich High-net-worth individuals Global wealth*, $trn Source: Capgemini *Individuals with at least $1m of investable assets The global number of high-net-worth individuals (HNWIs) grew by 7.5% to 16.5m in 2017, according to the World Wealth Report by Capgemini, a consulting firm. HNWIs have at least $1m in investable assets, excluding their main home, its contents and collectable items. Total HNWI wealth came to $63.5trn in 2017, with the highest proportion concentrated in the Asia-Pacific region.

For more explainers and charts from The Economist, visit economist.com Index A Africa child marriage 84 democracy 40 gay and lesbian rights 73, 74 Guinea 32 mobile phones 175–6 see also individual countries agriculture 121–2 Aguiar, Mark 169 air pollution 143–4 air travel and drones 187–8 flight delays 38–9 Akitu (festival) 233 alcohol beer consumption 105–6 consumption in Britain 48, 101–2 craft breweries 97–8 drink-driving 179–80 wine glasses 101–2 Alexa (voice assistant) 225 Algeria food subsidies 31 gay and lesbian rights 73 All I Want for Christmas Is You (Carey) 243 alphabet 217–18 Alternative for Germany (AfD) 223, 224 Alzheimer’s disease 140 Amazon (company) 225 America see United States and 227–8 Angola 73, 74 animals blood transfusions 139–40 dog meat 91–2 gene drives 153–4 size and velocity 163–4 and water pollution 149–50 wolves 161–2 Arctic 147–8 Argentina gay and lesbian rights 73 lemons 95–6 lithium 17–18 Ariel, Barak 191 Arizona 85 arms trade 19–20 Asia belt and road initiative 117–18 high-net-worth individuals 53 wheat consumption 109–10 see also individual countries Assange, Julian 81–3 asteroids 185–6 augmented reality (AR) 181–2 August 239–40 Australia avocados 89 forests 145 inheritance tax 119 lithium 17, 18 shark attacks 201–2 autonomous vehicles (AVs) 177–8 Autor, David 79 avocados 89–90 B Babylonians 233 Baltimore 99 Bangladesh 156 bank notes 133–4 Bateman, Tim 48 beer consumption 105–6 craft breweries 97–8 Beijing air pollution 143–4 dogs 92 belt and road initiative 117–18 betting 209–10 Bier, Ethan 153 Bils, Mark 169 birds and aircraft 187 guinea fowl 32–3 birth rates Europe 81–3 United States 79–80 black money 133–4 Black Power 34, 35 Blade Runner 208 blood transfusions 139–40 board games 199–200 body cameras 191–2 Boko Haram 5, 15–16 Bolivia 17–18 Bollettieri, Nick 197 bookmakers 209–10 Borra, Cristina 75 Bosnia 221–2 brain computers 167–8 Brazil beer consumption 105, 106 Christmas music 243, 244 end-of-life care 141–2 gay and lesbian rights 73 murder rate 45, 46 shark attacks 202 breweries 97–8 Brexit, and car colours 49–50 brides bride price 5 diamonds 13–14 Britain alcohol consumption 101–2 car colours 49–50 Christmas music 244 cigarette sales 23–4 craft breweries 98 crime 47–8 Easter 238 gay population 70–72 housing material 8 inheritance tax 119 Irish immigration 235 life expectancy 125 manufacturing jobs 131 national identity 223–4 new-year resolutions 234 police body cameras 191 sexual harassment 67, 68, 69 sperm donation 61 see also Scotland Brookings Institution 21 Browning, Martin 75 bubonic plague 157–8 Bush, George W. 119 C cables, undersea 193–4 California and Argentine lemons 95, 96 avocados 90 cameras 191–2 Canada diamonds 13 drones 188 lithium 17 national identity 223–4 capitalism, and birth rates 81–2 Carey, Mariah 243 Carnegie Endowment for International Peace 21 cars colours 49–50 self-driving 177–8 Caruana, Fabiano 206 Charles, Kerwin 169 cheetahs 163, 164 chess 205–6 Chetty, Raj 113 Chicago 100 children birth rates 79–80, 81–3 child marriage 84–5 in China 56–7 crime 47–8 and gender pay gap 115–16, 135–6 obesity 93–4 Chile gay and lesbian rights 73 lithium 17–18 China air pollution 143–5 arms sales 19–20 avocados 89 beer consumption 105 belt and road initiative 117–18 childhood obesity 93 construction 7 dog meat 91–2 dragon children 56–7 flight delays 38–9 foreign waste 159–60 lithium 17 rice consumption 109–10 Choi, Roy 99 Christian, Cornelius 26 Christianity Easter 237–8 new year 233–4 Christmas 246–7 music 243–5 cigarettes affordability 151–2 black market 23–4 cities, murder rates 44–6 Citizen Kane 207 citrus wars 95–6 civil wars 5 Clarke, Arthur C. 183 Coase, Ronald 127, 128 cocaine 44 cochlear implants 167 Cohen, Jake 203 Colen, Liesbeth 106 colleges, US 113–14 Colombia 45 colours, cars 49–50 commodities 123–4 companies 127–8 computers augmented reality 181–2 brain computers 167–8 emojis 215–16 and languages 225–6 spam e-mail 189–90 Connecticut 85 Connors, Jimmy 197 contracts 127–8 Costa Rica 89 couples career and family perception gap 77–8 housework 75–6 see also marriage cows 149–50 craft breweries 97–8 crime and avocados 89–90 and dog meat 91–2 murder rates 44–6 young Britons 47–8 CRISPR-Cas9 153 Croatia 222 Croato-Serbian 221–2 D Daily-Diamond, Christopher 9–10 Davis, Mark 216 De Beers 13–14 death 141–2 death taxes 119–20 democracy 40–41 Deng Xiaoping 117 Denmark career and family perception gap 78 gender pay gap 135–6 sex reassignment 65 Denver 99 Devon 72 diamonds 13–14, 124 digitally remastering 207–8 Discovery Channel 163–4 diseases 157–8 dog meat 91–2 Dorn, David 79 Dr Strangelove 207 dragon children 56–7 drink see alcohol drink-driving 179–80 driverless cars 177–8 drones and aircraft 187–8 and sharks 201 drugs cocaine trafficking 44 young Britons 48 D’Souza, Kiran 187 E e-mail 189–90 earnings, gender pay gap 115–16, 135–6 Easter 237–8 economy and birth rates 79–80, 81–2 and car colours 49–50 and witch-hunting 25–6 education and American rich 113–14 dragon children 56–7 Egal, Muhammad Haji Ibrahim 40–41 Egypt gay and lesbian rights 73 marriage 5 new-year resolutions 233 El Paso 100 El Salvador 44, 45 emojis 215–16 employment gender pay gap 115–16, 135–6 and gender perception gap 77–8 job tenure 129–30 in manufacturing 131–2 video games and unemployment 169–70 English language letter names 217–18 Papua New Guinea 219 environment air pollution 143–4 Arctic sea ice 147–8 and food packaging 103–4 waste 159–60 water pollution 149–50 Equatorial Guinea 32 Eritrea 40 Ethiopia 40 Europe craft breweries 97–8 summer holidays 239–40 see also individual countries Everson, Michael 216 exorcism 36–7 F Facebook augmented reality 182 undersea cables 193 FANUC 171, 172 Federer, Roger 197 feminism, and birth rates 81–2 fertility rates see birth rates festivals Christmas 246–7 Christmas music 243–5 new-year 233–4 Feuillet, Catherine 108 films 207–8 firms 127–8 5G 173–4 flight delays 38–9 Florida and Argentine lemons 95 child marriage 85 Foley, William 220 food avocados and crime 89–90 dog meat 91–2 lemons 95–6 wheat consumption 109–10 wheat genome 107–8 food packaging 103–4 food trucks 99–100 football clubs 211–12 football transfers 203–4 forests 145–6, 162 Fountains of Paradise, The (Clarke) 183 fracking 79–80 France career and family perception gap 78 Christmas music 244 exorcism 36–7 gender-inclusive language 229–30 job tenure 130 sex reassignment 66 sexual harassment 68–9 witch-hunting 26, 27 wolves 161–2 G gambling 209–10 games, and unemployment 169–70 Gandhi, Mahatma 155 gang members 34–5 Gantz, Valentino 153 gas 124 gay population 70–72 gay rights, attitudes to 73–4 gender sex reassignment 65–6 see also men; women gender equality and birth rates 81–2 in language 229–30 gender pay gap 115–16, 135–6 gene drives 153–4 Genghis Khan 42 genome, wheat 107–8 ger districts 42–3 Germany beer consumption 105 job tenure 130 national identity 223–4 sexual harassment 68, 69 vocational training 132 witch-hunting 26, 27 Ghana 73 gig economy 128, 130 glasses, wine glasses 101–2 Goddard, Ceri 72 Google 193 Graduate, The 207 Greece forests 145 national identity 223–4 sex reassignment 65 smoking ban 152 Gregg, Christine 9–10 grunting 197–8 Guatemala 45 Guinea 32 guinea fowl 32–3 guinea pig 32 Guinea-Bissau 32 Guo Peng 91–2 Guyana 32 H Haiti 5 Hale, Sarah Josepha 242 Hanson, Gordon 79 Hawaii ’Oumuamua 185 porn consumption 63–4 health child obesity 93–4 life expectancy 125–6 plague 157–8 and sanitation 155 high-net-worth individuals (HNWIs) 53 Hiri Motu 219 holidays Easter 237–8 St Patrick’s Day 235–6 summer holidays 239–40 Thanksgiving 241–2 HoloLens 181–2 homicide 44–6 homosexuality attitudes to 73–4 UK 70–72 Honduras 44, 45 Hong Kong 56 housework 75–6, 77–8 Hudson, Valerie 5 Hungary 223–4 Hurst, Erik 169 I ice 147–8 Ikolo, Prince Anthony 199 India bank notes 133–4 inheritance tax 119 languages 219 rice consumption 109 sand mafia 7 sanitation problems 155–6 Indonesia polygamy and civil war 5 rice consumption 109–10 inheritance taxes 119–20 interest rates 51–2 interpunct 229–30 Ireland aitch 218 forests 145 St Patrick’s Day 235–6 same-sex marriage 73 sex reassignment 65 Italy birth rate 82 end of life care 141–2 forests 145 job tenure 130 life expectancy 126 J Jacob, Nitya 156 Jamaica 45 Japan 141–2 Jighere, Wellington 199 job tenure 129–30 jobs see employment Johnson, Bryan 168 junk mail 189 K Kazakhstan 6 Kearney, Melissa 79–80 Kennedy, John F. 12 Kenya democracy 40 mobile-money systems 176 Kiribati 7 Kleven, Henrik 135–6 knots 9–10 Kohler, Timothy 121 Kyrgyzstan 6 L laces 9–10 Lagos 199 Landais, Camille 135–6 languages and computers 225–6 gender-inclusive 229–30 letter names 217–18 and national identity 223–4 Papua New Guinea 219–20 Serbo-Croatian 221–2 Unicode 215 World Bank writing style 227–8 Latimer, Hugh 246 Leeson, Peter 26 leisure board games in Nigeria 199–200 chess 205–6 gambling 209–10 video games and unemployment 169–70 see also festivals; holidays lemons 95–6 letter names 217–18 Libya 31 life expectancy 125–6 Lincoln, Abraham 242 lithium 17–18 London 71, 72 longevity 125–6 Lozère 161–2 Lucas, George 208 M McEnroe, John 197 McGregor, Andrew 204 machine learning 225–6 Macri, Mauricio 95, 96 Macron, Emmanuel 143 Madagascar 158 Madison, James 242 MagicLeap 182 Maine 216 Malaysia 56 Maldives 7 Mali 31 Malta 65 Manchester United 211–12 manufacturing jobs 131–2 robots 171–2 summer holidays 239 Maori 34–5 marriage child marriage 84–5 polygamy 5–6 same-sex relationships 73–4 see also couples Marteau, Theresa 101–2 Marx, Karl 123 Maryland 85 Massachusetts child marriage 85 Christmas 246 Matfess, Hilary 5, 15 meat dog meat 91–2 packaging 103–4 mega-rich 53 men career and family 77–8 housework 75–6 job tenure 129–30 life expectancy 125 polygamy 5–6 sexual harassment by 67–9 video games and unemployment 169 Mexico avocados 89, 90 gay and lesbian rights 73 murder rate 44, 45 microbreweries 97–8 Microsoft HoloLens 181–2 undersea cables 193 migration, and birth rates 81–3 mining diamonds 13–14 sand 7–8 mobile phones Africa 175–6 5G 173–4 Mocan, Naci 56–7 Mongolia 42–3 Mongrel Mob 34 Monopoly (board game) 199, 200 Monty Python and the Holy Grail 25 Moore, Clement Clarke 247 Moretti, Franco 228 Morocco 7 Moscato, Philippe 36 movies 207–8 Mozambique 73 murder rates 44–6 music, Christmas 243–5 Musk, Elon 168 Myanmar 118 N Nadal, Rafael 197 national identity 223–4 natural gas 124 Netherlands gender 66 national identity 223–4 neurostimulators 167 New Jersey 85 New Mexico 157–8 New York (state), child marriage 85 New York City drink-driving 179–80 food trucks 99–100 New Zealand avocados 89 gang members 34–5 gene drives 154 water pollution 149–50 new-year resolutions 233–4 Neymar 203, 204 Nigeria board games 199–200 Boko Haram 5, 15–16 population 54–5 Nissenbaum, Stephen 247 Northern Ireland 218 Norway Christmas music 243 inheritance tax 119 life expectancy 125, 126 sex reassignment 65 Nucci, Alessandra 36 O obesity 93–4 oceans see seas Odimegwu, Festus 54 O’Reilly, Oliver 9–10 Ortiz de Retez, Yñigo 32 Oster, Emily 25–6 ostriches 163, 164 ’Oumuamua 185–6 P packaging 103–4 Pakistan 5 Palombi, Francis 161 Papua New Guinea languages 219–20 name 32 Paris Saint-Germain (PSG) 203 Passover 237 pasta 31 pay, gender pay gap 115–16, 135–6 Peck, Jessica Lynn 179–80 Pennsylvania 85 Peru 90 Pestre, Dominique 228 Pew Research Centre 22 Phelps, Michael 163–4 Philippe, Édouard 230 phishing 189 Phoenix, Arizona 177 Pilgrims 241 plague 157–8 Plastic China 159 police, body cameras 191–2 pollution air pollution 143–4 water pollution 149–50 polygamy 5–6 pornography and Britain’s gay population 70–72 and Hawaii missile alert 63–4 Portugal 145 Puerto Rico 45 punctuation marks 229–30 Q Qatar 19 R ransomware 190 Ravenscroft, George 101 Real Madrid 211 religious observance and birth rates 81–2 and Christmas music 244 remastering 207–8 Reynolds, Andrew 70 Rhodes, Cecil 13 rice 109–10 rich high-net-worth individuals 53 US 113–14 ride-hailing apps and drink-driving 179–80 see also Uber RIWI 73–4 robotaxis 177–8 robots 171–2 Rogers, Dan 240 Romania birth rate 81 life expectancy 125 Romans 233 Romer, Paul 227–8 Ross, Hana 23 Royal United Services Institute 21 Russ, Jacob 26 Russia arms sales 20 beer consumption 105, 106 fertility rate 81 Rwanda 40 S Sahara 31 St Louis 205–6 St Patrick’s Day 235–6 salt, in seas 11–12 same-sex relationships 73–4 San Antonio 100 sand 7–8 sanitation 155–6 Saudi Arabia 19 Scotland, witch-hunting 25–6, 27 Scott, Keith Lamont 191 Scrabble (board game) 199 seas Arctic sea ice 147–8 salty 11–12 undersea cables 193–4 secularism, and birth rates 81–2 Seles, Monica 197 self-driving cars 177–8 Serbia 222 Serbo-Croatian 221–2 Sevilla, Almudena 75 sex reassignment 65–6 sexual harassment 67–9, 230 Sharapova, Maria 197 sharks deterring attacks 201–2 racing humans 163–4 shipping 148 shoelaces 9–10 Silk Road 117–18 Singapore dragon children 56 land reclamation 7, 8 rice consumption 110 single people, housework 75–6 Sinquefeld, Rex 205 smart glasses 181–2 Smith, Adam 127 smoking black market for cigarettes 23–4 efforts to curb 151–2 smuggling 31 Sogaard, Jakob 135–6 Somalia 40 Somaliland 40–41 South Africa childhood obesity 93 diamonds 13 gay and lesbian rights 73 murder rate 45, 46 South Korea arms sales 20 rice consumption 110 South Sudan failed state 40 polygamy 5 space elevators 183–4 spaghetti 31 Spain forests 145 gay and lesbian rights 73 job tenure 130 spam e-mail 189–90 sperm banks 61–2 sport football clubs 211–12 football transfers 203–4 grunting in tennis 197–8 Sri Lanka 118 Star Wars 208 sterilisation 65–6 Strasbourg 26 submarine cables 193–4 Sudan 40 suicide-bombers 15–16 summer holidays 239–40 Sutton Trust 22 Sweden Christmas music 243, 244 gay and lesbian rights 73 homophobia 70 inheritance tax 119 overpayment of taxes 51–2 sex reassignment 65 sexual harassment 67–8 Swinnen, Johan 106 Switzerland sex reassignment 65 witch-hunting 26, 27 T Taiwan dog meat 91 dragon children 56 Tamil Tigers 15 Tanzania 40 taxes death taxes 119–20 Sweden 51–2 taxis robotaxis 177–8 see also ride-hailing apps tennis players, grunting 197–8 terrorism 15–16 Texas 85 Thailand 110 Thanksgiving 241–2 think-tanks 21–2 Tianjin 143–4 toilets 155–6 Tok Pisin 219, 220 transgender people 65–6 Trump, Donald 223 Argentine lemons 95, 96 estate tax 119 and gender pay gap 115 and manufacturing jobs 131, 132 Tsiolkovsky, Konstantin 183 Turkey 151 turkeys 33 Turkmenistan 6 U Uber 128 and drink-driving 179–80 Uganda 40 Ulaanbaatar 42–3 Uljarevic, Daliborka 221 undersea cables 193–4 unemployment 169–70 Unicode 215–16 United Arab Emirates and Somaliland 41 weapons purchases 19 United Kingdom see Britain United States and Argentine lemons 95–6 arms sales 19 beer consumption 105 chess 205–6 child marriage 84–5 Christmas 246–7 Christmas music 243, 244 drink-driving 179–80 drones 187–8 end of life care 141–2 estate tax 119 fertility rates 79–80 food trucks 99–100 forests 145 gay and lesbian rights 73 getting rich 113–14 Hawaiian porn consumption 63–4 job tenure 129–30 letter names 218 lithium 17 manufacturing jobs 131–2 murder rate 45, 46 national identity 223–4 new-year resolutions 234 plague 157–8 police body cameras 191–2 polygamy 6 robotaxis 177 robots 171–2 St Patrick’s Day 235–6 sexual harassment 67, 68 sperm banks 61–2 Thanksgiving 241–2 video games and unemployment 169–70 wealth inequality 121 unmanned aerial vehicles (UAVs) see drones V video games 169–70 Vietnam weapons purchases 19 wheat consumption 110 Virginia 85 virtual reality (VR) 181, 182 Visit from St Nicholas, A (Moore) 247 W Wang Yi 117 Warner, Jason 15 wars 5 Washington, George 242 Washington DC, food trucks 99 waste 159–60 water pollution 149–50 wealth getting rich in America 113–14 high-net-worth individuals 53 inequality 120, 121–2 weather, and Christmas music 243–5 Weinstein, Harvey 67, 69 Weryk, Rob 185 wheat consumption 109–10 genome 107–8 Wilson, Riley 79–80 wine glasses 101–2 Winslow, Edward 241 wireless technology 173–4 witch-hunting 25–7 wolves 161–2 women birth rates 79–80, 81–3 bride price 5 career and family 77–8 child marriage 84–5 housework 75–6 job tenure 129–30 life expectancy 125 pay gap 115–16 sexual harassment of 67–9 suicide-bombers 15–16 World Bank 227–8 World Health Organisation (WHO) and smoking 151–2 transsexualism 65 X Xi Jinping 117–18 Y young people crime 47–8 job tenure 129–30 video games and unemployment 169–70 Yu, Han 56–7 Yulin 91 yurts 42–3 Z Zubelli, Rita 239

For more explainers and charts from The Economist, visit economist.com Index A Africa child marriage 84 democracy 40 gay and lesbian rights 73, 74 Guinea 32 mobile phones 175–6 see also individual countries agriculture 121–2 Aguiar, Mark 169 air pollution 143–4 air travel and drones 187–8 flight delays 38–9 Akitu (festival) 233 alcohol beer consumption 105–6 consumption in Britain 48, 101–2 craft breweries 97–8 drink-driving 179–80 wine glasses 101–2 Alexa (voice assistant) 225 Algeria food subsidies 31 gay and lesbian rights 73 All I Want for Christmas Is You (Carey) 243 alphabet 217–18 Alternative for Germany (AfD) 223, 224 Alzheimer’s disease 140 Amazon (company) 225 America see United States and 227–8 Angola 73, 74 animals blood transfusions 139–40 dog meat 91–2 gene drives 153–4 size and velocity 163–4 and water pollution 149–50 wolves 161–2 Arctic 147–8 Argentina gay and lesbian rights 73 lemons 95–6 lithium 17–18 Ariel, Barak 191 Arizona 85 arms trade 19–20 Asia belt and road initiative 117–18 high-net-worth individuals 53 wheat consumption 109–10 see also individual countries Assange, Julian 81–3 asteroids 185–6 augmented reality (AR) 181–2 August 239–40 Australia avocados 89 forests 145 inheritance tax 119 lithium 17, 18 shark attacks 201–2 autonomous vehicles (AVs) 177–8 Autor, David 79 avocados 89–90 B Babylonians 233 Baltimore 99 Bangladesh 156 bank notes 133–4 Bateman, Tim 48 beer consumption 105–6 craft breweries 97–8 Beijing air pollution 143–4 dogs 92 belt and road initiative 117–18 betting 209–10 Bier, Ethan 153 Bils, Mark 169 birds and aircraft 187 guinea fowl 32–3 birth rates Europe 81–3 United States 79–80 black money 133–4 Black Power 34, 35 Blade Runner 208 blood transfusions 139–40 board games 199–200 body cameras 191–2 Boko Haram 5, 15–16 Bolivia 17–18 Bollettieri, Nick 197 bookmakers 209–10 Borra, Cristina 75 Bosnia 221–2 brain computers 167–8 Brazil beer consumption 105, 106 Christmas music 243, 244 end-of-life care 141–2 gay and lesbian rights 73 murder rate 45, 46 shark attacks 202 breweries 97–8 Brexit, and car colours 49–50 brides bride price 5 diamonds 13–14 Britain alcohol consumption 101–2 car colours 49–50 Christmas music 244 cigarette sales 23–4 craft breweries 98 crime 47–8 Easter 238 gay population 70–72 housing material 8 inheritance tax 119 Irish immigration 235 life expectancy 125 manufacturing jobs 131 national identity 223–4 new-year resolutions 234 police body cameras 191 sexual harassment 67, 68, 69 sperm donation 61 see also Scotland Brookings Institution 21 Browning, Martin 75 bubonic plague 157–8 Bush, George W. 119 C cables, undersea 193–4 California and Argentine lemons 95, 96 avocados 90 cameras 191–2 Canada diamonds 13 drones 188 lithium 17 national identity 223–4 capitalism, and birth rates 81–2 Carey, Mariah 243 Carnegie Endowment for International Peace 21 cars colours 49–50 self-driving 177–8 Caruana, Fabiano 206 Charles, Kerwin 169 cheetahs 163, 164 chess 205–6 Chetty, Raj 113 Chicago 100 children birth rates 79–80, 81–3 child marriage 84–5 in China 56–7 crime 47–8 and gender pay gap 115–16, 135–6 obesity 93–4 Chile gay and lesbian rights 73 lithium 17–18 China air pollution 143–5 arms sales 19–20 avocados 89 beer consumption 105 belt and road initiative 117–18 childhood obesity 93 construction 7 dog meat 91–2 dragon children 56–7 flight delays 38–9 foreign waste 159–60 lithium 17 rice consumption 109–10 Choi, Roy 99 Christian, Cornelius 26 Christianity Easter 237–8 new year 233–4 Christmas 246–7 music 243–5 cigarettes affordability 151–2 black market 23–4 cities, murder rates 44–6 Citizen Kane 207 citrus wars 95–6 civil wars 5 Clarke, Arthur C. 183 Coase, Ronald 127, 128 cocaine 44 cochlear implants 167 Cohen, Jake 203 Colen, Liesbeth 106 colleges, US 113–14 Colombia 45 colours, cars 49–50 commodities 123–4 companies 127–8 computers augmented reality 181–2 brain computers 167–8 emojis 215–16 and languages 225–6 spam e-mail 189–90 Connecticut 85 Connors, Jimmy 197 contracts 127–8 Costa Rica 89 couples career and family perception gap 77–8 housework 75–6 see also marriage cows 149–50 craft breweries 97–8 crime and avocados 89–90 and dog meat 91–2 murder rates 44–6 young Britons 47–8 CRISPR-Cas9 153 Croatia 222 Croato-Serbian 221–2 D Daily-Diamond, Christopher 9–10 Davis, Mark 216 De Beers 13–14 death 141–2 death taxes 119–20 democracy 40–41 Deng Xiaoping 117 Denmark career and family perception gap 78 gender pay gap 135–6 sex reassignment 65 Denver 99 Devon 72 diamonds 13–14, 124 digitally remastering 207–8 Discovery Channel 163–4 diseases 157–8 dog meat 91–2 Dorn, David 79 Dr Strangelove 207 dragon children 56–7 drink see alcohol drink-driving 179–80 driverless cars 177–8 drones and aircraft 187–8 and sharks 201 drugs cocaine trafficking 44 young Britons 48 D’Souza, Kiran 187 E e-mail 189–90 earnings, gender pay gap 115–16, 135–6 Easter 237–8 economy and birth rates 79–80, 81–2 and car colours 49–50 and witch-hunting 25–6 education and American rich 113–14 dragon children 56–7 Egal, Muhammad Haji Ibrahim 40–41 Egypt gay and lesbian rights 73 marriage 5 new-year resolutions 233 El Paso 100 El Salvador 44, 45 emojis 215–16 employment gender pay gap 115–16, 135–6 and gender perception gap 77–8 job tenure 129–30 in manufacturing 131–2 video games and unemployment 169–70 English language letter names 217–18 Papua New Guinea 219 environment air pollution 143–4 Arctic sea ice 147–8 and food packaging 103–4 waste 159–60 water pollution 149–50 Equatorial Guinea 32 Eritrea 40 Ethiopia 40 Europe craft breweries 97–8 summer holidays 239–40 see also individual countries Everson, Michael 216 exorcism 36–7 F Facebook augmented reality 182 undersea cables 193 FANUC 171, 172 Federer, Roger 197 feminism, and birth rates 81–2 fertility rates see birth rates festivals Christmas 246–7 Christmas music 243–5 new-year 233–4 Feuillet, Catherine 108 films 207–8 firms 127–8 5G 173–4 flight delays 38–9 Florida and Argentine lemons 95 child marriage 85 Foley, William 220 food avocados and crime 89–90 dog meat 91–2 lemons 95–6 wheat consumption 109–10 wheat genome 107–8 food packaging 103–4 food trucks 99–100 football clubs 211–12 football transfers 203–4 forests 145–6, 162 Fountains of Paradise, The (Clarke) 183 fracking 79–80 France career and family perception gap 78 Christmas music 244 exorcism 36–7 gender-inclusive language 229–30 job tenure 130 sex reassignment 66 sexual harassment 68–9 witch-hunting 26, 27 wolves 161–2 G gambling 209–10 games, and unemployment 169–70 Gandhi, Mahatma 155 gang members 34–5 Gantz, Valentino 153 gas 124 gay population 70–72 gay rights, attitudes to 73–4 gender sex reassignment 65–6 see also men; women gender equality and birth rates 81–2 in language 229–30 gender pay gap 115–16, 135–6 gene drives 153–4 Genghis Khan 42 genome, wheat 107–8 ger districts 42–3 Germany beer consumption 105 job tenure 130 national identity 223–4 sexual harassment 68, 69 vocational training 132 witch-hunting 26, 27 Ghana 73 gig economy 128, 130 glasses, wine glasses 101–2 Goddard, Ceri 72 Google 193 Graduate, The 207 Greece forests 145 national identity 223–4 sex reassignment 65 smoking ban 152 Gregg, Christine 9–10 grunting 197–8 Guatemala 45 Guinea 32 guinea fowl 32–3 guinea pig 32 Guinea-Bissau 32 Guo Peng 91–2 Guyana 32 H Haiti 5 Hale, Sarah Josepha 242 Hanson, Gordon 79 Hawaii ’Oumuamua 185 porn consumption 63–4 health child obesity 93–4 life expectancy 125–6 plague 157–8 and sanitation 155 high-net-worth individuals (HNWIs) 53 Hiri Motu 219 holidays Easter 237–8 St Patrick’s Day 235–6 summer holidays 239–40 Thanksgiving 241–2 HoloLens 181–2 homicide 44–6 homosexuality attitudes to 73–4 UK 70–72 Honduras 44, 45 Hong Kong 56 housework 75–6, 77–8 Hudson, Valerie 5 Hungary 223–4 Hurst, Erik 169 I ice 147–8 Ikolo, Prince Anthony 199 India bank notes 133–4 inheritance tax 119 languages 219 rice consumption 109 sand mafia 7 sanitation problems 155–6 Indonesia polygamy and civil war 5 rice consumption 109–10 inheritance taxes 119–20 interest rates 51–2 interpunct 229–30 Ireland aitch 218 forests 145 St Patrick’s Day 235–6 same-sex marriage 73 sex reassignment 65 Italy birth rate 82 end of life care 141–2 forests 145 job tenure 130 life expectancy 126 J Jacob, Nitya 156 Jamaica 45 Japan 141–2 Jighere, Wellington 199 job tenure 129–30 jobs see employment Johnson, Bryan 168 junk mail 189 K Kazakhstan 6 Kearney, Melissa 79–80 Kennedy, John F. 12 Kenya democracy 40 mobile-money systems 176 Kiribati 7 Kleven, Henrik 135–6 knots 9–10 Kohler, Timothy 121 Kyrgyzstan 6 L laces 9–10 Lagos 199 Landais, Camille 135–6 languages and computers 225–6 gender-inclusive 229–30 letter names 217–18 and national identity 223–4 Papua New Guinea 219–20 Serbo-Croatian 221–2 Unicode 215 World Bank writing style 227–8 Latimer, Hugh 246 Leeson, Peter 26 leisure board games in Nigeria 199–200 chess 205–6 gambling 209–10 video games and unemployment 169–70 see also festivals; holidays lemons 95–6 letter names 217–18 Libya 31 life expectancy 125–6 Lincoln, Abraham 242 lithium 17–18 London 71, 72 longevity 125–6 Lozère 161–2 Lucas, George 208 M McEnroe, John 197 McGregor, Andrew 204 machine learning 225–6 Macri, Mauricio 95, 96 Macron, Emmanuel 143 Madagascar 158 Madison, James 242 MagicLeap 182 Maine 216 Malaysia 56 Maldives 7 Mali 31 Malta 65 Manchester United 211–12 manufacturing jobs 131–2 robots 171–2 summer holidays 239 Maori 34–5 marriage child marriage 84–5 polygamy 5–6 same-sex relationships 73–4 see also couples Marteau, Theresa 101–2 Marx, Karl 123 Maryland 85 Massachusetts child marriage 85 Christmas 246 Matfess, Hilary 5, 15 meat dog meat 91–2 packaging 103–4 mega-rich 53 men career and family 77–8 housework 75–6 job tenure 129–30 life expectancy 125 polygamy 5–6 sexual harassment by 67–9 video games and unemployment 169 Mexico avocados 89, 90 gay and lesbian rights 73 murder rate 44, 45 microbreweries 97–8 Microsoft HoloLens 181–2 undersea cables 193 migration, and birth rates 81–3 mining diamonds 13–14 sand 7–8 mobile phones Africa 175–6 5G 173–4 Mocan, Naci 56–7 Mongolia 42–3 Mongrel Mob 34 Monopoly (board game) 199, 200 Monty Python and the Holy Grail 25 Moore, Clement Clarke 247 Moretti, Franco 228 Morocco 7 Moscato, Philippe 36 movies 207–8 Mozambique 73 murder rates 44–6 music, Christmas 243–5 Musk, Elon 168 Myanmar 118 N Nadal, Rafael 197 national identity 223–4 natural gas 124 Netherlands gender 66 national identity 223–4 neurostimulators 167 New Jersey 85 New Mexico 157–8 New York (state), child marriage 85 New York City drink-driving 179–80 food trucks 99–100 New Zealand avocados 89 gang members 34–5 gene drives 154 water pollution 149–50 new-year resolutions 233–4 Neymar 203, 204 Nigeria board games 199–200 Boko Haram 5, 15–16 population 54–5 Nissenbaum, Stephen 247 Northern Ireland 218 Norway Christmas music 243 inheritance tax 119 life expectancy 125, 126 sex reassignment 65 Nucci, Alessandra 36 O obesity 93–4 oceans see seas Odimegwu, Festus 54 O’Reilly, Oliver 9–10 Ortiz de Retez, Yñigo 32 Oster, Emily 25–6 ostriches 163, 164 ’Oumuamua 185–6 P packaging 103–4 Pakistan 5 Palombi, Francis 161 Papua New Guinea languages 219–20 name 32 Paris Saint-Germain (PSG) 203 Passover 237 pasta 31 pay, gender pay gap 115–16, 135–6 Peck, Jessica Lynn 179–80 Pennsylvania 85 Peru 90 Pestre, Dominique 228 Pew Research Centre 22 Phelps, Michael 163–4 Philippe, Édouard 230 phishing 189 Phoenix, Arizona 177 Pilgrims 241 plague 157–8 Plastic China 159 police, body cameras 191–2 pollution air pollution 143–4 water pollution 149–50 polygamy 5–6 pornography and Britain’s gay population 70–72 and Hawaii missile alert 63–4 Portugal 145 Puerto Rico 45 punctuation marks 229–30 Q Qatar 19 R ransomware 190 Ravenscroft, George 101 Real Madrid 211 religious observance and birth rates 81–2 and Christmas music 244 remastering 207–8 Reynolds, Andrew 70 Rhodes, Cecil 13 rice 109–10 rich high-net-worth individuals 53 US 113–14 ride-hailing apps and drink-driving 179–80 see also Uber RIWI 73–4 robotaxis 177–8 robots 171–2 Rogers, Dan 240 Romania birth rate 81 life expectancy 125 Romans 233 Romer, Paul 227–8 Ross, Hana 23 Royal United Services Institute 21 Russ, Jacob 26 Russia arms sales 20 beer consumption 105, 106 fertility rate 81 Rwanda 40 S Sahara 31 St Louis 205–6 St Patrick’s Day 235–6 salt, in seas 11–12 same-sex relationships 73–4 San Antonio 100 sand 7–8 sanitation 155–6 Saudi Arabia 19 Scotland, witch-hunting 25–6, 27 Scott, Keith Lamont 191 Scrabble (board game) 199 seas Arctic sea ice 147–8 salty 11–12 undersea cables 193–4 secularism, and birth rates 81–2 Seles, Monica 197 self-driving cars 177–8 Serbia 222 Serbo-Croatian 221–2 Sevilla, Almudena 75 sex reassignment 65–6 sexual harassment 67–9, 230 Sharapova, Maria 197 sharks deterring attacks 201–2 racing humans 163–4 shipping 148 shoelaces 9–10 Silk Road 117–18 Singapore dragon children 56 land reclamation 7, 8 rice consumption 110 single people, housework 75–6 Sinquefeld, Rex 205 smart glasses 181–2 Smith, Adam 127 smoking black market for cigarettes 23–4 efforts to curb 151–2 smuggling 31 Sogaard, Jakob 135–6 Somalia 40 Somaliland 40–41 South Africa childhood obesity 93 diamonds 13 gay and lesbian rights 73 murder rate 45, 46 South Korea arms sales 20 rice consumption 110 South Sudan failed state 40 polygamy 5 space elevators 183–4 spaghetti 31 Spain forests 145 gay and lesbian rights 73 job tenure 130 spam e-mail 189–90 sperm banks 61–2 sport football clubs 211–12 football transfers 203–4 grunting in tennis 197–8 Sri Lanka 118 Star Wars 208 sterilisation 65–6 Strasbourg 26 submarine cables 193–4 Sudan 40 suicide-bombers 15–16 summer holidays 239–40 Sutton Trust 22 Sweden Christmas music 243, 244 gay and lesbian rights 73 homophobia 70 inheritance tax 119 overpayment of taxes 51–2 sex reassignment 65 sexual harassment 67–8 Swinnen, Johan 106 Switzerland sex reassignment 65 witch-hunting 26, 27 T Taiwan dog meat 91 dragon children 56 Tamil Tigers 15 Tanzania 40 taxes death taxes 119–20 Sweden 51–2 taxis robotaxis 177–8 see also ride-hailing apps tennis players, grunting 197–8 terrorism 15–16 Texas 85 Thailand 110 Thanksgiving 241–2 think-tanks 21–2 Tianjin 143–4 toilets 155–6 Tok Pisin 219, 220 transgender people 65–6 Trump, Donald 223 Argentine lemons 95, 96 estate tax 119 and gender pay gap 115 and manufacturing jobs 131, 132 Tsiolkovsky, Konstantin 183 Turkey 151 turkeys 33 Turkmenistan 6 U Uber 128 and drink-driving 179–80 Uganda 40 Ulaanbaatar 42–3 Uljarevic, Daliborka 221 undersea cables 193–4 unemployment 169–70 Unicode 215–16 United Arab Emirates and Somaliland 41 weapons purchases 19 United Kingdom see Britain United States and Argentine lemons 95–6 arms sales 19 beer consumption 105 chess 205–6 child marriage 84–5 Christmas 246–7 Christmas music 243, 244 drink-driving 179–80 drones 187–8 end of life care 141–2 estate tax 119 fertility rates 79–80 food trucks 99–100 forests 145 gay and lesbian rights 73 getting rich 113–14 Hawaiian porn consumption 63–4 job tenure 129–30 letter names 218 lithium 17 manufacturing jobs 131–2 murder rate 45, 46 national identity 223–4 new-year resolutions 234 plague 157–8 police body cameras 191–2 polygamy 6 robotaxis 177 robots 171–2 St Patrick’s Day 235–6 sexual harassment 67, 68 sperm banks 61–2 Thanksgiving 241–2 video games and unemployment 169–70 wealth inequality 121 unmanned aerial vehicles (UAVs) see drones V video games 169–70 Vietnam weapons purchases 19 wheat consumption 110 Virginia 85 virtual reality (VR) 181, 182 Visit from St Nicholas, A (Moore) 247 W Wang Yi 117 Warner, Jason 15 wars 5 Washington, George 242 Washington DC, food trucks 99 waste 159–60 water pollution 149–50 wealth getting rich in America 113–14 high-net-worth individuals 53 inequality 120, 121–2 weather, and Christmas music 243–5 Weinstein, Harvey 67, 69 Weryk, Rob 185 wheat consumption 109–10 genome 107–8 Wilson, Riley 79–80 wine glasses 101–2 Winslow, Edward 241 wireless technology 173–4 witch-hunting 25–7 wolves 161–2 women birth rates 79–80, 81–3 bride price 5 career and family 77–8 child marriage 84–5 housework 75–6 job tenure 129–30 life expectancy 125 pay gap 115–16 sexual harassment of 67–9 suicide-bombers 15–16 World Bank 227–8 World Health Organisation (WHO) and smoking 151–2 transsexualism 65 X Xi Jinping 117–18 Y young people crime 47–8 job tenure 129–30 video games and unemployment 169–70 Yu, Han 56–7 Yulin 91 yurts 42–3 Z Zubelli, Rita 239


Mastering Private Equity by Zeisberger, Claudia,Prahl, Michael,White, Bowen, Michael Prahl, Bowen White

asset allocation, backtesting, barriers to entry, Basel III, business process, buy low sell high, capital controls, carried interest, commoditize, corporate governance, corporate raider, correlation coefficient, creative destruction, discounted cash flows, disintermediation, disruptive innovation, distributed generation, diversification, diversified portfolio, family office, fixed income, high net worth, information asymmetry, intangible asset, Lean Startup, market clearing, passive investing, pattern recognition, performance metric, price mechanism, profit maximization, risk tolerance, risk-adjusted returns, risk/return, shareholder value, Sharpe ratio, Silicon Valley, sovereign wealth fund, statistical arbitrage, time value of money, transaction costs

Given you're reading this book, I'm certain this is a question you'd like to have answered. To define the asset class properly is not as simple as looking it up in a dictionary or conducting a quick search on the internet. To do so would give you some version of private equity is capital that is invested privately. Not on a public exchange. The capital typically comes from institutional or high-net worth investors who can contribute substantially and are able to withstand an average holding period of seven years. But private equity is so much more than its literal definition. The way I would describe private equity, or PE, today is an asset class delivering market-beating investment returns that has grown college endowments and enhanced the retirement security of millions of pension beneficiaries, including teachers, firefighters, police and other public workers.

These regulations address to whom PE funds can market and how they can make their funds known in the investor community. For the former, while rules vary from country to country, in nearly all instances the PE fund must raise capital via private placements to qualified investors only (often defined by having a minimum of investable assets or being registered as qualified individuals). Marketing to high-net worth and sophisticated investors is permitted in some jurisdictions, while any general public offering of the fund or marketing to retail investors is usually prohibited. GPs must therefore personally approach the appropriate investors and may not employ mass-communication methods to market a fund. In addition, national regulators may impose a varied—and at times opaque—set of rules. For instance, national regulation may prescribe contrasting guidelines for marketing onshore versus offshore funds; they may also require—or not—a PE firm to register before marketing any fund offering.

These trends represent a shift of power towards traditional fund LPs in a historically GP-dominated relationship, feeding back into a broader discussion around fees and carried interest in the traditional GP–LP model. The maturation of the industry has also triggered innovation on the GP front. Listed PE vehicles have offered GPs a way to reduce their dependence on, and time commitment to, the fundraising process. At the same time, listed PE provides retail investors with access to an asset class traditionally open only to institutional investors and high net-worth individuals. Segregated accounts and funds with substantially longer lifespans are other ways in which GPs are addressing specific investors’ needs. We round up the book with a comment by the authors on the past, present and future challenges of the PE industry. SECTION OVERVIEW CHAPTER 21. LP DIRECT INVESTMENT: This chapter details LPs’ direct investment in target companies. Ranging from passive co-investment to standalone direct investments, these investment strategies provide LPs with the means to build exposure in PE outside the GP–LP fund model.


pages: 382 words: 120,064

Bank 3.0: Why Banking Is No Longer Somewhere You Go but Something You Do by Brett King

3D printing, additive manufacturing, Airbus A320, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, asset-backed security, augmented reality, barriers to entry, bitcoin, bounce rate, business intelligence, business process, business process outsourcing, call centre, capital controls, citizen journalism, Clayton Christensen, cloud computing, credit crunch, crowdsourcing, disintermediation, en.wikipedia.org, fixed income, George Gilder, Google Glasses, high net worth, I think there is a world market for maybe five computers, Infrastructure as a Service, invention of the printing press, Jeff Bezos, jimmy wales, Kickstarter, London Interbank Offered Rate, M-Pesa, Mark Zuckerberg, mass affluent, Metcalfe’s law, microcredit, mobile money, more computing power than Apollo, Northern Rock, Occupy movement, optical character recognition, peer-to-peer, performance metric, Pingit, platform as a service, QR code, QWERTY keyboard, Ray Kurzweil, recommendation engine, RFID, risk tolerance, Robert Metcalfe, self-driving car, Skype, speech recognition, stem cell, telepresence, Tim Cook: Apple, transaction costs, underbanked, US Airways Flight 1549, web application

The flagship stores emerging today are generally going to be a mass retail brand space, or a high-net-worth luxury service space. We hear of a myriad of “branch of the future” concepts and so forth often, but there’s no use making a branch that is chock-a-block full of technology gadgetry if you don’t send the right brand message—remember the psychology involved. You don’t make me trust your brand by shoving digital screens and coffee machines in the space, you build trust through a great, personalised experience. When I discuss disruption to branch banking and the channels around shifting models, I’m often told that the “advisory” capability is what differentiates the branch experience from other channels. Then when I actually visit a branch, I get offered no advice, and the service experience is lousy. Even high-net-worth customers might be lucky to be “advised” once a year at their annual review meeting with a relationship manager, and this all too often descends into a “product of the month” pitch session instead of honest, tailored advice.

The problem for banks is that increasingly this group of de-banked customers who use non-bank value stores for power purchasing are not the poor underprivileged struggling with unemployment and with dismal credit ratings (as banks imagine they might be). Increasingly these are technology-enabled professionals, university graduates with prime credit ratings. Valuable future customers for sure, but hardly unattractive today either. You might argue that the most profitable high-net-worth customers or mortgage holders are hardly going to unhinge themselves entirely from the banking system. You’d be correct. But the problem with the unhinging of the bank account is not that you’ll lose the high-end, investment-class business. The problem is that you lose the day-to-day connection with the customer. The key to really understanding the fourth phase of disruption is that we all need the utility of banking, but increasingly we don’t need a bank to provide that utility.

There are two other core drivers that need to go into branch design and placement. For branch banking and design, different strategies need to be adopted for customers who are financially and cognitively less resourceful, and those who are wealthier, but time-poor. If you are catering for those customers who are less profitable but also less inclined to use digital channels, you have a cost burden for carrying legacy behaviour. If you are targeting mass-affluent and high-net-worth customers with $100k+ or more in ready cash to invest, the very nature of their busy lifestyles means that coming to a “space” is a luxury they can rarely afford. For many bankers this might seem counterintuitive. The dilemma then is that the most profitable customers you want to get into a branch are increasingly likely to try a direct channel first because their time is their most valuable commodity, which prevents them from seeking out a rich, face-to-face experience.


pages: 192 words: 75,440

Getting a Job in Hedge Funds: An Inside Look at How Funds Hire by Adam Zoia, Aaron Finkel

backtesting, barriers to entry, collateralized debt obligation, commodity trading advisor, Credit Default Swap, credit default swaps / collateralized debt obligations, discounted cash flows, family office, fixed income, high net worth, interest rate derivative, interest rate swap, Long Term Capital Management, merger arbitrage, offshore financial centre, random walk, Renaissance Technologies, risk-adjusted returns, rolodex, short selling, side project, statistical arbitrage, stocks for the long run, systematic trading, unpaid internship, value at risk, yield curve, yield management

Description Our client is seeking an experienced fund-raiser to join the firm. In general, the fundraiser will be responsible for raising assets from the high net worth and family office investing community. Responsibilities • Arrange for and conduct fund-raising meetings with clients and their respective investment consultants. • Provide leadership and day-to-day management of firmwide marketing initiative. • Create and/or redesign existing marketing literature. Requirements • Minimum of five years of fund-raising experience from a fund of hedge funds, hedge fund, or private client division of a large bank. • Extensive and active high-net-worth investor Rolodex. • Strong leadership and communication skills. • Strong teamwork skills. • Top-tier undergraduate degree. c06.indd 80 1/10/08 11:07:14 AM Fund Marketing 81 Search 4: Director of Client Relations Multibillion-dollar fundamental value hedge fund The top candidates for this search will have both investing and fund-raising experience at a hedge fund.

I finally joined a venture-funded education company in Boston doing business and corporate development with an emphasis on acquisitions. I ended up working there for about two years and left soon after the firm was bought by a major media company. Fortunately, I had stayed in contact with former colleagues from my banking program and through someone I met there was able to join the private equity group of an investment firm that managed the capital of a high net worth individual. During my time there (almost six years), I was able to work on some public market investments, which I found I enjoyed more than private equity. This firm was value focused and maintained a long-term bias with a three- to six-year time horizon. I wasn’t necessarily looking to join a hedge fund. The opportunity to work at my current firm really came through some contacts I had kept in touch with.

CASE STUDIES To follow are the stories of two individuals who secured fund marketing positions. The first began in a private bank where she had direct exposure to hedge funds. The second person was able to land a more senior position after working on both the buy- and sell-sides in marketing capacities. Case Study 17: A Classic Fund Marketer This person took one of the classic routes into hedge fund marketing—beginning at a private bank. By working with high-net-worth clients and researching hedge funds she set herself up perfectly to move into a hedge fund IR role. ■■■ c06.indd 81 1/10/08 11:07:14 AM 82 Getting a Job in Hedge Funds Although I was interested in finance and graduated with a degree in economics from an Ivy League school (class of 2002), I didn’t want to go into an investment banking program—the long hours were not for me. Instead, I applied to and was accepted into a two-year internal consulting program at a bulge-bracket bank (I had done an internship with the same bank the summer after my junior year).


pages: 304 words: 99,836

Why I Left Goldman Sachs: A Wall Street Story by Greg Smith

always be closing, asset allocation, Black Swan, bonus culture, break the buck, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, delayed gratification, East Village, fixed income, Flash crash, glass ceiling, Goldman Sachs: Vampire Squid, high net worth, information asymmetry, London Interbank Offered Rate, mega-rich, money market fund, new economy, Nick Leeson, quantitative hedge fund, Renaissance Technologies, short selling, Silicon Valley, Skype, sovereign wealth fund, Stanford marshmallow experiment, statistical model, technology bubble, too big to fail

That evening, I flew to Singapore, had dinner with two Goldman Sachs MDs at the Ritz Carlton buffet, and went to the Marina Bay Sands, an incredible new casino by the water with a futuristic Sky Park, Sky Bar, and infinity pool all on the roof overlooking the entire city-state. On Tuesday, I went to visit five different clients in Singapore. That evening, I flew to Dubai for a conference of Middle Eastern high-net-worth individuals—high-net-worth enough that Lloyd Blankfein also made the trip. The next morning, I flew back to London. The travel was brutal but exhilarating. It was the corrosive atmosphere in the London office that, slowly but surely, started to wear me down. My travels taught me many things. Client bases varied widely from region to region, and national characteristics often came into play, in almost stereotypical ways.

Or, applied to civilian life, “Jim put on so much weight, he is now trading with a 3 handle” (i.e., more than 300 pounds). Hedge fund: An investment fund that can undertake a wide range of strategies, including using leverage and derivatives, both going long (buying) and getting short (selling, without actually owning the asset). Because hedge funds are not highly regulated, they are only open to very large investors, such as pension funds, university endowments, and high-net-worth individuals. High-net-worth individuals: A polite term for people who are mega-rich or loaded. Hit a bid: To sell something at the price the market maker is willing to pay for it (i.e., the bid price). Hit the tape: Complete the trade; or the announcement of some news. It originates from the ticker tape that was used to transmit stock price information from 1870. Wall Streeters use this term all the time: “My new kid hit the tape” (i.e., we had a new baby).

A lot of Daffey’s popularity stemmed from senior management’s sheer awe at his client base, which consisted of the biggest, smartest macro hedge funds in the world. Hedge funds are investment funds that can undertake a wide range of strategies, both going long (buying an asset with the view that it will rise in value) and getting short (selling an asset without actually owning it, betting it will go down in value). Because these funds are not highly regulated, they are open only to very large investors such as pension funds, university endowments, and high-net-worth individuals. Macro hedge funds—named for their tendency to bet on big-picture events such as movements in interest rates and currencies, as opposed to stock prices—command exceptional respect. Daffey’s client portfolio was almost like the Cowboys, the Giants, the 49ers, and the Patriots. He knew all the big guns: Tudor Investment Corporation, run by southern investing legend Paul Tudor Jones, manages more than $10 billion.


pages: 169 words: 52,744

Big Capital: Who Is London For? by Anna Minton

Airbnb, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, eurozone crisis, Fall of the Berlin Wall, Frank Gehry, high net worth, housing crisis, illegal immigration, Kickstarter, land value tax, market design, new economy, New Urbanism, offshore financial centre, payday loans, quantitative easing, rent control, Right to Buy, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, urban renewal, working poor

They are clustered around Hyde and Regent Parks, and are the only areas that wealthy non-domiciled London residents would consider living in.13 The demand driving the housing market in these areas, and trickling down throughout the city and the rest of the country, is coming from a very particular market of what are known as ‘High Net Worth Individuals’ – of whom there are estimated to be in excess of 500,000 in the UK, mostly in London – and ‘Ultra High Net Worth Individuals’, who have in excess of $30 million, and billionaires. Academics call these super-rich groups ‘transnational elites’, whose wealth is invested internationally, who travel intensively and who have globally based social networks. Today they are clustered in the super prime parts of London, the world capital of billionaires, with seventy-seven, sixteen more than its nearest rival, New York.14 These groups have seen their wealth increase significantly since the financial crisis, boosted by the policy of Quantitative Easing, introduced by the Bank of England in the UK, the Federal Reserve in the US and the European Central Bank, which pushed up asset prices, including stocks and shares, gilts and property prices.

Entire neighbourhoods in the ‘alpha’ parts of London – St John’s Wood, Highgate, Hampstead, Notting Hill Gate, Kensington, to name but a few – have changed out of all recognition over the last decade. Estate agents refer to these centrally located ‘super prime’ areas as the ‘golden postcodes’. They have long been wealthy places, home to monied communities from all over the world as well as the English upper classes, but in the past, like most of London, they were also mixed areas. Now even the wealthy are displaced from Kensington by multimillionaire ‘Ultra High Net Worth Individuals’, who in turn displace others from central London to suburban areas, creating a domino effect that ripples out through the city, with the consequence that average-income earners and the poor move to the periphery or out of the capital altogether, placing pressure on housing and prices around the country. Simultaneously, London’s much-loved skyline is being transformed by one of the greatest waves of new construction seen in the city, with no fewer than 300 planned luxury residential towers going up.

Knight Frank’s survey of super-rich clients also asked what could change London’s position, and respondents were clear that tax and regulation were top of the list, with changes to taxation in first place, followed by changes to financial regulation. Terrorism was another factor which ranked as marginally more of a problem in New York than in London.16 THE MONACO GROUP In Kensington and Chelsea, home to around 4,900 Ultra High Net Worth Individals,17 I had arranged to meet Daniel Moylan. Moylan was formerly deputy leader of the council and a past adviser to Boris Johnson and remains a councillor of twenty-seven years’ standing. Walking down Kensington High Street on my way to meet him, I passed what used to be Ken Market, once a bohemian magnet for punks with their pink mohicans, who lolled about outside the indoor market when I was a child.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Berlin Wall, Bernie Madoff, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, Gordon Gekko, Henri Poincaré, high net worth, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, means of production, Menlo Park, merger arbitrage, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Ponzi scheme, price mechanism, principal–agent problem, profit maximization, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Sand Hill Road, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, technology bubble, The Wealth of Nations by Adam Smith, time value of money, too big to fail, transaction costs, underbanked, Vanguard fund, working poor, yield curve

It is difficult to generalize about the investment activity of individuals because they are such a varied and heterogeneous group, but every individual is faced with a complicated series of investment constraints. These constraints include individual risk preferences, tax considerations, a need for accumulation early in life to support spending during retirement, a length of life that is limited and uncertain, and possibly the need to provide a bequest. To complicate matters further, different individuals also have different investment alternatives available to them. High-net-worth individuals, for example, have access to investment advisers and alternative investments, but those not meeting certain wealth or income thresholds typically cannot participate in certain investment structures. The plight of the individual investor is distinct from the situation confronted by an institution or a corporation. Rather than facing the relatively straightforward fiduciary responsibility of a business or nonprofit organization, individuals must consider a range of complications and uncertainties.

More New Investment Forms 257 ALTERNATIVE INVESTMENTS: HEDGE FUNDS, PRIVATE EQUITY, AND VENTURE CAPITAL The realm of alternative investments is vast and includes not just hedge funds, private equity, and venture capital but also commodities, real estate, and infrastructure. These investment vehicles have captured the attention of many, fueled in great part by stories of brilliant managers and stellar returns. Undoubtedly, the awe and reverence some investors have for these sophisticated vehicles derives in part from the fact that they have long been limited to high-net-worth individual investors and institutional investors, rendering them somewhat inscrutable to the public. The truth is more nuanced. Snapshot of Alternatives Alternative investments have been available to institutional and professional investors since the 1970s. While the term alternative investments generally refers to nontraditional investments in securities such as equities, bonds, property, or more esoteric assets, the term is a catch-all of sorts and can refer to investments made in hedge funds, private equity, venture capital, real estate, and other financial contracts and derivatives.

Difficult conditions in equities markets, combined with a more complicated and expensive listing process, produced a barrier to initial public offerings, frequently the ultimate exit of a venture deal.41 The National Venture Capital Association (NVCA) was founded as an industry association in 1973, and over the next several decades the dollar amounts flowing into venture capital as an alternative investment class ballooned significantly (see figure 8.1 and table 8.2). The industry is now seen as a leading alternative investment class for institutional and high-net-worth investors looking for ways to diversify their portfolios. Venture capital is intimately tied to Silicon Valley in the San Francisco Bay area. This area—blessed with a confluence of some of the world’s top research universities and technology companies— was a natural place for the venture capital industry to emerge and grow, given the initial near-synonymy of venture capital firms with Capital under management U.S. venture funds ($ billions), 1985– 2011 350 300 ($ billions) 250 200 150 100 50 0 ‘85‘86‘87‘88‘89‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘00‘01‘02‘03‘04‘05‘06‘07‘08‘09 ‘10 ‘11 Year Figure 8.1 Capital Under Management U.S.


Commodity Trading Advisors: Risk, Performance Analysis, and Selection by Greg N. Gregoriou, Vassilios Karavas, François-Serge Lhabitant, Fabrice Douglas Rouah

Asian financial crisis, asset allocation, backtesting, buy and hold, capital asset pricing model, collateralized debt obligation, commodity trading advisor, compound rate of return, constrained optimization, corporate governance, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, discrete time, distributed generation, diversification, diversified portfolio, dividend-yielding stocks, fixed income, high net worth, implied volatility, index arbitrage, index fund, interest rate swap, iterative process, linear programming, London Interbank Offered Rate, Long Term Capital Management, market fundamentalism, merger arbitrage, Mexican peso crisis / tequila crisis, p-value, Pareto efficiency, Ponzi scheme, quantitative trading / quantitative finance, random walk, risk-adjusted returns, risk/return, selection bias, Sharpe ratio, short selling, stochastic process, survivorship bias, systematic trading, technology bubble, transaction costs, value at risk, zero-sum game

All chapters in this book are written by leading academics and practitioners in the area of alternative investments. Although some chapters are technical in nature, we have asked the contributors of those chapters to emphasize the impact of their analytical results on managed futures investing, rather than to focus on technical topics. We, therefore, believe this book can serve as a guide for institutional investors, pension funds managers, endowment funds, and high-net-worth individuals wanting to add CTAs to traditional stock and bond portfolios. T ix Acknowledgments T he editors would like to thank Richard E. Oberuc Sr. of Laporte Asset Allocation System (www.laportesoft.com) and Sol Waksman of the Barclay Trading Group, Ltd. (www.barclaygrp.com) for providing data and software. As well, we thank www.alternativesoft.com for their use of Extreme Metrics and HF Optimizer software.

However, with a proper choice of risk factors, a significant proportion of CTA returns can be explained and the abnormal performance of each strategy can be assessed properly. Performance 3 Chapter 7 applies the basic, cross-evaluation, and superefficiency DEA models to evaluate the performance of CTA classifications. With the everincreasing number of CTAs, there is an urgency to provide money managers, pension funds, and high-net-worth individuals with a trustworthy appraisal method for ranking CTA efficiency. Data envelopment analysis can achieve this, with the important benefit that benchmarks are not required, thereby alleviating the problem of using traditional benchmarks to examine nonnormal returns. CHAPTER 1 Managed Futures and Hedge Funds: A Match Made in Heaven Harry M. Kat n this chapter we study the possible role of managed futures in portfolios of stocks, bonds, and hedge funds.

CHAPTER 2 Benchmarking the Performance of CTAs Lionel Martellini and Mathieu Vaissié he bursting of the Internet bubble in March 2000 plunged traditional market indices (stocks, bonds, etc.) into deep turmoil, leaving most institutional investors with the impression that portfolio diversification tends to fail at the exact moment that investors have a need for it, namely in periods when the markets drop significantly.1 At the same time, most alternative investments (e.g., hedge funds, CTAs, real estate, etc.) posted attractive returns. They benefited from large capital inflows from high-net-worth individuals (HNWI) and institutional investors, who were both looking for investment vehicles that would improve the diversification of their portfolios. At the same time, many recent academic and practitioner studies have documented the benefits of investing in alternative investments in general, and hedge funds in particular (see Amenc, Martellini, and Vaissié 2003; Amin and Kat 2002, 2003b; Anjilvel Boudreau, Urias, and Peskin 2000; Brooks and Kat 2002; Cerrahoglu and Pancholi 2003; Daglioglu and Gupta 2003a; Schneeweis, Karavas, and Georgiev 2003).


pages: 348 words: 99,383

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope by John A. Allison

Affordable Care Act / Obamacare, American ideology, bank run, banking crisis, Bernie Madoff, business cycle, clean water, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, fiat currency, financial innovation, Fractional reserve banking, full employment, high net worth, housing crisis, invisible hand, life extension, low skilled workers, market bubble, market clearing, minimum wage unemployment, money market fund, moral hazard, negative equity, obamacare, Paul Samuelson, price mechanism, price stability, profit maximization, quantitative easing, race to the bottom, reserve currency, risk/return, Robert Shiller, Robert Shiller, The Bell Curve by Richard Herrnstein and Charles Murray, too big to fail, transaction costs, yield curve, zero-sum game

By the way, I learned an interesting lesson about the fundamental difference between institutional shareholders and high-net-worth individual shareholders through this process. Unfortunately, many institutional shareholders are short-term-oriented and care little about principles. Their incentive systems drive them toward short-term investment. The worst institutional shareholders are state pension plans (especially CalPERS), which confuse the political correct notion of the day with meaningful principled action. The best shareholders are older high-net-worth individuals who have earned their money by running an operating business. They have a longer-term perspective, appreciate the role of principles, and have business wisdom. If you manage a business, attract all the self-made, high-net-worth individual shareholders you can. 10 How Freddie and Fannie Grew to Dominate the Home Mortgage Lending Business AN INTERESTING QUESTION IS, HOW DID FREDDIE AND FANNIE come to dominate the home mortgage lending business?

They sold the property at a deep discount (once a bank owns a piece of property, its value typically falls 20 to 25 percent). This sale set a precedent for a new lower commercial real estate valuation in this relatively small market. The three partners all filed personal bankruptcy. (I assume the Obama administration is now worried about them, as they are truly low income and will be so for years.) If BB&T could have worked with this high-net-worth borrower under our traditional program, our loan would ultimately have been paid in full, and the secondary negative consequences would not have occurred. Frankly, the regulators do not care about this type of issue. They have their rules, some less harmful than others, but they individually and the regulatory system as a process are unable to use judgment regardless of the destructive consequences of their actions.

., 188–189 Greenspan’s view of, 32 Golden West, 39, 91, 92, 98, 159 Goldman Sachs, 71, 173 as AIG counterparty, 128–129 bailout of, 104, 164, 179 CDSs of, 126 counterparty risk at, 124 crony capitalism at, 6 financial “innovations” of, 101 Government policy: as cause of financial crisis, 1, 5–6, 251 and residential real estate bubble, 6 (See also Housing policy; Policy reforms) Government regulation, 5–8, 41–48, 204 Government spending, 180–183, 197–199 Government-sponsored enterprises (GSEs), 59, 64–65, 98, 137 (See also Fannie Mae; Freddie Mac) Great Depression: and avoidance of stock market, 74 banking industry in, 70–72 economic policies after, 161 and Federal Reserve, 19–20, 24, 188 and gold standard, 188 and government interference, 170 and Smoot-Hawley Tariff Act, 205 Great Recession, 1, 251–254 and Federal Reserve, 188 Freddie Mac and Fannie Mae in, 65 and interest-rate variation, 33 market corrections and depth of, 160 and monetary policy, 17 and residential real estate, 9–15 Great Society, 6, 55, 96 Greece, 51, 52, 137, 228 Greenspan, Alan, 23–30, 32, 33, 160 Gross domestic product, 183, 197–199 Hamilton, Alexander, 19 Harvard University, 43, 131 Hayek, Friedrich, 31 Health insurance, 201–202 High-net-worth shareholders, 93 Home Builders Association, 60 Home foreclosure laws, 77–80 Homeownership, 53–55 Hoover, Herbert, 24, 161, 205 Housing: as consumption, 9–12, 54–55, 73–74 government support of, 12 Housing policy, 53–65 HUD (Department of Housing and Urban Development), 15, 58 Human Action (von Mises), 238 Immigration, 19, 205–206 India, 10, 25, 205 IndyMac, 39, 75, 98 Inflation: CPI as indicator of, 26–27 and fair-value accounting, 103 and Federal Reserve, 21–22 and prices, 24–25 (See also Monetary policy) Initial public offerings, 150 Insurance: bond, 86–87 cross-guarantor, 48–52 FDIC (see FDIC insurance) health, 201–202 private deposit, 48–52 self-insurance at banks, 48–52 unemployment, 212–213 Interest rates, 26–27, 31–35 Inverted yield curves, 27–29 Investment banks: disclosure requirements for, 151 government bailout of, 162 “innovations” of, 101–102 leverage ratios of, 71–72 IPOs, 150 Iran, 198, 199, 227 Iraq, 198 Ireland, 77 Isaac, Bill, 107–108, 161–162 Italy, 51, 52 Japan, 159, 200, 205 Jefferson, Thomas, 19, 220 Johnson, Lyndon Baines, 6, 55, 96, 161, 188 JPMorgan Chase, 75 and Bear Stearns, 162 and shadow banking system, 120 as “too-big-to-fail” firm, 173 and Washington Mutual, 163 Keynes, John Maynard, 181 Labor: allocation of, 10–11, 14 minimum-wage laws, 209–212 Lehman Brothers, 71, 76, 101, 104, 129, 164 and Bear Stearns bailout, 162–163 corporate debt at, 107 counterparty risk at, 124 derivatives from, 123 Limited government, 182–183, 195, 231, 253 Liquidity: of banks, 68–69 and FDIC insurance, 171 and financial crises, 70–72 and housing prices, 74–75 and TARP, 171–172 Loan loss reserves accounting, 152–154 Loans: capital standards for, 51–52 qualified, 98 substandard, 140–141 Madoff, Bernie, 149, 225 March of Dimes, 241 Market corrections, 157–165 Federal Reserve’s prevention of, 23, 32 prevention of, 13 residential real estate, 78 and response to financial crisis, 177–180 Market discipline, 21, 38 Market-based monetary policy, 31–35 Market-clearing price, 209 Mathematical modeling: for loan loss reserves, 152–153 by ratings agencies, 82–83 for risk management, 136–138 MBIA, 86 Medicaid, 6, 55, 201 Medicare, 6, 8, 55, 201, 203 Meltdown (Michaels), 35 Merrill Lynch, 101, 124–125 Michaels, Patrick J., 35 Microsoft, 217 Military spending, 198–199, 227 Minimum-wage laws, 209–212 Mises, Ludwig von, 34, 238 Monetary policy, 17–35 of Bernanke, 27–31, 33, 35, 40, 125, 213 and federal debt, 21–22 and Federal Reserve, 17–23 of Greenspan, 23–27 market-based, 31–35 and unemployment, 208–209 Money market mutual funds, bailout of, 120–121, 192 Money supply, 21–22, 24, 189 Moody, John, 83, 150 Moody’s, 81–87 investor confidence in, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Morgan Stanley, 71, 101, 124, 173 Mortgage lending, 95–102 by Fannie Mae and Freddie Mac, 97–101 and investment bank innovations, 101–102 prime, 59, 97–99 by private banks, 97–99 savings and loan industry in, 95–97 subprime, 43, 56–57, 99–101 Mortgages: by BB&T Corporation, 97–98 jumbo, 62 pick-a-payment (see Pick-a-payment mortgages) selling vs. servicing, 113–114 Mozilo, Angelo, 46 Multiplier effect, 181 Naked shorting, 127–128, 151 Nationally recognized statistical rating organizations, 82 Negative real interest rates, 26–27 Neo-Keynesian response to financial crisis, 185–186 Neutral taxes, 197 New Deal, 53, 170, 232 Nixon, Richard, 96, 161, 188 North Korea, 34, 198, 227, 247, 252 NRSROs, 82 Obama administration, 142–144: and Dodd-Frank Act, 64 economic policies of, 15, 161 healthcare bill, 183, 201 and Patriot Act, 45 stimulus plan, 181–182 Office of the Comptroller of the Currency (OCC), 40, 154 Office of Thrift Supervision, 40, 41, 45–46 Operating earnings, 103–106 OTS, 40, 41, 45–46 Panics, 137–138, 161–165 Patriot Act, 45, 46, 48, 133–136, 147 Paulson, Henry: in 2008 panic, 164, 167 and AIG bailout, 128, 129 credibility of, 164 development of TARP, 76, 168–170, 172 Pick-a-payment mortgages, 89–93 borrowers using, 90–91 and FDIC, 91 and rise of Fannie Mae/Freddie Mac, 98 Policy reforms, 195–206 for entitlement programs, 199–204 and free trade, 204–205 and government regulations, 204 for government spending, 197–199 for immigration, 205–206 for political system, 206–207 and tax rate, 196–197 Politics: in banking regulation, 42–46 and crony capitalism, 129 and failure of Fannie Mae/Freddie Mac, 59–62 and Federal Reserve appointments, 18 policy reforms for, 206–207 Poor, Henry Varnum, 150 Portugal, 51 Price fixing, 31, 193 Price setting, 31–32 Prime lending, 59, 97–99 Prince, Charlie, 217 Principles-based accounting, 109 Privacy Act, 133, 135 Private accounting systems, 177–178 Private banks, 97–99, 187–188 Private deposit insurance, 48–52 Public schools, 228, 233–235 Racial discrimination (in lending), 42–45 Raines, Frank, 59 Rand, Ayn, 225, 231 Rating agencies, 81–87 investor confidence in, 84–87 mathematical modeling by, 136 and subprime mortgage bonds, 82–84 and “too-big-to-fail” firms, 173 and SEC, 81–82, 149–150 Real estate: commercial, 11, 97 residential (see Residential real estate market) Recessions, 28, 29, 160 Recovery (see Economic recovery) Reforms: banking industry (see Banking industry reforms) government policy (see Policy reforms) Regions Bank, 237 Regulation: of banking industry (see Banking regulation) by government (see Government regulation) Reporting, financial, 150–152 Reserve currency, U.S. dollar as, 77, 188, 229 Residential real estate market: economics of, 73–74 misinvestment in, 9–15 Residential real estate market bubble, 73–80 and government policy, 6 international impact of, 77 and job creation, 80 and state home foreclosure laws, 77–80 Risk: contagion, 123 counterparty, 123, 124 with derivatives, 122–124 diversification of, 67–69 and economic cycles, 189–193 and FDIC insurance, 38–41 and government regulation, 50–51 liquidity, 68–70 mathematical modeling for, 136–138 and “originate and sell” model, 100 systemic, 50–51 RMBS (residential mortgage-backed securities), 81 Roman empire, fall of, 230 Roosevelt, Franklin D., 24, 37, 103, 161 Rules-based accounting, 109 Russia, 198 Samuelson, Paul, 238 Sarbanes-Oxley Act, 133–134 and fair-value accounting, 106 and Fannie Mae/Freddie Mac, 99 misregulation by, 48, 147 and SEC, 150 violations of, 136 SARs (Suspicious Activity Reports), 136 Satchwell, Jack, 57 Savings and loan (S&L) industry, 95–97, 110, 191 Securities and Exchange Commission (SEC), 149–155 capital ratio guidelines, 71–72 and complexity of accounting rules, 116–117 and expensing of stock options, 114, 115 loan loss reserves accounting for, 152–154 misallocation of resources by, 14 and rating agencies, 81–82, 149–150 requirements for shorting stock, 127–128, 151 and rules-based accounting, 109, 110 and Sarbanes-Oxley Act, 150 Self-insurance, 48–52 Selgin, George, 189 Senate Banking Committee, 46 Shadow banking system, 119–131 and AIG bailout, 128–130 credit default swaps in, 126–128 and derivatives, 122–124 Federal Reserve’s role in, 30 losses from, 131 S&L industry, 95–97, 110, 191 Small businesses, 144–147, 183–184 Smoot-Hawley Tariff Act, 205 Social Security, 8, 199–204 South Financial, 237 South Korea, 247 Soviet Union, 34, 195–196, 252, 254 S&P (see Standard & Poor’s) Spain, 51, 52, 77 Spitzer, Eliot, 71, 134–135, 151 Stagflation, 181, 208 Standard & Poor’s (S&P), 81–87 investor confidence, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Standard of living, 6–7, 10, 161, 177 Start-up banks, 38–39 State home foreclosure laws, 77–80 Stimulus plan, 181–182 Stock options, expensing of, 114–117 Stocks, shorting, 127–128, 151 Stress tests, banks, 171 Subprime lending: and CRA, 56–57 by Fannie Mae and Freddie Mac, 99–101 and racial discrimination in lending study, 43 Subprime mortgage bonds, 82–87 Substandard loans, 140–141 SunTrust, 152, 237 Suspicious Activity Reports (SARs), 136 Tails (mathematical models), 137 TARP (see Troubled Asset Relief Program) Tax rate, 196–197 Tea Party Movement, 218, 231 Technology industry, 5 “Too-big-to-fail” firms, 130, 173, 193 Trader principle, 92, 223–224 Troubled Asset Relief Program (TARP), 167–175 and 2008 panic, 165 and FDIC, 37 Underwriters Laboratories, 117, 150 Unemployment, 207–213 in economic recovery, 207–208 and minimum-wage laws, 209–212 and misinvestment in residential real estate, 10–11 and monetary policy, 208–209 Unemployment insurance, 212–213 Unions, 179, 180, 212 United Auto Workers, 179, 180 United States: demographic problem in, 228 economic future of, 8, 227–230, 252–253 educational system of, 230–235 founding concepts of, 219–220 as free trade zone, 204–205 GDP of China vs., 183 mixed economy of, 5–6 public schools of, 233–235 university system of, 230–233 United Way, 224, 241 University system, 230–233 U.S.


pages: 356 words: 91,157

The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, basic income, Bernie Sanders, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, Gini coefficient, Google bus, high net worth, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, Paul Graham, plutocrats, Plutocrats, RAND corporation, rent control, rent-seeking, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, sovereign wealth fund, superstar cities, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

Overall, the larger a city’s population, the more globally competitive it is economically, and the larger its finance and tech industries, the greater the number of billionaires it has and the greater their net worth.11 Figure 3.1: Where the World’s Billionaires Live Source: Martin Prosperity Institute, based on data from Forbes, 2015. Figure 3.2 charts the global locations of a wider pool of wealthy people, so-called ultra-high net worth individuals with $30 million or more in assets. Across the world, there are 173,000 of these multimillionaires—a 0.002 percent slice of the global population that controls a total of roughly $20 trillion in wealth.12 On this metric, London comes out on top, with 4,364 of these ultra-rich. Tokyo is second, followed by Singapore, with New York in fourth place and Hong Kong in fifth. Figure 3.2: Locations of Ultra-High Net Worth Households Note: Households $30 million or more in assets. Source: Martin Prosperity Institute, based on data from Knight Frank, The Wealth Report—2015, www.knightfrank.com/research/the-wealth-report-2015-2716.aspx.

Do the super-rich really damage great cities? Although rarely occupied trophy apartments and lights-out buildings certainly make certain neighborhoods less vibrant, there are simply not enough super-rich people to deaden an entire city or even significant parts of it. New York City, after all, has more than 8 million inhabitants and some 3 million housing units, and its 116 billionaires and 3,000 or so ultra-high net worth multimillionaires wouldn’t fill half the seats in Radio City Music Hall. The global real estate buying spree that occurred in the wake of the 2008 economic and financial crisis had abated somewhat by 2016, as the world’s emerging economies—and especially the oil-rich nations—came on harder times themselves and their currencies lost ground, and the United States has cracked down on foreign real estate transactions, some of which amount to money laundering.

.), 74 suburbanization following, 67 in superstar cities, 67–72, 68 (fig.), 70 (fig.), 71 (table), 74–75, 78 transit influencing, 65–66, 72 urban policy for, 78 in Washington, DC, 59–60, 67 working class and, 56 George, Henry, 194 Gilbert, Dan, 141 Glass, Ruth, 59 Global Metro Monitor, 171, 176 global super-rich billionaires, 40–41, 40 (fig.) in cities, 38–42, 40 (fig.), 41 (fig.) ultra-high net worth households, 41–42, 41 (fig.) global urban policy, 210–211 global urbanization crisis Africa and, 169, 172, 182 bottom-up approach to, 179–180 China and, 169–170, 178–179 connectivity and, 181–183 economic data missing in, 170–171 economic output and, 170–172, 174 future of, 215 gentrification in, 4 inequality in, 4, 175 Integration Segment on Sustainable Urbanization and, 167–168 mega-slums in, 172–174 poverty in, 168–169, 172–173, 177–181 solutions to, 11, 179–184, 210–211 sprawl in, 181 transit and, 182 urban productivity in, 175–177, 177 (fig.)


pages: 825 words: 228,141

MONEY Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins

3D printing, active measures, activist fund / activist shareholder / activist investor, addicted to oil, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, backtesting, bitcoin, buy and hold, clean water, cloud computing, corporate governance, corporate raider, correlation does not imply causation, Credit Default Swap, Dean Kamen, declining real wages, diversification, diversified portfolio, Donald Trump, estate planning, fear of failure, fiat currency, financial independence, fixed income, forensic accounting, high net worth, index fund, Internet of things, invention of the wheel, Jeff Bezos, Kenneth Rogoff, lake wobegon effect, Lao Tzu, London Interbank Offered Rate, market bubble, money market fund, mortgage debt, new economy, obamacare, offshore financial centre, oil shock, optical character recognition, Own Your Own Home, passive investing, profit motive, Ralph Waldo Emerson, random walk, Ray Kurzweil, Richard Thaler, risk tolerance, riskless arbitrage, Robert Shiller, Robert Shiller, self-driving car, shareholder value, Silicon Valley, Skype, Snapchat, sovereign wealth fund, stem cell, Steve Jobs, survivorship bias, telerobotics, the rule of 72, thinkpad, transaction costs, Upton Sinclair, Vanguard fund, World Values Survey, X Prize, Yogi Berra, young professional, zero-sum game

Sure, this dollar-doubling, dollar-draining scenario is based on returns you’ll never see in the real world—but it illustrates what can happen when we neglect to consider the impact of taxes in our financial planning. Given the way things are going in Washington, do you think taxes are going to be higher or lower in the coming years? (You don’t even have to answer that one!) In section 5, I’m going to give you the “in” that until now was available only to sophisticated investors or ultra-high-net-worth individuals. I’m going to show you what the smartest investors already do—how to take taxes out of the equation, using what the New York Times calls “the insider’s secret for the affluent.” It’s an IRS-approved method to grow your money tax free, and you don’t have to be rich or famous to take advantage of it. It could literally help you achieve your financial independence 25% to 50% faster, depending upon your tax bracket.

Can Protégé pick five top hedge fund managers who will collectively beat the S&P 500 index over a ten-year period? As of February 2014, the S&P 500 is up 43.8%, while the five hedge funds are up 12.5%. There are still a few years left, but the lead looks like the world’s fastest man, Usain Bolt, running against a pack of Boy Scouts. (Note: for those unfamiliar with what a hedge fund is, it is essentially a private “closed-door” fund for only high-net-worth investors. The managers can have total flexibility to bet “for” the market and make money when it goes up, or “against” the market, and make money when it goes down.) THE FACTS ARE THE FACTS ARE THE FACTS Industry expert Robert Arnott, founder of Research Affiliates, spent two decades studying the top 200 actively managed mutual funds that had at least $100 million under management. The results are startling: From 1984 to 1998, a full 15 years, only eight out of 200 fund managers beat the Vanguard 500 Index.

One exciting strategy we will introduce allows us to make money when the market (index) goes up, yet it simultaneously guarantees that we will not lose our original investment if the market goes down. The catch? You don’t get to capture or participate in all of the gains. Most are in disbelief when I explain that there are tools out there that can guarantee that you don’t lose while still giving you the ability to participate in market “wins.” Why haven’t you heard of them? Because they are typically reserved for high-net-worth clients. I will show you one of the only places where the average investor can access these. Imagine your friends with their baffled and even suspicious looks when you tell them you make money when the market goes up but don’t lose money when it goes down. This strategy alone can completely change the way you feel about investing. It’s your safety rope while climbing the mountain when everyone else is “white knuckling” it with hope.


pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, starchitect, stem cell, Steve Jobs, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

In its 2011 edition, Credit Suisse noted the difference between the world’s rising middle class, which remains rooted in and defined by nationality, and the increasingly shared and global character of people at the very top: The base of the wealth pyramid is occupied by people from all countries of the world at various stages of their life-cycles; in contrast, HNW [high net worth, defined as people with an investable income of between $1 million and $50 million] and UHNW [ultra high net worth, defined as people with an investable income of at least $50 million] individuals are heavily concentrated in particular regions and countries, sharing a much more similar lifestyle. Even members at other locations tend to participate in the same global markets for high coupon consumption items. The wealth portfolios of individuals are also likely to be similar, dominated by financial assets and, in particular, equity holdings in public companies traded in international markets.

A recent academic study of the Forbes list of the four hundred richest Americans found that between 1983 and 2000 all of the wealthy prospered, but the very richest did best of all. In the course of those years, the top 25 percent of this group became 4.3 times wealthier, while the bottom 75 percent of them got “only” 2.1 times richer. In 2011, in its annual report on the world’s rich, Credit Suisse, the international investment bank, noted that the number of super-rich—whom it delicately dubs “ultra high net worth individuals,” or UHNWIs, with assets above $50 million—surged: “Although comparable data on the past are sparse, it is almost certain that the number of UHNW individuals is considerably greater than a decade ago. The general growth in asset values accounts for some of the increase, along with the appreciation of other currencies against the U.S. dollar. However, it also appears that, notwithstanding the credit crisis, the past decade has been especially conducive to the establishment of large fortunes.”

This nascent split between probusiness, promoney Americans of the bottom of the 1 percent and the 0.1 percent is in many ways more potentially incendiary than the antiestablishment idealism of Occupy Wall Street. We always knew the left was suspicious of high finance. What is surprising is that Wall Street’s yeomen have become suspicious of their bosses. Here’s how Joshua Brown, a New York–based investment adviser to high-net-worth individuals, charitable foundations, and retirement plans responded to complaints by a number of Wall Street chiefs that they are being unjustly vilified in America today. Brown’s tirade, which he posted on his blog, The Reformed Broker, quickly went viral: “Not only do we not ‘hate the rich’ as you and other em-bubbled plutocrats have postulated, in point of fact, we love them,” Brown wrote.


Termites of the State: Why Complexity Leads to Inequality by Vito Tanzi

"Robert Solow", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Andrei Shleifer, Andrew Keen, Asian financial crisis, asset allocation, barriers to entry, basic income, bitcoin, Black Swan, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, clean water, crony capitalism, David Graeber, David Ricardo: comparative advantage, deindustrialization, Donald Trump, Double Irish / Dutch Sandwich, experimental economics, financial repression, full employment, George Akerlof, Gini coefficient, Gunnar Myrdal, high net worth, hiring and firing, illegal immigration, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labor-force participation, libertarian paternalism, Long Term Capital Management, market fundamentalism, means of production, moral hazard, Naomi Klein, New Urbanism, obamacare, offshore financial centre, open economy, Pareto efficiency, Paul Samuelson, price stability, principal–agent problem, profit maximization, pushing on a string, quantitative easing, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, Tyler Cowen: Great Stagnation, universal basic income, unorthodox policies, urban planning, very high income, Vilfredo Pareto, War on Poverty, Washington Consensus, women in the workforce

The explicit, visible redistributive role of the state in recent decades, which is promoted with progressive taxes and with redistributive social spending, and which attracts much of the attention of commentators, has led conservatives to challenge it on the ground that, in State and Distribution of Income 201 a market economy, the results of the market have ethical justification and should not be changed by the government. In recent years the globalization of economic activities, and the growing mobility of financial capital and of high-net-worth individuals (HNWIs), has given these economists other arguments in favor of calls for reducing marginal tax rates, especially on incomes from capital sources, the incomes that are of greater importance to high-income individuals. As a consequence of these arguments, the marginal tax rates were significantly reduced in recent decades, contributing to widening income disparity (see Tanzi, 2014c).

Especially for corporations, the pressures for tax incentives and for various loopholes contributed to significantly increasing the difference 367 368 Termites of the State between the statutory tax rate (which in the United States and a few other countries, though much reduced, had remained relatively high) and the effective tax rate Capital incomes and tax rates on high incomes are, of course, far more important for individuals who receive high incomes and have large wealth than for average taxpayers. Complexities in tax systems can also be exploited by individuals who have high incomes and can get advice from good tax lawyers and accountants. These experts can navigate the complex laws and can find opportunities for their clients that complex tax systems often offer for “tax planning.” These high-income individuals, or high-net-worth individuals (HNWIs), find it easier than average workers to restructure the incomes that they receive to take advantage of lower rates on some income sources or in other countries. Tax planning has become increasingly important in recent decades. It involves showing more incomes in low-tax countries or in lower-tax-rate income sources. For American corporations, it also involves keeping more profits abroad.

., 2011, that has concluded that higher tax burdens and tax systems that rely more on direct taxes are more damaging to economic growth, and the paper by Baiardi et al., 2017 that has not found any such correlation. The Last Three Decades of the Twentieth Century During the last three decades of the twentieth century, the importance of services in advanced economies grew, economies opened up to trade with other countries, and their structures changed rapidly. Multicountry activities by both multinational enterprises and increasingly individuals with high net worths or individuals with particular skills became common. A global financial market was created, new communication technologies appeared, and their use and influence spread rapidly and influenced more and more the economic activities. Internet shopping appeared and grew in importance, and together with new technologies started creating increasing 386 Termites of the State challenges for many traditional jobs and activities.


pages: 202 words: 72,857

The Wealth Dragon Way: The Why, the When and the How to Become Infinitely Wealthy by John Lee

8-hour work day, Albert Einstein, barriers to entry, Bernie Madoff, butterfly effect, buy low sell high, California gold rush, Donald Trump, financial independence, high net worth, intangible asset, Kickstarter, Mark Zuckerberg, negative equity, passive income, payday loans, self-driving car, Snapchat, Stephen Hawking, Steve Jobs, stocks for the long run, stocks for the long term, Tony Hsieh, Y2K

You could liquidate your assets and never need to work again because your assets far outweigh your liabilities. Bill Gates is rich because he has so many assets. One of his assets just happens to be a company called Microsoft, which, according to a January 2014 report in Forbes, has a market capitalization value of $200 billion! The term high net worth has been creeping into the popular vernacular in recent years. People seem more inclined to refer to themselves as being high net-worth people, or high net-worth families, rather than as rich people or rich families. This is related to the fact (as we described at the beginning of this book) that wealth has less to do with money in the bank and more to do with a favourable balance of assets against liabilities. And you don't always need to use cash to increase your net worth.

See also Investors; Loans Flipping Forbes Ford, Henry Foreign currency market Forex Framestore Franchises Friends, negativity as roadblock to success Frost, Robert Frugality Fuller, Thomas Gambling Gates, Bill Generosity financial abundance and of rich people undesirable truths about Wealth Dragon principle Germany, economic success based on past failures Get-rich-quick schemes Gibran, Khalil Gladwell, Malcolm Goals Goals to Gold: Trading the Football Pitch for the Financial Markets (Sandford) Golden rules of property investing Great Britain dragon folklore economic success frugality in higher education in laziness in lottery Greed Gretzky, Wayne Hamlet (Shakespeare) Happiness Hard work fear of get-rich-quick schemes vs wealth and Wealth Dragon principle Harford, Tim Harry Potter series Hawking, Stephen Higher education High net-worth people Hill, Napoleon Holland, lease option legalization Home equity Hourly wage calculation How to Get Rich (Dennis) Hsieh, Tony Humiliation Individual voluntary agreements (IVAs) Infinite wealth, path to Information gathering Intangible assets Investments control over financial planner cautions in securities vs. property strategy for See also Property investment Investors finding structuring deals with types of Isaacson, Walter Jeffers, Susan Jobs, Steve Jordan, Michael Kiyosaki, Robert Kutcher, Ashton Lake District property deal Law of attraction Laziness Leads Learning curve Lease options Lee, Bruce Lee, John abundance vs. scarcity thinking Bruce Lee influence education family background and childhood financial abundance financial planners learning curve more money mindset negative people personal crisis philanthropy property investment beginnings property investment deal making tips property investment experiences property investment marketing tactics rat race trap relationship with Vincent Wong spending money taking action Wealth Dragon origins working smarter Legal work Lewis, C.


pages: 345 words: 75,660

Prediction Machines: The Simple Economics of Artificial Intelligence by Ajay Agrawal, Joshua Gans, Avi Goldfarb

"Robert Solow", Ada Lovelace, AI winter, Air France Flight 447, Airbus A320, artificial general intelligence, autonomous vehicles, basic income, Bayesian statistics, Black Swan, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, collateralized debt obligation, computer age, creative destruction, Daniel Kahneman / Amos Tversky, data acquisition, data is the new oil, deskilling, disruptive innovation, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Google Glasses, high net worth, ImageNet competition, income inequality, information retrieval, inventory management, invisible hand, job automation, John Markoff, Joseph Schumpeter, Kevin Kelly, Lyft, Minecraft, Mitch Kapor, Moneyball by Michael Lewis explains big data, Nate Silver, new economy, On the Economy of Machinery and Manufactures, pattern recognition, performance metric, profit maximization, QWERTY keyboard, race to the bottom, randomized controlled trial, Ray Kurzweil, ride hailing / ride sharing, Second Machine Age, self-driving car, shareholder value, Silicon Valley, statistical model, Stephen Hawking, Steve Jobs, Steven Levy, strong AI, The Future of Employment, The Signal and the Noise by Nate Silver, Tim Cook: Apple, Turing test, Uber and Lyft, uber lyft, US Airways Flight 1549, Vernor Vinge, Watson beat the top human players on Jeopardy!, William Langewiesche, Y Combinator, zero-sum game

A credit card network also must assess whether that is likely to be the case for a particular customer. For example, a high-net-worth platinum cardholder may have other credit card options and might stop using that particular card if declined. And that person may be on an expensive vacation, so the card network could lose all of the expenditures associated with that trip. Credit card fraud is a well-defined decision process, which is one reason we keep coming back to it, yet it’s still complicated. By contrast, for many other decisions, not only are the potential actions more complex (not just a simple accept or decline), but the potential situations (or states) also vary. Judgment requires an understanding of the reward for each pair of actions and situations. Our credit card example had just four outcomes (or eight if you distinguish between high-net-worth customers and everyone else).

Thinking through what you really want to achieve or what the costs of customer dissatisfaction might be takes time spent thinking, reflecting, and perhaps asking others for advice. Or it may be the time spent researching to better understand payoffs. For credit card fraud detection, thinking through the payoffs of satisfied and unsatisfied customers and the cost of allowing a fraudulent transaction to proceed are necessary first steps. Providing different payoffs for high-net-worth customers requires more thought. Assessing whether those payoffs change when those customers are on vacation requires even more consideration. And what about regular customers when they are on vacation? Are the payoffs in that situation different? And is it worth separating work travel from vacation? Or trips to Rome from trips to the Grand Canyon? In each case, judging the payoffs requires time and effort: more outcomes mean more judgment means more time and effort.

Some will choose not to investigate payoffs for scenarios that seem remote or unlikely. The credit card network might find it worthwhile to separate work trips from vacations but not vacations to Rome from the Grand Canyon. In such unlikely situations, the card network may guess at the right decision, group things together, or just choose a safer default. But for more frequent decisions (such as travel in general) or ones that appear more important (such as high-net-worth customers), many will take the time to deliberate and identify the payoffs more carefully. But the longer it takes to experiment, the longer it will take before your decision making is performing as well as it could. Figuring out payoffs might also be more like tasting new foods: try something and see what happens. Or, rather, in the vernacular of modern business: experiment. Individuals might take different actions in the same circumstances and learn what the reward actually is.


pages: 183 words: 51,514

Mission to Mars: My Vision for Space Exploration by Buzz Aldrin, Leonard David

Buckminster Fuller, Charles Lindbergh, Colonization of Mars, Elon Musk, gravity well, high net worth, Isaac Newton, Jeff Bezos, low earth orbit, Mars Rover, orbital mechanics / astrodynamics, Peter H. Diamandis: Planetary Resources, Ronald Reagan, telepresence, telerobotics, transcontinental railway, Tunguska event, X Prize

The Tauri Group report points out that the dominant SRV market is commercial human spaceflight, generating 80 percent of SRV demand. Their analysis indicates that about 8,000 high-net-worth individuals (with net worth exceeding $5 million) from across the globe are sufficiently interested and have spending patterns likely to result in the purchase of a suborbital flight at current prices. Roughly one-third of these consumers are from the United States. About 925 individuals currently have reservations on SRVs, the report says. Tauri’s study estimates that about 40 percent of the interested, high-net-worth population—3,600 individuals—will fly within the ten-year forecast period. Also, space enthusiasts outside the high-net-worth population are expected to generate modest additional demand (about 5 percent more). Work is ongoing in the private sector to build suborbital and orbital craft capable of flying cargo and/or passengers into space.


Design of Business: Why Design Thinking Is the Next Competitive Advantage by Roger L. Martin

asset allocation, Buckminster Fuller, business process, Frank Gehry, global supply chain, high net worth, Innovator's Dilemma, Isaac Newton, mobile money, QWERTY keyboard, Ralph Waldo Emerson, risk tolerance, six sigma, Steve Ballmer, Steve Jobs, supply-chain management, Wall-E, winner-take-all economy

New regulations allowed the big retail banks to buy up the independent brokerage firms. The result was a boon for the consulting industry, as the big banks tried to integrate the structure and culture of their new brokerage arms. One such bank asked me to develop a strategy for its high-net-worth customers. Previously, the bank had been limited to providing these customers with checking accounts, guaranteed investment certificates, mortgages, and traditional retail banking products. Now that it could offer brokerage services to these same customers, the bank wanted an integrated strategy for serving this lucrative segment. When they thought about the bank’s high-net-worth customers, the bank executives visualized customers who looked a lot like themselves: corporate execs, lawyers, and partners at the biggest professional service firms. The initial strategy of the bank focused on these customers and served them in its biggest downtown branches with special, splendidly appointed “private banking” offices.

The initial strategy of the bank focused on these customers and served them in its biggest downtown branches with special, splendidly appointed “private banking” offices. As my team and I dug into the data, it became clear to us that this group, though undeniably affluent, were not a desirable set of customers. They selected a limited and quite vanilla-flavored suite of services, and they were picky, demanding, and price sensitive. But there was another group of high-net-worth individuals who were underserved and seemed willing to pay for a broader array of services. They were entrepreneurs and partners from small legal and accounting firms, often living and working in the suburbs that ringed Canada’s larger cities. These folks had a much more complex set of needs and refused to observe any dividing line between their personal and business finances. They wanted mortgages for their homes and for their investment properties, they wanted to co-invest with clients and partners, and they didn’t want to have to bounce from one narrow specialist in the bank to another to get a deal done.


pages: 335 words: 94,657

The Bogleheads' Guide to Investing by Taylor Larimore, Michael Leboeuf, Mel Lindauer

asset allocation, buy and hold, buy low sell high, corporate governance, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, endowment effect, estate planning, financial independence, financial innovation, high net worth, index fund, late fees, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, market bubble, mental accounting, money market fund, passive investing, Paul Samuelson, random walk, risk tolerance, risk/return, Sharpe ratio, statistical model, stocks for the long run, survivorship bias, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game

The paper reports the results of a study done by economists Steven Vend and David Wise that compared the lifetime earnings of several thousand American households with their net worth at retirement. The purpose of the study was to determine what factors influence the accumulation of wealth. As you might suspect, Venti and Wise found some households with high lifetime earnings and relatively low net worth at retirement. Conversely, they also found households with modest lifetime earnings and relatively high net worth at retirement. Their next step was to determine why some people accumulated more wealth than others. Was it because some people enjoyed better health? Were some people smarter or luckier in their choice of investments? Was it due to receiving large inheritances? The economists concluded from their research that none of these factors had a significant impact on wealth at retirement. They only found one significant factor: Some people choose to save more than others.

Six hundred out of 1, 000 people will require a nursing home stay: average cost: $50, 000 per year, with an average stay of three to five years. Since Ms. Stevens wrote that article, nursing home costs have risen substantially. In some parts of the country, average nursing home costs are approaching $100,000 per year and will surely continue to rise in the future. Long-term care isn't for everyone. Two groups of people will never need it-those with very high net worth and those with little or no net worth. Those with multi-million dollar portfolios can probably self-insure and pay for long-term care out of pocket. Those with little or no savings qualify for Medicaid, which means the government will pay for your nursing home care. Medicaid is the nursing-home equivalent of welfare, which means you won't likely get the best of care, but you won't be paying for it, either.

Table 22.1 shows the current and scheduled estate tax exemption equivalents and tax rates. Because of the sunset provision written into the current estate tax law, in 2011 the exemption limits and tax rates will revert back to the lower equivalent exemption and higher tax rates that were in effect in 2002, unless Congress acts to extend repeal or make it permanent. Due to these changing estate tax laws, high-net-worth individuals who would be subject to the estate tax may want to think about stipulating in their advance healthcare directive that, should they be on life support and declared by doctors to be in a persistent vegetative state with no hope of recovery late in the year 2009, they wish to be kept alive until the very beginning of 2010 before the life-support machines are disconnected. And, they may also want to state that if it's late in the year 2010, and they're on life support with no hope of recovery, they want to make sure any life-saving and life-extending measures are ended sometime before 2011.


pages: 218 words: 62,889

Sabotage: The Financial System's Nasty Business by Anastasia Nesvetailova, Ronen Palan

algorithmic trading, bank run, banking crisis, barriers to entry, Basel III, Bernie Sanders, big-box store, bitcoin, Black-Scholes formula, blockchain, Blythe Masters, bonus culture, Bretton Woods, business process, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, distributed ledger, diversification, Double Irish / Dutch Sandwich, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, financial repression, fixed income, gig economy, Gordon Gekko, high net worth, Hyman Minsky, information asymmetry, interest rate derivative, interest rate swap, Joseph Schumpeter, Kenneth Arrow, litecoin, London Interbank Offered Rate, London Whale, Long Term Capital Management, margin call, market fundamentalism, mortgage debt, new economy, Northern Rock, offshore financial centre, Paul Samuelson, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, price mechanism, regulatory arbitrage, rent-seeking, reserve currency, Ross Ulbricht, shareholder value, short selling, smart contracts, sovereign wealth fund, Thorstein Veblen, too big to fail

Telephone preference rules are ignored – the practice breaches data protection but we are told it’s an acceptable risk and they will just pay the fine if they get caught.’19 Maybe this helps explain why, despite its official commitment since 2014 to become the ‘most trusted’ bank in the country, RBS remains the ‘least popular’ bank in the UK.20 In the summer of 2018, after a four-year investigation, the UK Financial Conduct Authority concluded that it could not take any action against RBS over GRG because commercial lending was unregulated.21 5 ‘OUR PEOPLE ARE OUR GREATEST ASSET’ Goldman’s Abacus For a giant like RBS operating in an unregulated area, it was easy to gain profits by sabotaging small businesses and retail clients. But what if you are a more sophisticated institution? Why restrict yourself to individual borrowers? Let us take Goldman Sachs, a premier member of the world’s banking elite which has a reputation for scale and foresight. A friend of ours who happens to be a high-net-worth individual had assets and estate managed by Goldman for some time. After one of her conversations with us about the nature of business in finance she decided to ask her personal bank manager at Goldman to explain what specifically she was being charged for. The manager remained evasive and repeatedly refused to explain the structure of the fees. Bewildered, she withdrew her business from Goldman and tried a few other big banks, encountering similar problems.

Equally, the conflict of interest between finance and clients has not been addressed. It was well after 2009 that Wells Fargo made up over one and a half million fake clients and moved some of real clients’ money into fictional accounts. It is well after 2009 that wealth managers trick their special clients into hidden fee structures and unneeded products. And even if you are not particularly sympathetic towards the plight of high-net-worth individuals, consider millions of customers of new lending platforms, including in the fintech sector, that promise astronomical returns to their investors, only for the new crypto managers to melt into the ether of the Internet, together with the invested funds. It must tell us something that the Consumer Financial Protection Bureau (CFPB), created in 2010 in the US as part of the post-crisis reform, was the most difficult measure to pursue politically.

Some eighty years ago Pecora found that, inevitably, the superprofits made in finance are traceable to some form of what Veblen called ‘sabotage’: they stem from a form of hindering, obstructing, delaying, misrepresenting, destroying or otherwise taking advantage of the ‘dumbest person in the room’. 14 SO WHAT? We saw our task in this book as that of translators, interpreting the good work that has been and is being done by academics and the professional media investigating the dynamics of the financial sector. We spoke with people in finance, especially those able to take a broader, systemic view of the industry. We also talked to academics and customers of the financial sector, including a few high-net-worth individuals. We have learned a lot. We then decided to look back at the history of the regulation of the financial industry, starting with the Pecora Report. We came across an intriguing dialogue that took place in 1934 between Senator Ferdinand Pecora and a certain Mr Whitney, during the investigation into a range of manipulative devices used by financiers in the run-up to the 1929 crash and subsequent depression: Pecora: ‘And by a free and open market you do not mean a controlled market, do you?’


pages: 192 words: 72,822

Freedom Without Borders by Hoyt L. Barber

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, banking crisis, diversification, El Camino Real, estate planning, fiat currency, financial independence, fixed income, high net worth, illegal immigration, interest rate swap, money market fund, obamacare, offshore financial centre, passive income, quantitative easing, reserve currency, road to serfdom, selective serotonin reuptake inhibitor (SSRI), too big to fail

Their services may vary, but the following services can be found: managed investment accounts offering excellent returns; precious metals trading accounts and physical bullion storage; investment banking, some specializing in areas like natural resource companies; investment brokerage accounts, in such areas as market access to stock, options, futures, forex, commodities, bonds, and precious metals in markets worldwide; and asset management and financial services to high-net-worth individuals, families, corporations, and trusts. Typically, and in compliance with Know Your Customer (KYC) rules required by most financial institutions worldwide in compliance with money-laundering regulations, certain personal identity documents, also known as due diligence documents (DDDs), are required. Institutions vary slightly in their requirements, but the minimum the bank will need to know and have substantiated proof of is your identity, as shown by a copy of a passport, and where you live, shown by a copy of a current utility bill.

Switzerland has had a lot to offer foreign investors in the form of sophisticated banking, with a wide array of banking services, financial accounts, investment knowledge, and personalized service. Switzerland’s financial community has attracted approximately one-quarter to one-third of the world’s private assets as a result of its banking and investment expertise. Today, its main focus is investment management of high-net-worth individuals from around the world, the crème de la crème of the banking world. Other countries, such as Singapore, are competing with Switzerland for the same business and have had some success; by doing so, they help to keep capital within their own region, and certainly under their control. Switzerland has been under attack for decades by the high-tax countries and some international organizations that would like to break Swiss banks open like a child’s piggy bank.

., Bahnhofstrasse 36, CH-8010 Zurich, Switzerland. Telephone 41 58 888 58 42. Fax 41 58 888 50 23. Website: www. juliusbaer.com. Swiss personal portfolio management. Minimum opening portfolio $500,000. Richard Colombik, International Tax Associates, 1111 Plaza Drive, Suite 430, Schaumburg, IL 60173. Telephone (847) 619-5700. Fax (847) 619-0971. E-mail: rcolom bik@colombik.com. Asset management for high net worth individuals. Unique offshore insurance strategies. Neil J. George, Jr., Leeb Brokerage Services, 500 Fifth Avenue, Suite 3120, New York, NY 10110. Telephone (212) 246-3696. E-mail: njgeorge@leeb.net. Global markets. Adrian Hartmann/Mr. Robert Vrijhof, Weber Hartmann Vrijhof and Partners Ltd., Zurichatrasse 110B, CH-8134 Adilswil, Switzerland. Telephone 41 1 709 11 15. Fax 41 1 709 11 13. Independent portfolio management and Swiss banking.


pages: 249 words: 66,383

House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It From Happening Again by Atif Mian, Amir Sufi

"Robert Solow", Andrei Shleifer, asset-backed security, balance sheet recession, bank run, banking crisis, Ben Bernanke: helicopter money, break the buck, business cycle, Carmen Reinhart, collapse of Lehman Brothers, creative destruction, debt deflation, Edward Glaeser, en.wikipedia.org, financial innovation, full employment, high net worth, Home mortgage interest deduction, housing crisis, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liquidity trap, Long Term Capital Management, market bubble, Martin Wolf, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, quantitative easing, Robert Shiller, Robert Shiller, school choice, shareholder value, the payments system, the scientific method, tulip mania, young professional, zero-sum game

But we shouldn’t think of the mortgage lender in this example as an independent entity. The mortgage lender uses money from savers in the economy. Savers give money to the bank either as deposits, debt, or equity, and are therefore the ultimate owners of the mortgage bank. When we say that the mortgage lender has the senior claim on the home, what we really mean is that savers in the economy have the senior claim on the home. Savers, who have high net worth, are protected against house-price declines much more than borrowers. Now let’s take a step back and consider the entire economy of borrowers and savers. When house prices in the aggregate collapse by 20 percent, the losses are concentrated on the borrowers in the economy. Given that borrowers already had low net worth before the crash (which is why they needed to borrow), the concentration of losses on them devastates their financial condition.

If the house price falls and the borrower sells, he must still pay back the full amount of the mortgage. The borrower has the junior claim on the home and therefore experiences the first losses associated with any decline in house prices. Borrowers tend to be households that have low net worth, which is exactly the reason they have to borrow to buy a home. Savers tend to be households that have high net worth. In the model, the savers lend directly to the borrowers, which is equivalent to saying the rich lend to the poor. In reality, of course, the savers put their money into a bank, a money-market fund, or direct holdings of financial assets such as stocks. That money finds its way into mortgages for the borrower. The point remains: Savers, through their financial holdings, have the senior claim on the underlying houses.

Of course, the exact same test can be performed for all jobs, not just those in the auto industry. And the evidence is pretty clear. The decline in non-tradable jobs catering to local demand was much larger in indebted counties experiencing the biggest drop in household net worth. But the decline in tradable jobs catering to national demand was widespread across the country. Figure 5.1 plots the pattern graphically. Just as in chapter 3, high net-worth-decline counties are the 20 percent of counties that experienced the largest drop in housing net worth during the recession, and low net-worth-decline counties are the 20 percent with the smallest drop. As the left panel illustrates, the drop in non-tradable jobs was much larger in counties getting hammered by the housing shock. But the right panel demonstrates how tradable jobs were lost at the same rate across the country.


pages: 348 words: 82,499

DIY Investor: How to Take Control of Your Investments & Plan for a Financially Secure Future by Andy Bell

asset allocation, bank run, buy and hold, collapse of Lehman Brothers, credit crunch, diversification, diversified portfolio, estate planning, eurozone crisis, fixed income, high net worth, hiring and firing, Isaac Newton, Kickstarter, lateral thinking, money market fund, Northern Rock, passive investing, place-making, quantitative easing, selection bias, short selling, South Sea Bubble, technology bubble, transaction costs, Vanguard fund

The UCITS Kitemark means you have a certain level of investor protection and allows EU-based fund managers meeting its criteria to market their funds anywhere within the EU. UCITS funds are designed for the retail investor as they are not considered complex. UCITS funds are not to be confused with the similarly labelled UCIS funds, which stands for unregulated collective investment scheme – typically riskier funds that are targeted at sophisticated and high net-worth investors. UCITS funds have to be overseen by a regulator in an EU state, and are often based in Ireland or Luxembourg. This combination of regulatory oversight and investment flexibility has led many hedge fund managers to offer UCITS versions of their offshore hedge funds to a retail audience. These products are sometimes referred to as Newcits. However, retail investors should handle anything looking like a hedge fund with care as these are complex funds and it is not always clear what is being invested in.

The number of shares in an ETF is adjusted daily to meet the supply and demand for them. All these factors make ETFs an attractive way for DIY investors to access a broad range of markets. ETFs are particularly suitable for charge-conscious passive investors as they keep costs down to an absolute minimum. As with funds, not all ETFs are UCITS funds aimed at the retail investor. Some are UCIS funds aimed at the sophisticated and high net-worth investor (see Chapter 9 to remind yourself of the difference). There are two different structures of exchange-traded products – physical and synthetic. Physical A physical ETF mimics an index by holding the same investments that make up the index. There are two main methods by which physical ETFs track an index – full replication and partial replication. Full replication is where the ETF buys all of the assets in the index, and this is common for the more mainstream indices such as the FTSE 100.

For example, with a time horizon of 10 to 20 years and a medium appetite for risk, it suggests a portfolio made up of: Large-cap stocks – 35 per cent Bonds – 25 per cent Small-cap stocks – 20 per cent Overseas stocks – 20 per cent In all likelihood, as a DIY investor you need not follow these portfolio construction ideas to the letter, or rather the number. The more complex ones are generally designed for high net-worth individuals with a lot of money. As long as you get a decent level of diversification, across three or four sectors, your portfolio will be in the right ballpark. These portfolios, constructed from equities, ETFs, OEICs, investment trusts, bonds and gilts, are suitable for your core investment holdings. Once you have your bedrock investments in place in a balanced portfolio, you may start to feel adventurous and experiment with less mainstream asset classes.


pages: 431 words: 132,416

No One Would Listen: A True Financial Thriller by Harry Markopolos

backtesting, barriers to entry, Bernie Madoff, buy and hold, call centre, centralized clearinghouse, correlation coefficient, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, family office, financial thriller, fixed income, forensic accounting, high net worth, index card, Long Term Capital Management, Louis Bachelier, offshore financial centre, Ponzi scheme, price mechanism, quantitative trading / quantitative finance, regulatory arbitrage, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, statistical arbitrage, too big to fail, transaction costs, your tax dollars at work

The SEC Division of Enforcement officially closed this investigation more than a year later, in November 2007. Their report acknowledged that Madoff had lied, or as they described it, “did not fully disclose” to the examiners “the nature of the trading conducted in the hedge fund accounts or the number of such accounts.” But even then they concluded, “The staff found no evidence of fraud. The staff did find, however, that BLM acted as an investment advisor to certain hedge funds, institutions and high net worth individuals in violation of the registration requirements of the Advisors Act. The staff also found that Fairfield Greenwich Group disclosures to its investors did not adequately describe BLM’s advisory role and described BLM as merely an executing broker to FFG’s accounts. As a result of discussions with the staff, BLM registered with the Commission as an investment advisor and FFG revised its disclosures to investors to reflect BLM’s advisory role.

There just wasn’t much more we could do to stop Madoff. All we could do was watch and wait for his inevitable downfall. And wait. And continue waiting. I never lost interest; whenever I had the opportunity I’d take a look at his returns—and always shake my head in disbelief. As I finally had to admit to Neil, “I hate to say it, but Bernie’s pulled off the perfect crime. He finds HFOFs that need his return stream to sell their stupid (high net worth) clients. He’s got to be managing at least $30 billion.” And as long as he was able to raise more money each month than he had to pay out, he could keep going indefinitely; by offering such a high and steady return, presumably he had attracted many clients who were using their investment with him as a savings account. Bernie was their bank; they invested their money with him and left it there, and it grew 10 percent a year, every year, far more than they possibly could earn anywhere else.

Tremont Capital Management, Inc. Corporate Headquarters is located at 555 Theodore Fremd Avenue; Rye, New York 10580; T: (914) 925-1140 F: (914) 921-3499. Tremont oversees on an advisory and fully discretionary basis over $10.5 billion in assets. Clients include institutional investors, public and private pension plans, ERISA plans, university endowments, foundations, and financial institutions, as well as high net worth individuals. Tremont is owned by Oppenhiemer Funds Inc. which is owned by Mass Mutual Insurance Company so they should have sufficient reserves to make investors whole. Mass Mutual is currently under investigation by the Massachusetts Attorney General, the Department of Justice, and the SEC. e. Kingate Fund run by FIM Advisers LLP is headquartered in London at 20 St. James Street; London SW1A 1ES; telephone # +44 20 7389 8900; fax # +44 20 7389 8911; www.fim-group.com/.


pages: 520 words: 134,627

Unacceptable: Privilege, Deceit & the Making of the College Admissions Scandal by Melissa Korn, Jennifer Levitz

"side hustle", affirmative action, barriers to entry, blockchain, call centre, Donald Trump, Gordon Gekko, helicopter parent, high net worth, Jeffrey Epstein, Maui Hawaii, medical residency, Menlo Park, performance metric, rolodex, Ronald Reagan, Sand Hill Road, Saturday Night Live, side project, Silicon Valley, Snapchat, stealth mode startup, Steve Jobs, telemarketer, Thorstein Veblen, unpaid internship, upwardly mobile, yield management, young professional, zero-sum game

The video soon cut to Singer, sitting in front of a row of windows in a Los Angeles skyscraper, having shot his segment on a different day. “I’m exceptionally blessed and excited to be a part of the Banyan Foundation,” Singer said, dressed up for the occasion, for him, in a gray sweater over a white collared shirt. He was helping the kids. And by aligning himself with a handsome, personable wealth manager who had a long list of high-net-worth clients, ran a foundation, and sat on the board of a prestigious private school, Singer was also helping himself. * * * • • • WERDESHEIM, WHO’D GRADUATED FROM USC and landed a job at Oppenheimer, had built a full life. His wife, Janelle, an interior decorator, had designed their Studio City home, which was featured in Ventura Boulevard magazine. He buzzed around in a luxury SUV with a skiing bumper sticker, a sports nut and cool dad to two children who attended the Buckley School, where Werdesheim had joined the board of trustees.

And if fundraisers could dangle a valuable asset like a recommendation for a college counselor while courting benefactors, all the better. Dana Pump, who had met Singer years earlier through basketball coaching, knew this well. He and his brother, David, had founded the Harold & Carole Pump Foundation, which raised millions for cancer research and treatment and threw an annual banquet that drew A-list actors, sports legends, and recording moguls. “When you’re dealing with high-net-worth people, and you’re going to ask them for money—you take care of anyone’s child, and you’ve got a layup,” he once told Entrepreneur magazine. Many donors were nervous about helping their kids through the college application process. Pump considered Singer to be an extremely knowledgeable, experienced college counselor and connected him to around ten families for legitimate counseling. The families he referred seemed satisfied with Singer’s services.

“Reading it during middle school was the first time I’d ever heard of such a place as Ha Fu and other ‘Ivy League’ universities,” Zara Zhang, who made it to Harvard, wrote while at the university in 2015. “It helped me realize that if I aspire to receive the best education in the world, the United States is the place to be.” The infatuation grew as wealth exploded across the country. China had more than a million millionaires by 2013, and the high-net-worth families had plenty of ideas on how to spend their money. Gucci belts and Burberry coats with plaid popped collars proved they’d made it, and the same went for college as parents sought to heap privileges on their only children. The number of students from China enrolled at U.S. colleges would soar to roughly 370,000 by the 2018–19 academic year, up nearly sixfold over fifteen years. For a long time, a degree from any U.S. school served as a mark of distinction when young professionals moved back to China and looked for jobs.


pages: 302 words: 95,965

How to Be the Startup Hero: A Guide and Textbook for Entrepreneurs and Aspiring Entrepreneurs by Tim Draper

3D printing, Airbnb, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Berlin Wall, bitcoin, blockchain, Buckminster Fuller, business climate, carried interest, connected car, crowdsourcing, cryptocurrency, Deng Xiaoping, discounted cash flows, disintermediation, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, family office, fiat currency, frictionless, frictionless market, high net worth, hiring and firing, Jeff Bezos, Kickstarter, low earth orbit, Lyft, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, Metcalfe's law, Metcalfe’s law, Mikhail Gorbachev, Minecraft, Moneyball by Michael Lewis explains big data, Nelson Mandela, Network effects, peer-to-peer, Peter Thiel, pez dispenser, Ralph Waldo Emerson, risk tolerance, Robert Metcalfe, Ronald Reagan, Rosa Parks, Sand Hill Road, school choice, school vouchers, self-driving car, sharing economy, short selling, Silicon Valley, Skype, smart contracts, Snapchat, sovereign wealth fund, stealth mode startup, stem cell, Steve Jobs, Tesla Model S, Uber for X, uber lyft, universal basic income, women in the workforce, Y Combinator, zero-sum game

But then we needed to hire an expensive compliance officer and expensive lawyers both in Silicon Valley and Washington, DC to work to comply to make it so we could trade private companies. For a startup, we were spending a lot of money just to get into business! Our engineers put together a platform for the masses, so that anyone could participate. Then we got word from our attorneys that our platform could only be used for high net worth clients and qualified institutions. We had to rewrite the software to clear customers in advance to make sure they were considered high net worth. This was in addition to all the regulations built around KYC (know your customer), fraud checking and AML (anti-money laundering). It was a lot of red tape that stood in the way of our progress. In the meantime, we were testing the market for our product. I knew instinctively that investors would love to have more liquidity in their private shares, since the illiquid markets were making it difficult for investors to get any money out of their holdings in private companies, and that entrepreneurs would like to sell some of their shares too to pay for a house or send their children to college or whatever.

At this writing, the tide may have finally turned. The JOBS Act passed into law, allowing the small investor to participate in private company investing. And although years have gone by and the rules and regulations are still not clear, it seems that there is an opening there. Some new platforms are being built for private companies to be traded. At Draper Associates, we have backed Equidate and EquityZen, two promising platforms for high net worth investors to trade private stocks, and AngelList, Crowdfunder, and others may be working toward allowing investors in private companies to become more liquid. Electronic share companies like eShares and Capshare may be able to easily manage the logistics of trading private shares. And ICOs, since they are currencies rather than securities, may also pave a new path to funding and liquidity for creative entrepreneurs for their endeavors.


pages: 317 words: 106,130

The New Science of Asset Allocation: Risk Management in a Multi-Asset World by Thomas Schneeweis, Garry B. Crowder, Hossein Kazemi

asset allocation, backtesting, Bernie Madoff, Black Swan, business cycle, buy and hold, capital asset pricing model, collateralized debt obligation, commodity trading advisor, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, fixed income, high net worth, implied volatility, index fund, interest rate swap, invisible hand, market microstructure, merger arbitrage, moral hazard, Myron Scholes, passive investing, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, risk-adjusted returns, risk/return, selection bias, Sharpe ratio, short selling, statistical model, stocks for the long run, survivorship bias, systematic trading, technology bubble, the market place, Thomas Kuhn: the structure of scientific revolutions, transaction costs, value at risk, yield curve, zero-sum game

In fact, standard deviation merely offers an estimate of the probability of certain outcomes based on assumptions concerning the underlying asset’s return distribution. In brief, standard deviation offers an estimate of the degree to which (e.g., the probability) a bad or good outcome is greater or less than the expected outcome. A 20 Measuring Risk 21 It is probably important in a chapter on risk and a book that emphasizes risk management to lay one’s cards on the table early. Most of today’s retail investor and high net worth industry based asset allocation models are centered on too simple an approach to return and risk estimation. For the most part they are based on portfolio return and risk estimates derived from historical performance with the assumption that the future risk of an asset or a portfolio mirrors that of the past. Moreover, they do not take into account many types of risk (e.g., uncertain changes in inflation or regulatory environment), changing correlations between and among assets, new assets, or the vagaries or herd instincts of investors.

They appeal to a central neurosis of the capitalist psyche—the world is fair, all information is understandable, and all asset allocation models exist in an efficient market of ideas in which each model is well reviewed and tested such that—while differing in emphasis—each approach stands on solid ground of academic theory and practitioner experience. Many asset allocation programs are developed to meet the expectations of a retail and high net worth market that simply does not have the statistical or theoretical background to use more advanced asset allocation procedures, all of which have their own unique advantages and disadvantages. In the previous chapter we focused primarily on the evolution of return estimation and the necessity of concentrating on the conditional nature of expected returns; that is, if risk changes then return changes.

Will-Risk Aversion: The investor’s subjective disposition for taking risks, that is, how much risk the investor is willing to accept.3 ■ Know-how: An investor’s understanding of the financial market and its products is a major influence. The better the understanding, the higher the risk level an investor will accept. For instance, even though according to objective measures of risk, hedge funds are less risky than long equity positions, individual investors may avoid any allocation to hedge funds because of their lack of familiarity. An important task of a financial consultant is, therefore, to educate high net worth individuals about the risk-return characteristics of the various private equity opportunities and hedge fund strategies. ■ Positive Experience: Positive experiences with different asset classes in the past increase the willingness to take new risks (i.e., invest in unfamiliar asset classes). 119 Core and Satellite Investment: Market/Manager Based Alternatives BarCap US Corporate High-Yield Private Equity Index SPDR Barclays Capital High Yield Bond ETF S&P GSCI FTSE NAREIT ALL REITS CISDM EW HF Index CISDM CTA EW Index PowerShares Listed Private Equity Portfolio iShares S&P GSCI Commodity Indexed Trust iShares FTSE NAREIT Real Estate 50 Index Fund HF Replication CTA Replication 0.95 0.94 0.99 0.99 0.94 Lipper HI Cur Yld Bd Private Equity MF Lipper Nat Res Fd IX Lipper Real Estate Fd HF Investable (Mgr.


pages: 337 words: 89,075

Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio by Victor A. Canto

accounting loophole / creative accounting, airline deregulation, Andrei Shleifer, asset allocation, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, commodity trading advisor, corporate governance, discounted cash flows, diversification, diversified portfolio, fixed income, frictionless, high net worth, index fund, inflation targeting, invisible hand, John Meriwether, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low cost airline, market bubble, merger arbitrage, money market fund, new economy, passive investing, Paul Samuelson, price mechanism, purchasing power parity, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, selection bias, shareholder value, Sharpe ratio, short selling, statistical arbitrage, stocks for the long run, survivorship bias, the market place, transaction costs, Y2K, yield curve, zero-sum game

As with a traditional strategic asset allocation (SAA), the CAA approach is flexible and robust enough to accommodate differences in risk tolerances, investment objectives, and other investor constraints. But, it’s also flexible and robust enough to merge with, enhance, or outright revolutionize the approaches of various asset management firm types. In what follows, I summarize some investment advisors’ (with whom I am close friends) experiences to illustrate the CAA’s versatile approach. 144 Case Study: An Asset Management Firm for High-Net-Worth Individuals A financial-management firm based in Hawaii is our first case study. This firm’s investment philosophy is fairly straightforward, using a focused approach to produce consistent and rewarding performance for clients. Although this group offers a variety of portfolio-management approaches— including equity, balanced, fixed-income, and aggressive-growth options—it is best known for its balanced approach to meeting client objectives.

In the process, if she convinces the committee of the outlying forecast’s likelihood, the probabilities are revised accordingly. 146 UNDERSTANDING ASSET ALLOCATION Style Size Value Large 50% 70% Growth Chapter 8 The Cyclical Asset Allocation Strategy’s Versatility 50% Asset Type Benchmark/ETFs S&P BARRA Value S&P BARRA Growth Value Domestic Equities Mid 50% 50% 20% Growth 50% S&P 400 Value S&P 400 Growth Value World Small 50% 10% Growth 50% 100% S&P 600 Value S&P 600 Growth Cash Equivalent 25% Money Market Fund Short Term Fixed Income 25% 50% Intermediate Term 25% Lehman 1–3-Year Treasury Bond Lehman 7–10-Year Treasury Bond Long Term 25% Figure 8.1 Lehman 20+-Year Treasury Bond Strategic asset allocation for a manager of high-net-worth individuals. 147 Table 8.1 Investment advisory committee quarterly questionnaire. Economic Drivers Inflation Rate Rising Stable Falling Real Interest Rates Rising Stable Falling Taxes and Regulation Rising Stable Falling FX Dollar Value Rising Stable Falling P/E Ratio Expanding Stable Contracting Relative Attractiveness of Asset Class (10 Is Highest Likelihood) T-Bonds > Cash 0 1 2 3 4 5 6 7 8 9 10 Equities > T-Bonds 0 1 2 3 4 5 6 7 8 9 10 Value > Growth 0 1 2 3 4 5 6 7 8 9 10 Large-Cap > Mid-Cap 0 1 2 3 4 5 6 7 8 9 10 Mid-Cap > Small-Cap 0 1 2 3 4 5 6 7 8 9 10 Large-Cap > Small-Cap 0 1 2 3 4 5 6 7 8 9 10 U.S. > International 1 2 3 4 5 6 7 8 9 10 0 Are We a Consensus?

See cyclical asset allocation California energy crisis example (location effect), 194-198, 273 cap-weighted indexes versus equal-weighted indexes, 175-180, 242-245 capital asset pricing model (CAPM), 2-3, 19, 113, 253 capital gains, 72-73, 76-79, 83-84. See also return-delivery vehicles capital tax sensitivity (CATS), 213-214 capitalized earnings model (CEM), 90-100 CAPM (capital asset pricing model), 2-3, 19, 113, 253 Carhart, Mark, 165 case studies financial-management firm for high-net-worth, 145-146, 149 global financial management plan, 149-152 hedge funds, 157-161 lifecycle funds, 152-157 309 CATS (capital tax sensitivity), 213-214 CEM. See capitalized earnings model Clinton, William J., 55, 73, 76, 83, 90, 95, 238 commodities prices, location effect and, 201 consol, 91 consolidation, incentive for, 185 corporate behavior, tax-rate changes and, 68-70 capital gains, 76-79 debt financing, 73-76 incentive structure effects, 70-73, 80-84 corporate debt, 72-76.


pages: 173 words: 53,564

Fair Shot: Rethinking Inequality and How We Earn by Chris Hughes

"side hustle", basic income, Donald Trump, effective altruism, Elon Musk, end world poverty, full employment, future of journalism, gig economy, high net worth, income inequality, invisible hand, Jeff Bezos, job automation, knowledge economy, labor-force participation, Lyft, M-Pesa, Mark Zuckerberg, meta analysis, meta-analysis, new economy, oil rush, payday loans, Peter Singer: altruism, Potemkin village, precariat, randomized controlled trial, ride hailing / ride sharing, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, TaskRabbit, The Bell Curve by Richard Herrnstein and Charles Murray, traveling salesman, trickle-down economics, uber lyft, universal basic income, winner-take-all economy, working poor, working-age population, zero-sum game

All told, nearly 80 percent of all the world’s social traffic is routed through Facebook’s servers. But even with all of these unprecedented opportunities, a third force fueled Facebook’s rise: the massive amount of financial capital made available to us by venture capitalists. A historically unprecedented run-up in the markets—combined with historic lows in tax rates—put large amounts of capital in the hands of high-net-worth individuals, pension funds, and university endowments in the 1980s and 1990s. Venture capital firms in particular promised high-net-worth individuals and institutions eye-popping returns from high-risk, low-tax investments, for a not-so-small fee. Venture capitalists plan for seven out of ten of their investments to fail, two to break even, and one to explode in value, wiping out all of the other losses and guaranteeing a high return. That’s the theory; in reality, in the past 15 years, most venture capital firms have not posted much better returns than the public markets.


pages: 182 words: 55,234

Rendezvous With Oblivion: Reports From a Sinking Society by Thomas Frank

Affordable Care Act / Obamacare, Bernie Sanders, big-box store, business climate, business cycle, call centre, crowdsourcing, David Brooks, deindustrialization, deskilling, Donald Trump, edge city, Frank Gehry, high net worth, income inequality, Jane Jacobs, Jeff Bezos, McMansion, new economy, New Urbanism, obamacare, offshore financial centre, plutocrats, Plutocrats, Ponzi scheme, profit maximization, Ralph Nader, Richard Florida, Ronald Reagan, Silicon Valley, single-payer health, The Death and Life of Great American Cities, too big to fail, urban planning, Washington Consensus, Works Progress Administration

The same way of thinking led Carnegie to support the estate tax—“of all forms of taxation this seems the wisest,” he wrote. It was wise because it would “induce the rich man to attend to the administration of wealth during his life,” and if he didn’t, then the tax would return most of his hoardings to the “community from which it chiefly came.” Vestiges of the Carnegie attitude survive to this day. A 2009 study of high-net-worth individuals by Barclays Wealth (“a leading global wealth manager”) confirmed that American philanthropists tend to understand their giving in a context in which the state is either absent or irrelevant. And, of course, there are plenty of nice plutocrats who don’t fidget or doodle when talking to strangers, and who have no problem endowing a ward or a wing in return for a commemorative plaque.

Our dueling political parties are dedicated to the principle of serving them, and even our seething anti-elitist movements, such as the Tea Party, are designed to build even further the affluence of the affluent. We elect politicians who slice away at the estate tax because we feel the fortunes of the rich ought to go unencumbered by that burden. Our leaders in Washington are perennially considering cutting Social Security because retaining it might require the rich to chip in more than their current percentage. If it’s a choice between us spending our dotage in helplessness and filth and our high-net-worth friends having to forgo next year’s Learjet, Americans will choose the personal sacrifice every time. By withholding niceness for a day we might, surprisingly, inculcate niceness in our charges. So let’s teach the rich to listen. Not because we have anything interesting to say, of course. Not for our own sake. But for theirs. (2011) The Architecture of Inequality My first memorable encounter with what we now call the McMansion came somewhere around 1985.


pages: 376 words: 110,796

Realizing Tomorrow: The Path to Private Spaceflight by Chris Dubbs, Emeline Paat-dahlstrom, Charles D. Walker

Berlin Wall, call centre, Charles Lindbergh, desegregation, Donald Trump, Doomsday Book, Elon Musk, high net worth, Iridium satellite, iterative process, Jeff Bezos, Kickstarter, low earth orbit, Mark Shuttleworth, Mikhail Gorbachev, multiplanetary species, Nelson Mandela, Norman Mailer, private space industry, Richard Feynman, Ronald Reagan, Search for Extraterrestrial Intelligence, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, technoutopianism, X Prize, young professional

In the tourism sector, two companies, Zegrahm Expeditions and Space Adventures (sA), commenced marketing suborbital flights in 1997, using their experience selling and marketing in the adventure travel business, just as SE had done more than a decade earlier. Zegrahm Expeditions is a luxury adventure travel company, founded in 199o, that offers high-end soft adventure programs on seven continents. Years of experience and luxury service had endeared the company to a loyal group of high-net-worth clients. Its president, Werner Zehnder, and vice president, Scott Fitzsimmons, had both worked for SE in the r98os. Zegrahm established its own space division, Zegrahm Space Voyages, and began offering its suborbital space flight program in 1997 by collecting $9,000 dollar deposits ($5,000 deposit + $4,000 flight insurance) for a $98,000 suborbital ride. The program materials offered a two-and-a-halfhour flight on the Space Cruiser System, to be developed by Vela Technology Development, Inc., an aerospace company headed by Pat Kelley, who had more than thirty years' experience in the space business, including missile warning satellites, launch vehicles, and missile defense projects.

As the business grew, Moltzan transitioned to sales, selling individual and corporate space and flight experiences, a role that included shepherding the company's suborbital clients. This contact with dozens of potential candidates gave him an understanding of the type of individual attracted to suborbital flights. "Everybody had a passion for space for slightly different reasons," Moltzan recalls. They were mostly male, in their mid-thirties and older. There were thrill seekers, pilots, and wanna-be astronauts who had significantly high net worth. Some were lured by the prospect of becoming the first citizen from their country to fly in space. By 2004 Moltzan was serving as director of business development. Traveling to Asia, the Middle East, Europe, and South America, he managed relationships with international organizations such as the Japanese advertising agency Dentsu and the Japanese Aerospace Exploration Agency (JAXA). He also visited companies that were interested in offering sA's suborbital program and space-related activities as unique employee incentives or promotional products that instantly generated "buzz" for their national or regional marketing campaigns.

Unlike its predecessors, which were strapped for cash to market suborbital flights, Virgin benefits from its global brand and large, wellfunded marketing machine. The company's suborbital booking structure is very similar to Zegrahm's and sA's. Clients wanting to be at the front of the line when flights become available are called Founders and are invited to book the first one hundred seats. Founders pay the full $200,000 upfront and are entitled to numerous perks and privileges, not to mention access to a social network of high-net-worth individuals. Other categories include Pioneers and Voyagers. Pioneers pay a deposit of $100,000 to $175,000 and are expected to fly within the first year of Virgin Galactic's operations. Voyagers, who pay $zo,ooo deposits, will follow the Pioneers, estimated to be after one thousand seats have gone up. Since 2005, public interest in spaceflight has increased dramatically. Virgin Galactic and Richard Branson became familiar names, synonymous with space tourism.


pages: 354 words: 26,550

High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems by Irene Aldridge

algorithmic trading, asset allocation, asset-backed security, automated trading system, backtesting, Black Swan, Brownian motion, business cycle, business process, buy and hold, capital asset pricing model, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, computerized trading, diversification, equity premium, fault tolerance, financial intermediation, fixed income, high net worth, implied volatility, index arbitrage, information asymmetry, interest rate swap, inventory management, law of one price, Long Term Capital Management, Louis Bachelier, margin call, market friction, market microstructure, martingale, Myron Scholes, New Journalism, p-value, paper trading, performance metric, profit motive, purchasing power parity, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk tolerance, risk-adjusted returns, risk/return, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, statistical model, stochastic process, stochastic volatility, systematic trading, trade route, transaction costs, value at risk, yield curve, zero-sum game

Broker-dealers use inter-dealer brokers to quickly find the best price for a particular security among the network of other broker-dealers. Occasionally, broker-dealers also deal directly with other broker-dealers, particularly for less liquid instruments such as customized option contracts. Broker-dealers’ transacting clients are investment banking clients (institutional clients), large corporations (corporate clients), medium-sized firms (commercial clients), and high-net-worth individuals (HNW clients). Investment institutions can in turn be brokerages providing trading access to other, smaller institutions and individuals with smaller accounts (retail clients). Until the late 1990s, it was the broker-dealers who played the central and most profitable roles in the financial ecosystem; broker-dealers controlled clients’ access to the exchanges and were compensated handsomely for doing so.

The institutional investors, the well-capitalized professional investment outfits, were served by the elite class of institutional sales brokers that sought volume; the individual investors were assisted by the retail brokers that charged higher commissions. This hierarchical structure existed from the early 1920s through much of the 1990s when the advent of the 11 Evolution of High-Frequency Trading Commercial Clients Investment Banking Broker-Dealers Exchanges or Inter-dealer Brokers Corporate Clients Private Client Services Private Bank Institutional Investors High-Net-Worth Individuals Retail Clients FIGURE 2.3 Twentieth-century structure of capital markets. Internet uprooted the traditional order. At that time, a garden variety of online broker-dealers sprung up, ready to offer direct connectivity to the exchanges, and the broker structure flattened dramatically. Dealers trade large lots by aggregating their client orders. To ensure speedy execution for their clients on demand, dealers typically “run books”—inventories of securities that the dealers expand or shrink depending on their expectation of future demand and market conditions.

., 163 Heteroscedasticity, 103–104 High-frequency trading: advantages to buyer, 1–2 advantages to market, 2–3 capitalization and, 34–35 challenges of, 4–5 characteristics of, 21–22 classes of trading strategies, 4 compared to traditional approaches, 13–19, 22–24 economics of business, 32–34 financial markets and technological innovation, 7–13 firms specializing in, 3–4 market participants, 24–26 operating model for business, 26–31 trading methodology evolution, 13–19 volume and profitability of, 1 High-net-worth individuals, 10 High water mark concept, 50 Hillion, P., 67, 160, 163 Hirschberger, M., 214 Ho, T., 137–138 Hodrick, Robert J., 88, 89 Hogan, K., 180 Holden, C., 142, 163 Hollifield, B., 163 Horner, Melchoir R., 192 Hou, K., 86 Hsieh, D.A., 57, 58 Hu, Jian, 180 Hu, Zuliu F., 181 Huang, R., 147 Huberman, G., 279 Hvidkjaer, Soeren, 196 ICAP, 25 Iceberg orders, 69 INDEX Illiquidity ratio, of Amihud, 134 Implementation, of high-frequency trading system, 28–31 Implementation shortfall (IS), 295, 296, 299–301 Implementation stage, of automated system development, 234–236 Industry news, event arbitrage, 174 Inefficiency.


pages: 416 words: 106,532

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond by Chris Burniske, Jack Tatar

Airbnb, altcoin, asset allocation, asset-backed security, autonomous vehicles, bitcoin, blockchain, Blythe Masters, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, disintermediation, distributed ledger, diversification, diversified portfolio, Donald Trump, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, financial innovation, fixed income, George Gilder, Google Hangouts, high net worth, Jeff Bezos, Kenneth Rogoff, Kickstarter, Leonard Kleinrock, litecoin, Marc Andreessen, Mark Zuckerberg, market bubble, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, packet switching, passive investing, peer-to-peer, peer-to-peer lending, Peter Thiel, pets.com, Ponzi scheme, prediction markets, quantitative easing, RAND corporation, random walk, Renaissance Technologies, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, Sharpe ratio, Silicon Valley, Simon Singh, Skype, smart contracts, social web, South Sea Bubble, Steve Jobs, transaction costs, tulip mania, Turing complete, Uber for X, Vanguard fund, WikiLeaks, Y2K

This has not been lost on wealth management firms that are now looking more aggressively into how alternative investments can be used to improve client returns. For example, Morgan Stanley has outlined asset allocation models for its high net worth investors with under $25 million in investable assets; those models recommend 56 percent stocks, 19 percent bonds, 3 percent cash, and 22 percent alternatives. For those clients with over $25 million in investable assets, the recommendation is for 50 percent stocks, 19 percent bonds, 3 percent cash, and 28 percent in alternatives.12 Merrill Lynch has recommended allocation models for its typical client that include alternatives near or above 20 percent of a portfolio.13 Clearly, the inclusion of alternative investments should not be limited to only high net worth investors. Historically, one of the biggest reasons alternative investments have not been incorporated into retail portfolios is because of their illiquid characteristics.

For example, many hedge funds operate under a 2 and 20 model, or sometimes 3 and 30, where they charge a 2 percent annual management fee and take 20 percent of the profits from a year. Other common characteristics include their exclusivity and general secrecy. Prior to the 2008 financial crisis, investors who took advantage of hedge fund performance and the alternative investments they utilized were typically of ultra-high net worth with sizeable investable assets, given that often the minimum investment was $1 million or more to gain entry. Additionally, investors had to tie up their funds for lengthy periods as part of the agreement with the hedge fund manager. While mutual funds provide a prospectus that outlines exactly the approach and asset classes to be used, hedge funds are often veiled in secrecy. They might publicly advertise a broad investment strategy, but specifics are often withheld to preserve the secret sauce of the hedge fund.


Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America by David Callahan

affirmative action, Albert Einstein, American Legislative Exchange Council, automated trading system, Bernie Sanders, Bonfire of the Vanities, carbon footprint, carried interest, clean water, corporate social responsibility, David Brooks, demographic transition, desegregation, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Thorp, financial deregulation, financial independence, global village, Gordon Gekko, greed is good, high net worth, income inequality, Irwin Jacobs: Qualcomm, Jeff Bezos, John Markoff, Kickstarter, knowledge economy, knowledge worker, Marc Andreessen, Mark Zuckerberg, market fundamentalism, medical malpractice, mega-rich, Mitch Kapor, Naomi Klein, NetJets, new economy, offshore financial centre, Peter Thiel, plutocrats, Plutocrats, profit maximization, quantitative trading / quantitative finance, Ralph Nader, Renaissance Technologies, Richard Florida, Robert Bork, rolodex, Ronald Reagan, school vouchers, short selling, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, stem cell, Steve Ballmer, Steve Jobs, unpaid internship, Upton Sinclair, Vanguard fund, War on Poverty, working poor, World Values Survey

Also, this book is really about two different classes of the wealthy: I explore the changing beliefs of the ultra-affluent class as a whole—those in the top 1 percent of households—which is quite a large group, but also the political activism and philanthropy of the mega-rich, a much smaller group of people who have personal fortunes of hundreds of millions or billions of dollars. The ranks of both the ultra-affluent and the super-rich have soared in the last fifteen years and remain very large today, despite the financial crash. According to the authoritative World Wealth Report, there were 2.5 million high-net-worth individuals in the United States at the end of 2008, who were defined as people who each had at least $1 million in investable assets. The report also estimated that 30,600 households in the United States had assets greater than $30 million. These estimates were made after the crash but before the stock market rebounded in 2009. Another estimate, which looked at households rather than at individuals and was released in March 2010 by the Spectrum Group, estimated that 7.8 million U.S. households had liquid assets greater than $1 million and 980,000 households had assets of $5 million or more.7 The number of billionaires has also fallen since the crash, but it remains large.

Messing with business is a sure way to bring thousands of well-paid lobbyists storming onto Capitol Hill. And often they will win, given how U.S. politics tends to advantage narrow and well-organized interest groups—especially those with deep pockets. Tax hikes on the rich, in contrast, are more diffuse and don’t so directly threaten specific interests with lobbying arms in Washington. There is no Association of High Net Worth Individuals inside the Beltway that is committed to fighting across-the-board income tax hikes on the rich. (Not yet, anyway.) Is it too far-fetched to imagine the Democrats as a businessfriendly party that also practices wealth redistribution? Not at all. c06.indd 141 5/11/10 6:20:03 AM 142 fortunes of change That’s how Clinton governed: he resliced the fiscal pie with tax hikes on the rich and tax credits for the poor even as he continued Republican deregulatory policies.

William Henry and Elaine Lafferty, “Not Marching Together,” Time, May 3, 1993. 9. Craig A. Rimmerman, From Identity to Politics: The Lesbian and Gay Movements in the United States (Philadelphia: Temple University Press, 2001), 90–92. 10. Robert Frank, Richistan: A Journey through the American Wealth Boom and the Lives of the New Rich (New York: Crown, 2007), 197. 11. Paul G. Schervish, “Why the Wealthy Give: Factors Which Mobilize Philanthropy among High Net-Worth Individuals,” in Adrian Sargeant and Walter Wymer, The Routledge Companion to Nonprofit Marketing (New York: Routledge, 2008), 178. 12. Kerry Eleveld, “There Is a Gay Agenda: Winning Elections,” Salon, November 29, 2006. 5. The One-World Wealthy 1. Lauren Foster, “Understanding Global Philanthropy 2007: A Businesslike Approach to Charity,” Financial Times, December 11, 2007. 2. Stephanie Hanes, “Greg Carr’s Big Gamble,” Smithsonian, May 2007.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Robert Solow", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, bank run, banks create money, Basel III, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cleantech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, margin call, Mark Zuckerberg, market bubble, means of production, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, profit maximization, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, zero-sum game

That’s why the Glass-Steagall Act and its counterparts elsewhere, forcing banks to choose between taking customer deposits or playing the markets, was so unpopular in banking circles, and why they celebrated its repeal at the turn of the twenty-first century. The move into investment banking was made more attractive by other aspects of financial deregulation. It enabled investment banks to poach some of the commercial banks’ most profitable clients: large businesses which could finance investment by issuing bonds rather than taking bank loans, and high-net-worth individuals seeking private wealth management. And it opened up a range of new financial markets for investment banks to gamble on, trading instruments which had long been known about but which past regulations had effectively banned. Two classes of financial instrument in particular were made available to investors by deregulation from the 1970s onwards, and were central to the subsequent massive growth in financial transactions and profitability.

But in the 1970s, the relaxation of the ‘prudent man' investment rule allowed pension funds to invest in less conventional ways, such as private equity (PE) and venture capital (VC), while the Employee Retirement Security Act of 1974 permitted pension funds and insurance companies to invest in a greater variety of funds, such as equities, high-yield debt, PE and VC. Fund managers pushed for this relaxation as a way to make higher-returning investments, but governments were keen to allow it because faster-growing private-sector funds would lessen demand for state-provided pensions. During this time, the rise in the number of very wealthy people - dubbed high-net-worth individuals (HNWIs) - also increased demand for professional asset management. An HNWI is now generally defined as someone with net financial assets (excluding property) of more than $1 million. Originally a rich-country phenomenon, it is now global as the ranks of millionaires and billionaires swell in emerging countries, notably in Asia and Latin America. According to the consultancy Capgemini, the number of HNWIs rose from 4.5 million in 1997 to 14.5 million in 2014.

Owning an asset that suddenly jumps in value has always been a faster way to get rich than patiently saving and investing out of income;31 and the speed differential of asset ‘revaluation' over asset accumulation has been amplified in the present era of historically low interest rates. Revaluation gains in the ‘real' economy are widely hailed as economically efficient and socially progressive. Entrepreneurs who cash in on a genuinely useful invention can claim to have reaped just rewards from genuinely productive risk-taking, especially when they are shown to have displaced hereditary landowners in the charts of ultra-high net worth. But when - as is usually the case by the time the revaluation occurs - shares have passed beyond the original inventors and become owned by private equity or quoted on financial markets, it is passive rather than active inventors who capture most of the revaluation gains. Financialization enables investment bankers and fund managers who picked the right stock - often by chance - to make profits that would previously have gone to those who built the right product, by painstaking design.


pages: 360 words: 113,429

Uneasy Street: The Anxieties of Affluence by Rachel Sherman

American ideology, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, deindustrialization, Donald Trump, estate planning, financial independence, gig economy, high net worth, income inequality, Mark Zuckerberg, McMansion, mental accounting, NetJets, new economy, Occupy movement, plutocrats, Plutocrats, precariat, school choice, sharing economy, Silicon Valley, Steve Jobs, The Spirit Level, Thorstein Veblen, transaction costs, upwardly mobile, We are the 99%, women in the workforce, working poor

Bush, despite his own extraordinary wealth and exclusive upbringing, managed to paint his opponent for the presidency, John Kerry, as an elite snob, while representing himself as the guy voters could imagine themselves having a beer with. So being wealthy is not always good. Even words such as well-off, wealthy, rich, affluent, privileged, and upper-class have negative connotations and are rarely used by wealthy people to describe themselves. More frequently, we hear euphemisms such as “comfortable,” “fortunate,” and the hefty but neutral-sounding phrase “high net worth individual” (abbreviated HNWI).25 In 2014 former first lady and secretary of state Hillary Clinton caused a minor scandal when she claimed that she and her husband were “dead broke” when they left the White House. She also contrasted herself with the “truly well-off,” who, she said, don’t pay “ordinary income taxes” and have not become wealthy “through dint of hard work.” These verbal missteps reveal a deep discomfort with the idea of being wealthy in America.

For an ethnography of classed “common sense” in the United States, see Heiman 2015. 77.This focus on selfhood mirrors, in a sense, a similar phenomenon among working-class young people in the “mood economy,” who blame themselves for failing to achieve the trappings of adulthood, such as a home, steady job, and family (Silva 2013; see also Lewis 1993). 78.See Small 2009. 79.Graham 1999; Lacy forthcoming. Annette Lareau has begun a qualitative interview study comparing white and African American high-net-worth families, but it is too early to have results (personal communication). CHAPTER ONE: ORIENTATIONS TO OTHERS 1.I did not ask my respondents explicitly about what social class they thought they were in. The concept of social class is complicated, and it is hard to know how people understand it. Furthermore, we know that Americans tend to identify as middle class and to think that their income is average.

See also philanthropy; volunteering Golden Rule, 124–25, 131. See also reciprocity “good people,” 60, 132, 154, 157, 198, 231, 252; characteristics of, 22–25; physical health and, 260n17; raising children to be, 227–29 gratitude. See appreciation The Great Gatsby (Fitzgerald), 8, 9 guilt. See discomfort with wealth habitus (per Boudieu), 199, 228–29 “help,” family and financial, 64, 142 “high net worth individual” HNWI, 10 Hochschild, Arlie R., 272n4 home ownership, 16–17, 54, 95 home renovation, 46; budgets for, 161–62, 173; and consumer decisions of research interviewees, 16–17; legitimation of consumer choices, 98, 100–101; as major expense, 95–96; as practice spending money, 120; responsibilities as gendered, 161–62; and study of consumption choices, 14 hotels, luxury, 240–41 Howard, Adam, 213 identity: clothing and social, 116, 130–31, 205–6; “giving back” and, 123–26, 136–39, 142–43; as habitus, 199; as independent of wealth, 96; middle class, identification with, 23–24, 36, 43, 121, 232–33; self-identification as wealthy, 142; symbolic boundaries and self-identification, 60–61; wealth and loss of, 129–30; work and self-validation or, 60–61, 70–71, 85, 90, 235; working class, identification with, 47 immigration: immigrant heritage and legitimation, 70 independence, 22, 24; dependency within marital relationships, 38–39, 63–64, 72, 90, 167, 176–79, 189, 193, 196, 272n2; financial self-sufficiency, 22, 58–59; inheritors and, 71–72, 180; as personal achievement, 62–63; and risk, 67–68; as value, 71–72; work and self-reliance, 22, 58–59, 62–63, 66, 71–74, 86, 181 inequality: and deprivation as relative, 155–57; and discomfort with wealth, 10–11, 149, 230–31; domestic employees and structural, 35, 48, 266n6; and entitlement as legitimate, 25, 122; “giving back” and, 25, 122–26, 140–41, 149–54; as inevitable and unavoidable, 41, 44, 135, 150–51; legitimation of, 231–34; New York and the “inequality crisis,” 13; occupational insecurity and, 6–7; “1 percenters” and, 7, 13–14, 40–41, 259n10, 264n51; as political issue, 10–11, 13, 43–44; reciprocity and denial or erasure of, 124–25, 133–34; redistribution and, 152–53; social costs of, 7; structural, 25, 41, 44, 48, 52, 65–67, 126, 135, 149–54, 233–36; white privilege, 66–67, 233 inhabitance of privilege or wealth, 25, 32, 90–91, 102–3, 228–29, 230–33 inherited wealth, 14, 60–61, 188; and anxiety, 26, 152, 179, 268n13; as destructive, 75; discomfort with, 26, 60, 71–78, 122–23, 151–52; family and financial “help,” 58–59, 66–67; gender of inheritors, 160, 179–80; as morally suspect, 32, 63, 230, 268n13; and obligation to spend on others, 76–77; and paid work, 73–75; prudence and, 73; self-sufficiency and, 42–43, 58–59, 71–72; stereotypes of laziness and, 72–73; taxes on, 147, 149 insecurity, economic: expressed by interviewees, 39; freedom from fear as advantage of wealth, 46; interviewees’ anxiety about, 39, 67–68; and occupational, 6–7; upward orientation and, 30, 38.


pages: 317 words: 71,776

Inequality and the 1% by Danny Dorling

Affordable Care Act / Obamacare, banking crisis, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Boris Johnson, Branko Milanovic, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, collective bargaining, conceptual framework, corporate governance, credit crunch, David Attenborough, David Graeber, delayed gratification, Dominic Cummings, double helix, Downton Abbey, en.wikipedia.org, Etonian, family office, financial deregulation, full employment, Gini coefficient, high net worth, housing crisis, income inequality, land value tax, longitudinal study, low skilled workers, lump of labour, mega-rich, Monkeys Reject Unequal Pay, Mont Pelerin Society, mortgage debt, negative equity, Neil Kinnock, Occupy movement, offshore financial centre, plutocrats, Plutocrats, precariat, quantitative easing, race to the bottom, Robert Shiller, Robert Shiller, TaskRabbit, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, unpaid internship, very high income, We are the 99%, wealth creators, working poor

Others have a little empathy but are still highly individualistic.3 It is hard to become rich if you are not primarily looking out for yourself. Those who amass fortunes manage to do so partly because they don’t like sharing and see themselves as special, as more careful with money, as being worth more than others. They tend to see others, and sharing, as ‘just weak’. The richest people in the world have a revealing acronym to describe themselves – HNWI – high-net-worth individuals. These are people who have a spare million US dollars’ worth of wealth, not including their primary residence or their pension. Worldwide, there were estimated to be 12 million such people in 2012, with a mean ‘investable’ wealth of $3.85 million each. It is worth looking at where the world’s richest live, what they have, and the huge inequalities even within this tiny group. Most of the world’s 12 million superrich possess ‘only’ a little over $1 million in disposable wealth.

head teachers Healey, Denis 6.1, nts.1 health 5.1, 6.1 American and behaviour marketing 5.1, 5.2, 5.3, 5.4, 5.5 costs and crime and diet 5.1, 5.2 funding 5.1, 5.2, 5.3, 5.4 impact of student loans 5.1, 5.2 reducing inequality social care recipients 5.1, 5.2 in the UK Health and Social Care Act, 2012 5.1 Health and Social Care Information Centre ‘Help to Work’ scheme Hennell, Tom Henrich, J., et al. Henry, J. Henry, J. S. Herzer, D. and Vollmer, S. Hewitt, L. and Graham, S. Higgins, S., et al. High Fliers Research Limited Hills, J., et al. Hirsh, D. Hiscott, G. HNWI (high-net-worth individuals) 4.1, 4.2, 4.3, 4.4 homelessness 5.1, 5.2 Hope, C. Horsey, David 3.1, nts.1 Hosking, P. O. household income 1.1, 1.2, 1.3 housing 4.1, 4.2 empty stock 4.1, 4.2 equity gains and losses 4.1, 4.2 investment 4.1, 4.2 luxury poverty 4.1, 4.2 prices 4.1, 6.1 private rented 4.1, 4.2, 4.3 social 4.1, 4.2 vulnerable families housing benefit Hull human genome project Hutton, Will 3.1, nts.1 Iceland 4.1, 5.1, 6.1, 6.2 immigration 5.1, 6.1 immiseration 3.1, 4.1 impoverishment 2.1, 6.1 incapacity benefit income inequality 1.1, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 4.1, 5.1, 5.2, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 incomes drive down equity gap 1.1, 3.1, 3.2 and happiness highest UK licensed occupations low and falling pay 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 perks servant class 3.1, 3.2 and tax 3.1, 3.2 women youth India 3.1, 3.2, 5.1, 5.2 inequality 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 3.1, 3.2 attitudes to 3.1, 3.2 causes of extreme price of 6.1 reducing 4.1, 4.2, 4.3, 4.4, 5.1 rise of 4.1, 4.2, 5.1 inheritance 4.1, 4.2 inheritance tax 4.1, 4.2 ‘In Search of Homo Economicus’ Institute for Fiscal Studies (IFS) 1.1, 1.2, 4.1, 5.1, nts.1 Institute for Public Policy Research (IPPR) 2.1, 2.2 Institute of International Finance International Labour Organization International Monetary Fund 3.1, 5.1 internships, Westminster School auction IQ tests 2.1, 2.2 Ireland 3.1, 4.1, 6.1, 6.2 Italy 2.1, 6.1 Jack, I. 3.1, nts.1 James, Clive 3.1, 6.1, nts.1, nts.2 Japan 1.1, 1.2, 1.3, 2.1, 2.2, 3.1, 4.1, 4.2, 5.1, 6.1, 6.2 Jeffery, C.


pages: 257 words: 71,686

Swimming With Sharks: My Journey into the World of the Bankers by Joris Luyendijk

activist fund / activist shareholder / activist investor, bank run, barriers to entry, Bonfire of the Vanities, bonus culture, collapse of Lehman Brothers, collective bargaining, corporate raider, credit crunch, Credit Default Swap, Emanuel Derman, financial deregulation, financial independence, Flash crash, glass ceiling, Gordon Gekko, high net worth, hiring and firing, information asymmetry, inventory management, job-hopping, light touch regulation, London Whale, Nick Leeson, offshore financial centre, regulatory arbitrage, Satyajit Das, selection bias, shareholder value, sovereign wealth fund, the payments system, too big to fail

Sid worked at one such brokerage firm, as did the interdealer broker who made the point that only a few per cent in the City make ‘the huge sums’. Most people who do enjoy huge sums of money need someone to invest it for them, which brings us to the third and last vast continent: asset management. These firms charge a fee for investing the money entrusted to them not only by wealthy people (‘high net worth individuals’), but also from pension funds, oil-rich countries and insurance companies, who have to put their premiums somewhere. There are plain asset managers who tend to invest in relatively straightforward bonds and shares. In addition, there are private equity firms that use their investors’ capital to take over companies in order to sell them at a profit later on; hedge funds that follow ‘unorthodox’ investment strategies with high risks and rewards; while venture capitalists employ their expertise and clients’ capital to help promising small companies and entrepreneurs grow.

(Davies) 1 financial sector (see also bankers; banks; City; global financial crisis): amorality in 1, 2, 3, 4 ‘animal’ types within 1 blame culture in 1 blog’s negative comments on 1 Brown’s praise for 1 and caveat emptor 1, 2, 3, 4, 5, 6 and charity donations 1 code of silence governs 1, 2, 3, 4 competition vs co-operation in 1 countries/blocs played against each other by 1 ethical dilemmas in 1 immune to exposure 1 and insider jokes 1 IT’s role in 1, 2 and patches and workarounds 1 ‘map’ of 1 and mergers and acquisitions 1, 2, 3, 4 countries’ legal systems affected by 1 number of employees in 1 politicians identify with 1 post-crash books about 1, 2 PR people within 1, 2 and project finance 1 protest demonstrations against 1 regulators identify with 1 remuneration in 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 bonuses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and leisure-time spending 1 restructuring in 1 scandals within 1, 2, 3 (see also rogue traders) Barings 1 FX 1, 2 HSBC 1, 2 JP Morgan 1, 2 LIBOR 1, 2, 3 London Whale, see Iksil, Bruno Société Générale 1 UBS 1 sport and war analogies within 1 whistle blowers within 1, 2, 3 women in, men’s attitudes towards 1 Financial Services Authority 1 Financial Times 1, 2 F9 model monkeys 1 Fool’s Gold (Tett) 1 Freud, Sigmund 1 Fukushima 1 FX scandal 1 GDP (gross domestic product) 1 Geithner, Timothy 1 Gekko, Gordon (film character) 1, 2 global financial crisis, see financial crash Goldman Sachs 1, 2, 3 as exception to short-termism 1 Geithner’s and Clinton’s lucrative speeches to 1 London trading floor of, a ‘toxic and destructive environment’ 1 as ‘pure’ investment bank 1 banking licence subsequently acquired by 1 Smith’s book on 1 Smith’s NYT piece on 1, 2 Goodfellas 1 greed 1, 2, 3, 4, 5, 6 gross domestic product (GDP) 1 Gross Misconduct: My Year of Excess in the City (Thompson) 1 Guardian: distrust of 1 finance blog of: first interviews posted on 1 ‘Going native …’ subtitle of 1 readers’ comments posted on 1, 2, 3, 4, 5, 6, 7, 8 responses to interviews on 1, 2 traditional banking said to be under-represented on 1 guardiannews.com/jlbankingblog, see under Guardian Haldane, Andrew 1 Halliburton 1 Hancock, Matthew 1 Harrington, William J 1 hedge funds 1, 2, 3 and ‘unorthodox’ investment strategies 1 high-frequency trading 1, 2, 3, 4 high-net-worth individuals 1 house prices 1 How I Caused the Credit Crunch: A Vivid and Personal Account of Banking Excess (Ishikawa) 1 HSBC 1 annual results announcement of 1, 2 and drugs money 1, 2 mixed investment–commercial nature of 1 human resources (HR) (see also recruitment), and redundancy 1, 2 Iksil, Bruno (‘London Whale’) 1, 2 incentives: and accountancy firms 1 ‘perverse’ 1, 2, 3, 4, 5 need to remove 1 short-termism encouraged by 1 Initial Public Offering (IPO) 1, 2 insurance: banking’s overlap with 1 enormous reach of 1 investment banks (see also banks): ‘animal’ types within 1 books about 1 as ‘casinos’ 1, 2, 3 and ‘castes’ 1 vs commercial 1, 2 commercial banks begin to take over 1 culpability of, in global financial crash 1 daily routine of 1, 2, 3 definition of, clarified 1 and dot-com bubble 1, 2, 3 job titles within 1, 2, 3 radically changed ownership structure of 1 and risk and compliance 1, 2, 3, 4, 5, 6 (see also regulators) risk-taker–risk-bearer dichotomy in 1 and ‘rock’n’roll trader’ 1 speculation by 1 subcultures engendered by 1 Iraq 1 Ishikawa, Tetsuya 1 IT 1, 2 jlbankingblog, see under Guardian job titles, in investment banks 1, 2, 3 JP Morgan 1 Blair’s role in 1, 2, 3 rogue trader at 1, 2 Kerviel, Jérôme 1 KPMG 1 Krugman, Paul 1 Lagarde, Christine 1 Large Hadron Collider 1 Leeson, Nick 1 Lehman Brothers: capital buffers of 1 collapse of 1, 2, 3, 4, 5 inadequate buffers of 1 as ‘pure’ investment bank 1 Lewis, Michael 1 Liar’s Poker (Lewis) 1, 2 LIBOR scandal 1, 2, 3 Lloyds, annual results announcement of 1, 2 London riots 1 London Stock Exchange, and ‘my word is my bond’ 1, 2 London Whale, see Iksil, Bruno Master of the Universe 1, 2, 3 Masters of Nothing: How the Crash Will Happen Again Unless We Understand Human Nature (Hancock, Zahawi) 1 Masters of the Universe 1 passim, 1, 2 (see also banker types) cold fish’s scorn for 1 criticism of sector resented by 1 sector readily defended by 1 megabanks 1 (see also banks) mergers and acquisitions 1, 2, 3, 4 countries’ legal systems affected by 1 Merrill Lynch 1 middle office 1, 2, 3, 4, 5 more power and status in, post-crash 1 Monkey Business: Swinging through the Wall Street Jungle (Rolfe, Troob) 1 Moody’s 1, 2 Morgan Grenfell 1 My Life as a Quant (Derman) 1 ‘my word is my bond’ 1, 2 neutrals 1, 2, 3, 4, 5, 6, 7 (see also banker types) in political parties 1 New York Times 1, 2, 3, 4 9, 5 trader exploits 1 Nissen, George 1 Occupy London 1 operational risk 1 The Origin of Financial Crises (Cooper) 1 ‘other people’s money’ mentality 1 Oxfam 1 Paulson, Hank 1 Permanent Subcommittee on Investigations (US) 1 politicians: as best chance to wrest power from financial sector 1 identification of, with financial sector 1 justified cynicism about 1 neutrals among 1 powerlessness of, in face of global finance 1 private schools formerly attended by 1 teeth grinders among 1 project finance 1, 2 prop trading 1, 2, 3, 4 Prudential Regulation Authority 1 PwC 1 quants (quantitative analysts) 1, 2, 3, 4 ‘animal’ types among 1 with Asperger’s 1, 2 geeks among 1 rating agencies 1, 2, 3, 4, 5 and CDOs 1 Moody’s 1, 2 ‘oligopoly’ of 1 paid by banks 1 RBS, annual results announcement of 1, 2 recruitment 1, 2 (see also redundancy) and short-termism 1 redundancy 1, 2, 3, 4, 5, 6 (see also recruitment) as ‘enhanced severance’ 1 as rite of passage 1 termed ‘the cull’ 1 in UK vs US 1, 2 and work-related visas 1 regulators 1 fighting symptoms rather than cause 1 and Financial Services Authority, Financial Conduct Authority, Prudential Regulation Authority 1 identification of, with financial sector 1 ‘idiots’ description applied to 1, 2 ‘losing people at all levels’ post-crash 1 numbers working for 1 and self-declaration 1 religion 1 remuneration 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 bonuses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and leisure-time spending 1 restructuring 1 riots, in London 1 risk: ability to weigh 1 and departmental specialisations 1 managers, salaries of 1 operational 1 sovereign 1 takers of vs bearers of 1 risk and compliance 1, 2, 3, 4, 5, 6 (see also regulators) disparaged 1 and self-declaration 1 ‘rock’n’roll trader’ 1 rogue traders 1 at Barings 1, 2 at JP Morgan 1 at Société Générale 1 at UBS 1, 2 Rosenbaum, Ron 1 Rubin, Robert 1 Rusbridger, Alan 1 Saddam Hussein 1 Salomon Brothers 1 Samuel Montagu 1 Sants, Hector 1 scandals 1, 2, 3 (see also rogue traders) Barings 1 FX 1, 2 HSBC 1, 2 JP Morgan 1, 2 LIBOR 1, 2, 3 London Whale, see Iksil, Bruno Société Générale 1 UBS 1 school system, UK 1 Schroders 1 Schumer, Charles E 1 short-termism 1, 2 Sid (trader, broker) 1 passim, 1, 2 Smith Brothers 1 Smith, Greg 1, 2, 3, 4 social Darwinism 1 Société Générale 1 mixed investment–commercial nature of 1 Sorkin, Andrew Ross 1 sovereign risk 1 Sports Illustrated 1 Square Mile, see City Stcherbatcheff, Barbara 1 Stock Exchange, former 1 Summer, Lawrence 1 ‘tax optimisation’ 1 technical analysis 1 teeth grinders 1, 2, 3, 4 (see also banker types) in political parties 1 Tett, Gillian 1 ‘too big to fail’ 1, 2, 3, 4 and ability to blackmail 1 ‘too big to manage’ 1 Traders, Guns and Money (Das) 1 Twin Towers: terrorist attacks on 1, 2 trader exploits 1 UBS 1 rogue trader at 1 van Ees, Peter 1 Van Rompuy, Herman 1 venture capitalists 1 Verey, Michael 1 volatility 1 Voss, Rainer 1, 2, 3 Wall Street 1, 2, 3 Watergate 1 Wawoe, Kilian 1, 2 Weber, Axel 1 Weiser, Stanley 1 whistle blowers 1, 2, 3 ‘Why I Am Leaving Goldman Sachs’ (Smith) 1, 2 Why I Left Goldman Sachs (Smith) 1 The Wolf of Wall Street 1 Wolfe, Tom 1 working hours 1, 2, 3 World Trade Center: terrorist attacks on 1, 2 trader exploits 1 Zahawi, Nadhim 1 About the Author Joris Luyendijk was born in Amsterdam.


pages: 218 words: 68,648

Confessions of a Crypto Millionaire: My Unlikely Escape From Corporate America by Dan Conway

Affordable Care Act / Obamacare, Airbnb, bank run, basic income, bitcoin, blockchain, buy and hold, cloud computing, cognitive dissonance, corporate governance, crowdsourcing, cryptocurrency, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, fault tolerance, financial independence, gig economy, Gordon Gekko, Haight Ashbury, high net worth, job satisfaction, litecoin, Marc Andreessen, Mitch Kapor, obamacare, offshore financial centre, Ponzi scheme, prediction markets, rent control, reserve currency, Ronald Coase, Satoshi Nakamoto, Silicon Valley, smart contracts, Steve Jobs, supercomputer in your pocket, Turing complete, Uber for X, universal basic income, upwardly mobile

She disappeared and then ushered in the private banking manager, Gene, a petite, impeccably dressed, and overly polite man who took my hand and said we’d be working with him from now on. He was focused exclusively on servicing high net worth individuals. Unbeknownst to me, there was a separate space within the bank where I could now do my banking away from normal people. He gave me his support line which I could call at any time, night or day, if I was experiencing a problem or presumably if I just wanted to talk. I had a vision of calling him late at night and asking, “Hey, what do you think of all this fucking money we have?” We were now high-net-worth individuals and would be treated with proper respect and deference. He reversed the wire charges for some personal business we’d done a month before. I was thrilled and thanked him. “No, it is the least we can do,” he said.


pages: 497 words: 123,718

A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption by Steven Hiatt; John Perkins

addicted to oil, airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, Bob Geldof, Bretton Woods, British Empire, capital controls, centre right, clean water, colonial rule, corporate governance, corporate personhood, deglobalization, deindustrialization, Doha Development Round, energy security, European colonialism, financial deregulation, financial independence, full employment, global village, high net worth, land reform, large denomination, liberal capitalism, Long Term Capital Management, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, Naomi Klein, new economy, North Sea oil, offshore financial centre, oil shock, Ponzi scheme, race to the bottom, reserve currency, Ronald Reagan, Scramble for Africa, statistical model, structural adjustment programs, too big to fail, trade liberalization, transatlantic slave trade, transfer pricing, union organizing, Washington Consensus, working-age population, Yom Kippur War

He has also been associated with drug trafficking, illicit arms sales, and other forms of corruption. In 2005, Augusto Pinochet and several close family members were placed under investigation for tax evasion and fraud. Sea, Sand, and Secrecy Jersey in the mid-1980s was enjoying an extraordinary economic boom. In the previous decade dozens of major banks from around the world had set up offshore subsidiaries to handle the rapid growth of private banking services for their high-net-worth clients. Law firms and major accounting businesses had also set up offshore subsidiaries to provide administration and trust services for their business and private clients. Just a forty-five-minute flight from London, Jersey is well situated to provide offshore services to the City of London, itself a major offshore tax haven. As early as the 1960s, local law firms, keen to follow the examples set by Bermuda and the Cayman Islands, promoted a series of regulatory and statutory changes to Jersey’s government that cumulatively created what the business community likes to call “an attractive offshore investment environment.”

The multinational accounting and consulting firm KPMG epitomizes this arrogant and subversive attitude. The corporate culture within its tax department was exposed when a U.S. Senate investigating committee revealed internal memos, e-mails, and other correspondence obtained from the accounting business in 2003. In one e-mail, Gregg Ritchie, a senior KPMG tax adviser, alerted Jeff Stein, head of KPMG’s tax practice, that, even if regulators took action against the firm’s tax strategies for high-net-worth clients, the potential profit from these deals exceeded any possible court penalties. “Our average deal,” Ritchie noted, “would result in KPMG fees of $360,000 with a maximum exposure of only $31,000.” Another internal document contained a warning that, if the company were to comply with the legal requirements of the IRS relating to the registration of tax shelters, KPMG would “not be able to compete in the tax-advantaged products market.”

In a short article entitled “The Department of You Can’t Make It Up,” British satirical magazine Private Eye reported that the Shin Corporation sale was routed via a British Virgin Islands company, suitably called Ample Rich Investments, to avoid paying tax.16 Or what about Britain’s Labour Party, which has held power since 1997 and receives one donation after another from prominent supporters with offshore accounts? This culture of corruption has become the norm. Her Majesty’s Loyal Tax Avoiders It might seem to casual observers that the offshore world in which I and my colleagues were working is remote from the economy of the “real” world, but in fact offshore banking lies at the core of a globalized financial system that enables businesses and the superrich, known within banking circles as high-net-worth individuals (HNWIs, or “hen-wees”), to operate beyond the reach of onshore public or legal authority. The offshore economy began to emerge as a significant feature in the 1960s when huge volumes of petrodollars started to accumulate in Europe. The globalization of the financial system was catalyzed by a variety of factors, most notably liberalization of financial transactions through the removal of international exchange controls, the demise of the fixed-rate exchange mechanisms conceived at Bretton Woods in 1944, the extensive deregulation of financial markets during the 1980s, and the emergence of new communication technologies that put money transfers into effect at the click of a mouse.


pages: 504 words: 126,835

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

"Robert Solow", Airbnb, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, Clayton Christensen, Colonization of Mars, commoditize, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Elon Musk, Erik Brynjolfsson, fear of failure, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, high net worth, hiring and firing, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, technological singularity, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra

It is rather that these money managers are completely different creatures than the capitalists that most people associate with corporate ownership. While capitalist ownership is about responsibility, entrepreneurship, and control, asset managers are ultimately actors who cannot practice such ownership. He or she simply cannot be a capitalist. In 2012, after the recovery from the Great Recession, the global asset management industry managed 36.5 percent of assets held by pension funds, insurance companies, sovereign wealth funds, high-net-worth individuals, and the mass affluent. Asset managers are not the only form of intermediaries, but they represent a considerable proportion of the gray ownership in Western economies. And as GDP has expanded in the West, the asset management industry has followed – and, going forward, is likely to grow faster than the rest of the economy, according to PwC. By 2020, the industry is estimated to have expanded to manage more than 45 percent of total holdings.

(i) Harley-Davidson Motor Company (HD) (i), (ii) Harvard Business Review, “Is the Cost of Innovation Falling?” (Bright Simons) (i) Harvard University, “Soviet–Harvard illusion” (Nassim Nicholas Taleb) (i) Hayek, Friedrich (i), (ii), (iii), (iv) healthcare sector see medical/healthcare sector Hegde, Shanttaram (i)n28 Hemingway, Ernest, The Sun Also Rises (i) Herper, Matthew (i) Hicks, John, “The Theory of Monopoly” (i) high-growth firms (i) high-net-worth individuals (i) high-tech sector (US), and economic dynamism (i) Hirschman, Albert O. (i)n43 Hitchhiker’s Guide to the Galaxy, The (Douglas Adams) (i) Hobbes, Thomas (i) Hobijn, Bart (i) Hoenig, Thomas (i) home-market firms, vs. multinationals (i) Honeywell (i) hospitals, performance measurements (i) Hudson Institute (i) Huebner, Jonathan (i) human capital, and innovation (i) Hungary, and EU GM potato regulation (i) hydrocarbon reserves, and sovereign wealth funds (i) IBM (i), (ii), (iii) ICT (information and communications technology) ICT intensity and productivity (i), (ii) investment expenditure on software (i) investment in hardware as share of GDP (i), (ii) US ICT sector (i), (ii) see also information technology (IT) Idestam, Fredrik (i) IMD Business School (Switzerland), attitudes to globalization survey (i) immigration, and aging populations (i), (ii) Inc 500 ranking (i) incomes and benefits/taxes (i) income inequality (i), (ii), (iii), (iv), (v), (vi), (vii) and productivity (decoupling thesis) (i), (ii) and robots (i) working-age households vs. pensioners (i) incremental development and corporate managerialism (i), (ii) and deregulation (i) vs. radical innovation (i), (ii), (iii), (iv) and regulatory complexity/uncertainty (i), (ii), (iii) and specialization (i), (ii) incumbency advantages (i), (ii) index of complicatedness (Boston Consulting Group) (i) India and BRIC concept (i), (ii) and globalization (i) License Raj (i), (ii) indirect land-use effects (i) individualism, culture of (i) see also dissent; eccentricity; freedom industrial organization (i), (ii) industrial policy, and regulation (i), (ii) industrial revolution (i), (ii), (iii) information technology (IT) business IT services (i) and capitalism (i) IT companies and globalization (i) and second unbundling of production (i) see also ICT (information and communications technology) Innocent III, Pope, and barber profession (i) innovation and cancer research (i), (ii) and capitalism (i), (ii), (iii), (iv), (v) and compliance officers (i) and corporate destruction (i) and corporate investment (i), (ii) and corporate managerialism (i), (ii) and corporate medical research (i) and deregulation (i) and digitalization (i) and dual class stock structures (i) and economic dynamism (i), (ii), (iii) and entrepreneurship (i), (ii) and failure (i) and financial regulation (i) and firm boundaries (i), (ii), (iii) and globalization (i), (ii), (iii), (iv) and gray capitalism (i) and healthcare (i) historical perspective (i) Huebner on (i) and human capital (i) and market contestability (i), (ii), (iii), (iv), (v), (vi) market vs. social values of (i) and Middle Ages (i) and multinationals (i) and occupational licenses (i) “offshore” pattern of (i) permissionless innovation (i) and planning machines (i) and precautionary regulations (i), (ii) and productivity downward trend (i), (ii) and quantitative valuation methods (i) and R&D (i) and regulation (i), (ii), (iii), (iv), (v) and regulatory complexity/uncertainty (i), (ii), (iii), (iv), (v), (vi) Schumpeterian innovation (i), (ii), (iii) and “scientific civilization” thinking (i) and specialization (i), (ii), (iii), (iv) and strategy (i) and technological creation (i), (ii), (iii), (iv) value innovation (i) and verticalization (i) see also creative destruction; diffusion; dissent; eccentricity; incremental development; New Machine Age thesis; R&D; technology INSEAD business school (i) institutional investors (i) total assets by types of investors (OECD, 2001–13) (i), (ii) see also asset managers; professional investment/investors institutional owners and rentier capitalism (i) see also insurance companies/funds; pensions insurance companies/funds and asset management industry (i) and financial regulation (i) and rentier capitalism (i) total assets (OECD, 2001–13) (i), (ii) intangibles and business investment data (i) knowledge as intangible (i) and withering (i) Intel (NM Electronics) (i), (ii), (iii) intelligent vehicles see driverless vehicles interest rates (i), (ii), (iii) interfirm trade (i) International Federation of Accountants (IFAC) (i) international trade see global trade internet relative impact of (i), (ii) start-ups (i) and Swedish economy (i) see also online services intertemporal choice/allocation (i) intrafirm trade (i) investment actuarial investment code (i) and diversification (i), (ii) foreign direct investment (FDI) (i), (ii), (iii) institutional investors (i) modern portfolio theory (i) private investment (US) (i) professionalized investment (i), (ii), (iii) stockholding periods (i), (ii), (iii) total assets by types of institutional investors (OECD, 2001–13) (i), (ii) see also asset managers; business investment; pensions IT (information technology) see information technology (IT) Italy and globalization (i) income inequality and generations (i) “Italian disease” and diffusion of innovations (i) lesser dependence on larger enterprises (i) profit margins (i) public debt (i) regulation: index of regulatory freedom (i), (ii); index of regulatory trade barriers (i), (ii); medical devices (i); taxi services (i) retirement savings (i) Japan car industry and lean production (i) cash hoarding (corporate savings) (i) population decline (i) R&D spending (i) retirement savings (i) Jawbone bracelets (i) job dissatisfaction (i) see also incomes; labor; unemployment Jobs, Steve (i) Johnson, Lyndon B.

Chance (Being There character) (i), (ii) multinational (global) companies characteristics of (i), (ii) and competition (i) and corporate cash savings (i) and dispersed ownership (i) and firm boundaries (i), (ii) and foreign direct investment (FDI) (i), (ii) and global trade (i), (ii) vs. home-market firms (i) and innovation (i) as logistics hubs (i) and market concentration (i), (ii) and market contestability (i) and private standards (i) and productivity (i), (ii) and R&D (i) and regionalization of Asia’s trade growth (i) and regulation (i) reputation of (i) and “slicing up” of value chains (i) and specialization (i), (ii) and supply chains (i) and transaction costs (i) see also big firms; globalization; globalization (overview) Musk, Elon (i), (ii), (iii) mutual funds (i), (ii) nanotechnology (i), (ii), (iii) NASA (i) Nasdaq, and sovereign wealth funds (i) national accounts (recorded data), vs. real value of improvements (i), (ii) National Science Foundation (US) (i) neoconservatism (i) neoliberalism (i) nepotism (i) net lending see corporate net lending Netherlands exports to China (i) taxi services and regulation (i) “new economy” (i) New England Journal of Medicine, medical devices study (i) New Machine Age thesis background: economic realities vs. technological blitz vision (i), (ii), (iii), (iv), (v), (vi), (vii); historical perspective (i) criticism of thesis: cyclical effects on productivity argument (i); jobs and technology issue (i); productivity/income decoupling issue (i), (ii); recorded data vs. real improvements argument (i), (ii); summary (i) and fear of artificial intelligence (i) and planning machine economic philosophy (i) and Robert Gordon on US labor productivity growth (i) see also The Second Machine Age (Brynjolfsson and McAfee) New York City dockers and containerization (i) taxi services and regulation (i), (ii) New York Stock Exchange (i), (ii), (iii), (iv), (v) see also Wall Street New York Times, on Bell’s telephone invention (i) NICs (newly industrialized countries) (i) Nietzsche, Friedrich (i), (ii) nimby (not-in-my-backyard) attitude (i) NM Electronics (Intel) (i), (ii), (iii) Nobel Peace Prize, and Twitter (i) “noise” (at work) (i) Nokia and corporate managerialism (i), (ii), (iii), (iv), (v), (vi) and Foxconn (i) and specialization (i) and tablet market (i) non-entrepreneurial planning (i) North American Free Trade Agreement (i) Norway, sovereign wealth fund (i), (ii), (iii) not-in-my-backyard (nimby) attitude (i) Obama, Barack (i), (ii) obsolescence see knowledge obsolescence occupational licenses (i), (ii), (iii), (iv) OECD (Organisation for Economic Co-operation and Development) on aging firms and innovation (i) on corporate savings (i) on “diffusion machine” and productivity (i) GDP forecasts (i) on intermediaries and shareholders’ income (i) on pension funds and PPRFs (i) on R&D skill deficiencies (i) on regulatory administration costs (i) on sovereign wealth funds (i) on taxi services (i) OECD countries product market regulation (PMR) indicators (i), (ii) R&D spending (i) start-ups (i) total assets by types of institutional investors (2001–13) (i), (ii) “off-license” sectors (i) “offshore” pattern of innovation (i) oligopolistic (or monopolistic) competition (i) Ollila, Jorma (i), (ii) Olson, Mancur (i) “one percent” (wealthiest group) (i) online services and diffusion of innovations (i), (ii) and recorded economic data (i) and regulation (i) see also internet open source technology, and socialism (i) organic cognition (i) Organisation for Economic Co-operation and Development see OECD; OECD countries organization industrial organization (i), (ii) vs. managerialism/technostructure (i) and multinationals (i) and specialization (i) Organization Man (i), (ii) organizational diversification (i), (ii) Osborne, Michael (i) outsourcing (i) ownership see capitalist ownership; institutional owners Palo Alto Research Center (PARC, Xerox) (i) “Panama Papers” story (i) Parisian taxis, and regulation (i) patents, and knowledge obsolescence (i) pay see incomes payment cycles (i) payment technologies (i) pensions and asset management industry (i) and gray capitalism (i), (ii), (iii), (iv) need for reform (i) pension crisis (i) pensioners vs. working-age households incomes (i) and principal–agent debate (i) private pensions (i), (ii) public/state pensions (i), (ii), (iii), (iv), (v); public pension funds and reserve funds (OECD, 2001–13) (i), (ii); public pension return funds (PPRFs) (i) see also retirement Pepsi (i) performance imperatives (i) performance measurements (i) performance tools (i), (ii) permission-based regulatory culture (i), (ii) permissionless innovation (i) pessimism, and capitalist decline (i) Pessoa, João Paolo (i) Pfleiderer, Paul (i) pharmaceutical sector and price regulations (i)n28 R&D investment (i), (ii) and regulation (i), (ii) Phelps, Edmund (i)n41 Mass Flourishing (i), (ii) Piketty, Thomas (i), (ii) PillCam digestive tract sensor (i) Pippi Longstocking (i) planning and corporate managerialism: planning machines (i), (ii), (iii); strategy (i); uncertainty and risk (i) Cybersyn project (i) and failing companies (i) and globalization (i) non-entrepreneurial planning (i) and regulation (i) and “scientific civilization” thinking (i) and spirit of bureaucracy (i) and Swedish economy (i) plastic cards (i) Pliny the Elder, Naturalis Historia (i) Plouffe, David (i) PMR (product market regulation) indicators (i), (ii) policy uncertainty, and investment (i), (ii) political romanticism (i) political world and capitalism as borderless space (i) cronyism , (i), (ii), (iii), (iv) dirigisme (France) (i) government intervention vs. liberalism (i) governments and globalization (i) governments and mobile technology (i) gray-haired voters (i) lobbying (i), (ii), (iii), (iv), (v) and regulation: 1980s–1990s policy changes (i); case of taxi services and Uber (i); political romanticism (i); social regulation (i); trend on the rise (i) and sovereign wealth funds (i), (ii), (iii) see also policy uncertainty; politics politics corporate politics (i), (ii), (iii), (iv) end of and digital age (i) populism (i), (ii), (iii), (iv), (v) see also political world populations aging (i), (ii), (iii) decline (i) populism (i), (ii), (iii), (iv) Porter, Michael (i), (ii) portfolio theory (i) Portugal, lesser dependence on larger enterprises (i) positioning (i), (ii), (iii), (iv) poverty, and globalization (i) PPRFs (public pension return funds) (i) see also pensions precautionary regulations (i), (ii), (iii), (iv) predictability (i), (ii), (iii), (iv), (v), (vi), (vii) see also uncertainty; volatility premature scaling (i), (ii) price index bias (i) Pricewaterhouse Coopers (PwC) on asset management industry (i) on compliance officers in US (i) productivity growth survey (i) on sovereign wealth funds (i) principal–agent problem (i) principal–agent theory (i) prioritizing, and strategy (i) private standards (i) probabilistic decision-making (i), (ii) product market regulation (PMR) indicators (i), (ii) production and computer technology (i) geography of production (i) lean production (i), (ii) and multinationals (i) production costs (i), (ii), (iii) unbundling of: first (i); second (i), (ii), (iii), (iv) see also specialization; supply chains; value chains productivity and containerization (of global trade) (i) and cyclical effects (i) and data economy (i) downward trend (i), (ii) and employment (i) and financial sector growth (i) and foreign operations (i)n46 and globalization (i), (ii), (iii) and ICT intensity (i), (ii) and incomes (decoupling thesis) (i), (ii) key to prosperity (i) low productivity and innovation diffusion problems (i) and market contestability (i), (ii) and multinationals (i), (ii) and regulation (i) and robots (i) total factor productivity (TFP) growth (i), (ii), (iii) and transaction costs (i) UK productivity puzzle (i) professional investment/investors (i), (ii), (iii) see also asset managers professions regulation of (i), (ii) see also occupational licenses profit margins and decoupling (productivity/incomes) thesis (i) and globalization (i), (ii) protectionism (i), (ii), (iii), (iv), (v) public markets and financialization of the economy (i) and mergers and acquisitions (i) public pension return funds (PPRFs) (i) see also pensions public relations campaigns (i), (ii) “put option” (i) PwC see Pricewaterhouse Coopers (PwC) quantitative valuation methods (i) quantum dots (QD) technology (i) R&D (research and development) and corporate net lending (i) and firm boundaries (i), (ii) and multinationals (i) and pharmaceutical products (i), (ii) and policy uncertainty (i) and productivity (i) R&D scoreboards (European Commission) (i), (ii) and regulation (i), (ii), (iii) vs. share buybacks at IBM (i) spending issues (i), (ii), (iii) and sunk costs (i) US R&D investment (i), (ii), (iii) and vertical specialization (i) see also incremental development Rajan, Raghuram (i) rating agencies (i), (ii), (iii) rationalism and globalist worldview (i), (ii) and societal change (i) Reagan, Ronald (i), (ii) real economy, vs. financial economy (i), (ii), (iii), (iv) reallocation of business, and deregulation (i) recorded data (national accounts) vs. real value of improvements (i), (ii) regulation after 1980s–1990s deregulation wave (i), (ii) and bureaucracy brake (Germany) (i) and compliance officers (i) and costs and time lags (i) and decline of capitalism (i), (ii) economic regulation (i), (ii) financial regulations (i), (ii), (iii), (iv) and globalization (i) and gray capitalism (i) and healthcare sector (i), (ii), (iii), (iv) index of regulatory freedom (i), (ii) and industrial policy (i), (ii) and innovation (i), (ii), (iii), (iv), (v), (vi) and labor (i), (ii), (iii), (iv), (v) and lobbying (i) and managerialism (i), (ii) and market contestability (i), (ii) moving-target regulations (i) and multinationals (i) and pensions (i) permission-based regulatory culture (i), (ii) and permissionless innovation (i) and planning (i) and political romanticism (i) and political world (i), (ii) prescriptive vs. proscriptive (i), (ii) private standards (i) and R&D (i), (ii), (iii) and size of companies (i) social regulation (i), (ii) and trade (i), (ii), (iii) see also deregulation; legislation; regulatory complexity/uncertainty regulatory accumulation (i) regulatory bodies (i) regulatory complexity/uncertainty cadmium example (i), (ii) energy sector case (i), (ii) impact on economic growth (i) impact on innovation (i), (ii), (iii), (iv), (v) precautionary regulations (i), (ii), (iii), (iv) regulatory conflicts (i) regulatory/policy uncertainty and investment allocation (i), (ii) rise of regulatory uncertainty (i) see also deregulation; regulation renewable energy see green/renewable energy rent-seeking (i), (ii), (iii) rentier capitalism (i), (ii), (iii), (iv), (v), (vi) rentier formula, resource allocation according to (i) rentiers (i), (ii) reputation management (i) research concept of in corporate world (i), (ii) scientific research (i) see also cancer research; incremental development; R&D Research in Motion (RiM) (i), (ii) retail, and globalization (i) retirement age of (i) savings (i), (ii), (iii), (iv), (v), (vi), (vii) see also pensions Ricardo, David, wine-for-cloth thesis (i) rich people vs. capitalists (i), (ii) high-net-worth individuals (i) mass affluent (i) “one percent” (wealthiest group) (i) risk banks’ proneness to (i) and globalist worldview (i), (ii) and uncertainty (i), (ii) Robertson, Dennis (i) Robinson, James (i) robotics/robots and Asimov/science fiction (i) impact of on society (i) and labor (i), (ii), (iii), (iv), (v); Foxconn example (i) and technology-frustrated generation (i) see also artificial intelligence; automation; driverless vehicles; New Machine Age thesis; technology Rodman, Dennis (i) Rolling Stone (magazine), “Why Isn’t Wall Street in Jail?”


pages: 280 words: 79,029

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better by Andrew Palmer

Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, break the buck, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, information asymmetry, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, margin call, Mark Zuckerberg, McMansion, money market fund, mortgage debt, mortgage tax deduction, Myron Scholes, negative equity, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative finance, railway mania, randomized controlled trial, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, Thales of Miletus, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application

Not everyone gets onto the site: around 70–80 percent of entrepreneurs are told by Crowdcube to provide more information in their business plans. That is often enough to put off the fly-by-night operators and the people who have had a bright idea in the pub. On the other side of the marketplace are the investors. Crowdcube is not quite open to all: people either have to self-certify that they are high net-worth individuals or sophisticated investors or have to fill out a questionnaire that is designed to weed out anyone who really doesn’t understand the risks of start-up investing. But the bar is not set very high. You get asked things like whether most start-ups (a) succeed or (b) fail, and whether the founders are obliged to pay you back if the company gets into trouble. This is not a test, more like a lengthy reminder that you are very likely to end up losing money if you play the VC game.

Lenders were often no better: like other auction sites, Prosper found that there was a small group of people whose goal was to win the auction no matter how low the rate they received as a result. This sort of foolishness is not just restricted to retail investors. MarketInvoice, an electronic platform in London that allows small firms to sell off their outstanding invoices at a discount, also used to run auctions. Its investors were not members of the public, but high-net-worth individuals, family offices, and specialist funds. Even so, it observed exactly the same kind of behavior, with investors determined to invest their allocation of money no matter what and bidding discounts down to minuscule levels. Prosper’s experiment with an auction system has long since ended. It now assesses borrowers itself and puts them into risk bands that come with a preordained interest rate attached.


pages: 265 words: 74,941

The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work by Richard Florida

banking crisis, big-box store, blue-collar work, business cycle, car-free, carbon footprint, collapse of Lehman Brothers, congestion charging, creative destruction, deskilling, edge city, Edward Glaeser, falling living standards, financial innovation, Ford paid five dollars a day, high net worth, Home mortgage interest deduction, housing crisis, if you build it, they will come, income inequality, indoor plumbing, interchangeable parts, invention of the telephone, Jane Jacobs, Joseph Schumpeter, knowledge economy, low skilled workers, manufacturing employment, McMansion, Menlo Park, Nate Silver, New Economic Geography, new economy, New Urbanism, oil shock, Own Your Own Home, pattern recognition, peak oil, Ponzi scheme, post-industrial society, postindustrial economy, reserve currency, Richard Florida, Robert Shiller, Robert Shiller, secular stagnation, Silicon Valley, Silicon Valley startup, social intelligence, sovereign wealth fund, starchitect, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, total factor productivity, urban decay, urban planning, urban renewal, white flight, young professional, Zipcar

By late 2009, housing prices had fallen more than 50 percent off their peak in Las Vegas. Florida, the other great American retirement destination, also felt the sharp pop of the housing bubble as real estate prices tumbled more than 40 percent from their peak in Miami and Tampa. The crisis decimated the Sunbelt’s nouveau riche, many of whom had made their pile in real estate. Phoenix lost 34 percent of its high-net-worth individuals, those with more than $1 million in assets apart from their home; Las Vegas lost 38 percent; Miami and Orlando, 42 percent each; and Tampa, 51 percent.5 Plummeting home prices triggered a cascading series of related problems. Sunbelt cities developed the nation’s highest concentration of homes underwater—those where the amount owed exceeds the current value. Las Vegas led the nation with 67.2 percent of its homes underwater in May 2009.

Quoted in Kris Hudson, “Phoenix Bears the Brunt of Hotel Market’s Steep Downturn,” Wall Street Journal, June 3, 2009. 4. Quoted in Dennis Wagner, “Pain on Main Street: Timing Proves Bad for Phoenix,” USA Today, December 20, 2008. 5. Daniel Gross, “Who is Killing America’s Millionaires?” Slate, July 24, 2009; Gross cites a Capgemini study as the source of these data. Overall, the number of high-net-worth individuals in the United States fell from 3.02 million in 2007 to 2.46 million in 2008, a decline of 18.5 percent. He cites Capgemini’s Ileana van der Linde as saying “We’ve been doing this report for 13 years and haven’t seen this kind of loss of wealth since we started.” 6. At the time, 21.9 percent of homes nationally were identified as being underwater. The exact figure for Las Vegas was 67.2 percent.


pages: 231 words: 76,283

Work Optional: Retire Early the Non-Penny-Pinching Way by Tanja Hester

"side hustle", Affordable Care Act / Obamacare, Airbnb, anti-work, asset allocation, barriers to entry, buy and hold, crowdsourcing, diversification, estate planning, financial independence, full employment, gig economy, hedonic treadmill, high net worth, index fund, labor-force participation, longitudinal study, medical bankruptcy, mortgage debt, obamacare, passive income, post-work, remote working, rent control, ride hailing / ride sharing, risk tolerance, stocks for the long run, Vanguard fund

The second big aspect of ACA plans that is helpful to early retirees is that they truly are the closest thing to “affordable” coverage that we have. ACA plan premiums are going up each year, but at a much slower rate than non-exchange plans, which is a positive for everyone relying on the exchanges. And, the premium you pay is tied to your income, which for many early retirees is low (as opposed to basing premiums on your assets, which are likely to be high). While this fact agitates quite a few people who disapprove of high-net-worth people receiving subsidies to help pay for their health insurance, neither party has signaled any interest in changing that particular part of the law. And the US has a long history of adopting programs that adjust only on basis of income, not on assets, what’s known as means testing, not asset testing. So the way premiums and subsidies are calculated is unlikely to change anytime soon, though funding for the subsidies themselves is consistently under threat.

And in all cases, make sure your property insurance includes some coverage for liability, so that if someone is injured in or around your home and sues you, it doesn’t wipe you out financially. If your early retirement plan involves building up sizeable assets, approaching $1 million or more, it’s wise to add umbrella insurance to your policy list. Umbrella insurance is additional liability protection against lawsuits and claims against you, and the data show that high-net-worth people are far more likely to be sued than are those without sizeable assets. You can get protection of $1 million or more for a few hundred dollars a year if you already have liability protection on your property. The best part is that what you’re really paying for is the insurance company’s legal defense, because they don’t want to pay out a single dollar. Umbrella insurance is well worth the cost.


Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game by Walker Deibel

barriers to entry, Clayton Christensen, commoditize, deliberate practice, discounted cash flows, diversification, Elon Musk, family office, financial independence, high net worth, intangible asset, inventory management, Jeff Bezos, knowledge worker, Lean Startup, Mark Zuckerberg, meta analysis, meta-analysis, Network effects, new economy, Peter Thiel, risk tolerance, risk/return, rolodex, software as a service, Steve Jobs, supply-chain management, Y Combinator

Further, an astounding 91 percent of everyone having over $5 million in net worth owns their own company—a trend suggesting that the wealthier someone is, the more likely they are to own a business. Owning your own business is not only an opportunity to provide value through products and services, but it’s arguably the best way for most people to build real wealth. In this chapter, we’ll look at acquisition entrepreneurship as an investment vehicle. To be clear, this does not mean that after you buy a business you are promised a high net-worth ranking. Nor does it mean that acquiring a company purely for financial gain is a good idea. Rather, it points to the fact that being the owner of a successful business can be a great investment vehicle, and that those who make the most of it can finish big. We’ve seen that the acquisition entrepreneur needs to act as both entrepreneur and investor. After all, by utilizing the bank instead of private investors for the majority of financing, it puts the responsibility on the entrepreneur to invest their own money into the company.

Again, this is up to you. I have known people who have purchased companies at both extremes. The final recipe is up to you (and the bank). If you are in a position to pay all cash for a specific deal, understand that you’re either so wealthy that whatever the deal you’ll pay all cash, or you’re not thinking big enough. Based on my interviews with brokers, professional buyers, and bankers, very few, if any, high net worth individuals pay all cash for a business. I have to conclude this is because they understand the higher ROI associated with acquiring with some portion on debt—just like PE firms. 107 Whatever your position, you will likely either desire or require leverage to close on your target company. As a result, you’ll need a bank to give you a loan, and I recommend asking for the maximum you can get, for two reasons: First, you can always take less, and every banker will understand your interest in evaluating a maximum ROI investment.


pages: 349 words: 134,041

Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives by Satyajit Das

accounting loophole / creative accounting, Albert Einstein, Asian financial crisis, asset-backed security, beat the dealer, Black Swan, Black-Scholes formula, Bretton Woods, BRICs, Brownian motion, business process, buy and hold, buy low sell high, call centre, capital asset pricing model, collateralized debt obligation, commoditize, complexity theory, computerized trading, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, currency peg, disintermediation, diversification, diversified portfolio, Edward Thorp, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, financial innovation, fixed income, Haight Ashbury, high net worth, implied volatility, index arbitrage, index card, index fund, interest rate derivative, interest rate swap, Isaac Newton, job satisfaction, John Meriwether, locking in a profit, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Marshall McLuhan, mass affluent, mega-rich, merger arbitrage, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mutually assured destruction, Myron Scholes, new economy, New Journalism, Nick Leeson, offshore financial centre, oil shock, Parkinson's law, placebo effect, Ponzi scheme, purchasing power parity, quantitative trading / quantitative finance, random walk, regulatory arbitrage, Right to Buy, risk-adjusted returns, risk/return, Satyajit Das, shareholder value, short selling, South Sea Bubble, statistical model, technology bubble, the medium is the message, the new new thing, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, volatility smile, yield curve, Yogi Berra, zero-coupon bond

There were esoteric debates about what was now ‘structured’ or DAS_C08.QXP 8/7/06 4:49 PM Page 237 7 N G a m e s w i t h o u t f ro n t i e r s 237 ‘exotic’. The profitability of the business declined as price became the primary basis of competition amongst all the dealers. Smarter investors cunningly played them off to get better deals. Dealers began to seek new ways to improve profitability and started to market structured products directly to retail customers, the widows and orphans of legend. Retail customers were now HNWI (high net worth individuals); there was the ‘mass affluent’, surely an oxymoron. Structured product marketers set out into suburbia and strip malls. The logic was compelling – you had less sophisticated clients, the margins would be richer. In short, you could rip them off blind. In Europe individuals, when not dodging tax, were worrying about reduced investment returns. The creation of the euro brought new opportunities.

Pre-risk transfer Bank credit exposure to specified entities totalling US$1,000 million Post-risk transfer Risk US$950 million senior notes Investors (100 firms × $10 million each) US$30 million mezzanine notes US$20 million equity Sponsor bank Figure 9.4 Fully funded CDO capital structure The bank generally puts in all or most of the equity in the CDO. The mezzanine and senior notes are sold to investors. Insurance companies, fund managers and high net worth individuals buy these notes. For some obscure reason retirees and wealthy individuals in Australia and New Zealand are especially attracted to CDO mezzanine investments. The senior note holders get paid first. If there are losses then equity takes the first losses. If the losses are greater than the equity amount then the mezzanine investors get hit. Senior note holders take a smack only if the DAS_C10.QXD 5/3/07 7:59 PM Page 287 9 C re d i t w h e re c re d i t i s d u e – f u n w i t h C D S a n d C D O 287 losses on the underlying loans are above the equity and mezzanine amounts.

However, the text is different. 6 ‘What Worries Warren’ (3 March 2003) Fortune. 13_INDEX.QXD 17/2/06 4:44 pm Page 325 Index accounting rules 139, 221, 228, 257 Accounting Standards Board 33 accrual accounting 139 active fund management 111 actuaries 107–10, 205, 289 Advance Corporation Tax 242 agency business 123–4, 129 agency theory 117 airline profits 140–1 Alaska 319 Allen, Woody 20 Allied Irish Bank 143 Allied Lyons 98 alternative investment strategies 112, 308 American Express 291 analysts, role of 62–4 anchor effect 136 Anderson, Rolf 92–4 annuities 204–5 ANZ Bank 277 Aquinas, Thomas 137 arbitrage 33, 38–40, 99, 114, 137–8, 171–2, 245–8, 253–5, 290, 293–6 arbitration 307 Argentina 45 arithmophobia 177 ‘armpit theory’ 303 Armstrong World Industries 274 arrears assets 225 Ashanti Goldfields 97–8, 114 Asian financial crisis (1997) 4, 9, 44–5, 115, 144, 166, 172, 207, 235, 245, 252, 310, 319 asset consultants 115–17, 281 ‘asset growth’ strategy 255 asset swaps 230–2 assets under management (AUM) 113–4, 117 assignment of loans 267–8 AT&T 275 attribution of earnings 148 auditors 144 Australia 222–4, 254–5, 261–2 back office functions 65–6 back-to-back loans 35, 40 backwardation 96 Banca Popolare di Intra 298 Bank of America 298, 303 Bank of International Settlements 50–1, 281 Bank of Japan 220 Bankers’ Trust (BT) 59, 72, 101–2, 149, 217–18, 232, 268–71, 298, 301, 319 banking regulations 155, 159, 162, 164, 281, 286, 288 banking services 34; see also commercial banks; investment banks bankruptcy 276–7 Banque Paribas 37–8, 232 Barclays Bank 121–2, 297–8 13_INDEX.QXD 17/2/06 326 4:44 pm Page 326 Index Baring, Peter 151 Baring Brothers 51, 143, 151–2, 155 ‘Basel 2’ proposal 159 basis risk 28, 42, 274 Bear Stearns 173 bearer eurodollar collateralized securities (BECS) 231–3 ‘behavioural finance’ 136 Berkshire Hathaway 19 Bermudan options 205, 227 Bernstein, Peter 167 binomial option pricing model 196 Bismarck, Otto von 108 Black, Fischer 22, 42, 160, 185, 189–90, 193, 195, 197, 209, 215 Black–Scholes formula for option pricing 22, 185, 194–5 Black–Scholes–Merton model 160, 189–93, 196–7 ‘black swan’ hypothesis 130 Blair, Tony 223 Bogle, John 116 Bohr, Niels 122 Bond, Sir John 148 ‘bond floor’ concept 251–4 bonding 75–6, 168, 181 bonuses 146–51, 244, 262, 284–5 Brady Commission 203 brand awareness and brand equity 124, 236 Brazil 302 Bretton Woods system 33 bribery 80, 303 British Sky Broadcasting (BSB) 247–8 Brittain, Alfred 72 broad index secured trust offerings (BISTROs) 284–5 brokers 69, 309 Brown, Robert 161 bubbles 210, 310, 319 Buconero 299 Buffet, Warren 12, 19–20, 50, 110–11, 136, 173, 246, 316 business process reorganization 72 business risk 159 Business Week 130 buy-backs 249 ‘call’ options 25, 90, 99, 101, 131, 190, 196 callable bonds 227–9, 256 capital asset pricing model (CAPM) 111 capital flow 30 capital guarantees 257–8 capital structure arbitrage 296 Capote, Truman 87 carbon trading 320 ‘carry cost’ model 188 ‘carry’ trades 131–3, 171 cash accounting 139 catastrophe bonds 212, 320 caveat emptor principle 27, 272 Cayman Islands 233–4 Cazenove (company) 152 CDO2 292 Cemex 249–50 chaos theory 209, 312 Chase Manhattan Bank 143, 299 Chicago Board Options Exchange 195 Chicago Board of Trade (CBOT) 25–6, 34 chief risk officers 177 China 23–5, 276, 302–4 China Club, Hong Kong 318 Chinese walls 249, 261, 280 chrematophobia 177 Citibank and Citigroup 37–8, 43, 71, 79, 94, 134–5, 149, 174, 238–9 Citron, Robert 124–5, 212–17 client relationships 58–9 Clinton, Bill 223 Coats, Craig 168–9 collateral requirements 215–16 collateralized bond obligations (CBOs) 282 collateralized debt obligations (CDOs) 45, 282–99 13_INDEX.QXD 17/2/06 4:44 pm Page 327 Index collateralized fund obligations (CFOs) 292 collateralized loan obligations (CLOs) 283–5, 288 commercial banks 265–7 commoditization 236 commodity collateralized obligations (CCOs) 292 commodity prices 304 Commonwealth Bank of Australia 255 compliance officers 65 computer systems 54, 155, 197–8 concentration risk 271, 287 conferences with clients 59 confidence levels 164 confidentiality 226 Conseco 279–80 contagion crises 291 contango 96 contingent conversion convertibles (co-cos) 257 contingent payment convertibles (co-pays) 257 Continental Illinois 34 ‘convergence’ trading 170 convertible bonds 250–60 correlations 163–6, 294–5; see also default correlations corruption 303 CORVUS 297 Cox, John 196–7 credit cycle 291 credit default swaps (CDSs) 271–84, 293, 299 credit derivatives 129, 150, 265–72, 282, 295, 299–300 Credit Derivatives Market Practices Committee 273, 275, 280–1 credit models 294, 296 credit ratings 256–7, 270, 287–8, 297–8, 304 credit reserves 140 credit risk 158, 265–74, 281–95, 299 327 credit spreads 114, 172–5, 296 Credit Suisse 70, 106, 167 credit trading 293–5 CRH Capital 309 critical events 164–6 Croesus 137 cross-ruffing 142 cubic splines 189 currency options 98, 218, 319 custom repackaged asset vehicles (CRAVEs) 233 daily earning at risk (DEAR) concept 160 Daiwa Bank 142 Daiwa Europe 277 Danish Oil and Natural Gas 296 data scrubbing 142 dealers, work of 87–8, 124–8, 133, 167, 206, 229–37, 262, 295–6; see also traders ‘death swap’ strategy 110 decentralization 72 decision-making, scientific 182 default correlations 270–1 defaults 277–9, 287, 291, 293, 296, 299 DEFCON scale 156–7 ‘Delta 1’ options 243 delta hedging 42, 200 Deming, W.E. 98, 101 Denmark 38 deregulation, financial 34 derivatives trading 5–6, 12–14, 18–72, 79, 88–9, 99–115, 123–31, 139–41, 150, 153, 155, 175, 184–9, 206–8, 211–14, 217–19, 230, 233, 257, 262–3, 307, 316, 319–20; see also equity derivatives Derman, Emmanuel 185, 198–9 Deutsche Bank 70, 104, 150, 247–8, 274, 277 devaluations 80–1, 89, 203–4, 319 13_INDEX.QXD 17/2/06 4:44 pm Page 328 328 Index dilution of share capital 241 DINKs 313 Disney Corporation 91–8 diversification 72, 110–11, 166, 299 dividend yield 243 ‘Dr Evil’ trade 135 dollar premium 35 downsizing 73 Drexel Burnham Lambert (DBL) 282 dual currency bonds 220–3; see also reverse dual currency bonds earthquakes, bonds linked to 212 efficient markets hypothesis 22, 31, 111, 203 electronic trading 126–30, 134 ‘embeddos’ 218 emerging markets 3–4, 44, 115, 132–3, 142, 212, 226, 297 Enron 54, 142, 250, 298 enterprise risk management (ERM) 176 equity capital management 249 equity collateralized obligations (ECOs) 292 equity derivatives 241–2, 246–9, 257–62 equity index 137–8 equity investment, retail market in 258–9 equity investors’ risk 286–8 equity options 253–4 equity swaps 247–8 euro currency 171, 206, 237 European Bank for Reconstruction and Development 297 European currency units 93 European Union 247–8 Exchange Rate Mechanism, European 204 exchangeable bonds 260 expatriate postings 81–2 expert witnesses 310–12 extrapolation 189, 205 extreme value theory 166 fads of management science 72–4 ‘fairway bonds’ 225 Fama, Eugene 22, 111, 194 ‘fat tail’ events 163–4 Federal Accounting Standards Board 266 Federal Home Loans Bank 213 Federal National Mortgage Association 213 Federal Reserve Bank 20, 173 Federal Reserve Board 132 ‘Ferraris’ 232 financial engineering 228, 230, 233, 249–50, 262, 269 Financial Services Authority (FSA), Japan 106, 238 Financial Services Authority (FSA), UK 15, 135 firewalls 235–6 firing of staff 84–5 First Interstate Ltd 34–5 ‘flat’ organizations 72 ‘flat’ positions 159 floaters 231–2; see also inverse floaters ‘flow’ trading 60–1, 129 Ford Motors 282, 296 forecasting 135–6, 190 forward contracts 24–33, 90, 97, 124, 131, 188 fugu fish 239 fund management 109–17, 286, 300 futures see forward contracts Galbraith, John Kenneth 121 gamma risk 200–2, 294 Gauss, Carl Friedrich 160–2 General Motors 279, 296 General Reinsurance 20 geometric Brownian motion (GBM) 161 Ghana 98 Gibson Greeting Cards 44 Glass-Steagall Act 34 gold borrowings 132 13_INDEX.QXD 17/2/06 4:44 pm Page 329 Index gold sales 97, 137 Goldman Sachs 34, 71, 93, 150, 173, 185 ‘golfing holiday bonds’ 224 Greenspan, Alan 6, 9, 19–21, 29, 43, 47, 50, 53, 62, 132, 159, 170, 215, 223, 308 Greenwich NatWest 298 Gross, Bill 19 Guangdong International Trust and Investment Corporation (GITIC) 276–7 guaranteed annuity option (GAO) contracts 204–5 Gutenfreund, John 168–9 gyosei shido 106 Haghani, Victor 168 Hamanaka, Yasuo 142 Hamburgische Landesbank 297 Hammersmith and Fulham, London Borough of 66–7 ‘hara-kiri’ swaps 39 Hartley, L.P. 163 Hawkins, Greg 168 ‘heaven and hell’ bonds 218 hedge funds 44, 88–9, 113–14, 167, 170–5, 200–2, 206, 253–4, 262–3, 282, 292, 296, 300, 308–9 hedge ratio 264 hedging 24–8, 31, 38–42, 60, 87–100, 184, 195–200, 205–7, 214, 221, 229, 252, 269, 281, 293–4, 310 Heisenberg, Werner 122 ‘hell bonds’ 218 Herman, Clement (‘Crem’) 45–9, 77, 84, 309 Herodotus 137, 178 high net worth individuals (HNWIs) 237–8, 286 Hilibrand, Lawrence 168 Hill Samuel 231–2 329 The Hitchhiker’s Guide to the Galaxy 189 Homer, Sidney 184 Hong Kong 9, 303–4 ‘hot tubbing’ 311–12 HSBC Bank 148 HSH Nordbank 297–8 Hudson, Kevin 102 Hufschmid, Hans 77–8 IBM 36, 218, 260 ICI 34 Iguchi, Toshihude 142 incubators 309 independent valuation 142 indexed currency option notes (ICONs) 218 India 302 Indonesia 5, 9, 19, 26, 55, 80–2, 105, 146, 219–20, 252, 305 initial public offerings 33, 64, 261 inside information and insider trading 133, 241, 248–9 insurance companies 107–10, 117, 119, 150, 192–3, 204–5, 221, 223, 282, 286, 300; see also reinsurance companies insurance law 272 Intel 260 intellectual property in financial products 226 Intercontinental Hotels Group (IHG) 285–6 International Accounting Standards 33 International Securities Market Association 106 International Swap Dealers Association (ISDA) 273, 275, 279, 281 Internet stock and the Internet boom 64, 112, 259, 261, 310, 319 interpolation of interest rates 141–2, 189 inverse floaters 46–51, 213–16, 225, 232–3 13_INDEX.QXD 17/2/06 4:44 pm Page 330 330 Index investment banks 34–8, 62, 64, 67, 71, 127–8, 172, 198, 206, 216–17, 234, 265–7, 298, 309 investment managers 43–4 investment styles 111–14 irrational decisions 136 Italy 106–7 Ito’s Lemma 194 Japan 39, 43, 82–3, 92, 94, 98–9, 101, 106, 132, 142, 145–6, 157, 212, 217–25, 228, 269–70 Jensen, Michael 117 Jett, Joseph 143 JP Morgan (company) 72, 150, 152, 160, 162, 249–50, 268–9, 284–5, 299; see also Morgan Guaranty junk bonds 231, 279, 282, 291, 296–7 JWM Associates 175 Kahneman, Daniel 136 Kaplanis, Costas 174 Kassouf, Sheen 253 Kaufman, Henry 62 Kerkorian, Kirk 296 Keynes, J.M. 167, 175, 198 Keynesianism 5 Kidder Peabody 143 Kleinwort Benson 40 Korea 9, 226, 278 Kozeny, Viktor 121 Krasker, William 168 Kreiger, Andy 319 Kyoto Protocol 320 Lavin, Jack 102 law of large numbers 192 Leeson, Nick 51, 131, 143, 151 legal opinions 47, 219–20, 235, 273–4 Leibowitz, Martin 184 Leland, Hayne 42, 202 Lend Lease Corporation 261–2 leptokurtic conditions 163 leverage 31–2, 48–50, 54, 99, 102–3, 114, 131–2, 171–5, 213–14, 247, 270–3, 291, 295, 305, 308 Lewis, Kenneth 303 Lewis, Michael 77–8 life insurance 204–5 Lintner, John 111 liquidity options 175 liquidity risk 158, 173 litigation 297–8 Ljunggren, Bernt 38–40 London Inter-Bank Offered Rate (LIBOR) 6, 37 ‘long first coupon’ strategy 39 Long Term Capital Management (LTCM) 44, 51, 62, 77–8, 84, 114, 166–75, 187, 206, 210, 215–18, 263–4, 309–10 Long Term Credit Bank of Japan 94 LOR (company) 202 Louisiana Purchase 319 low exercise price options (LEPOs) 261 Maastricht Treaty and criteria 106–7 McLuhan, Marshall 134 McNamara, Robert 182 macro-economic indicators, derivatives linked to 319 Mahathir Mohammed 31 Malaysia 9 management consultants 72–3 Manchester United 152 mandatory convertibles 255 Marakanond, Rerngchai 302 margin calls 97–8, 175 ‘market neutral’ investment strategy 114 market risk 158, 173, 265 marketable eurodollar collateralized securities (MECS) 232 Markowitz, Harry 110 mark-to-market accounting 10, 100, 139–41, 145, 150, 174, 215–16, 228, 244, 266, 292, 295, 298 Marx, Groucho 24, 57, 67, 117, 308 13_INDEX.QXD 17/2/06 4:44 pm Page 331 Index mathematics applied to financial instruments 209–10; see also ‘quants’ matrix structures 72 Meckling, Herbert 117 Melamed, Leo 34, 211 merchant banks 38 Meriwether, John 167–9, 172–5 Merrill Lynch 124, 150, 217, 232 Merton, Robert 22, 42, 168–70, 175, 185, 189–90, 193–7, 210 Messier, Marie 247 Metallgesellschaft 95–7 Mexico 44 mezzanine finance 285–8, 291–7 MG Refining and Marketing 95–8, 114 Microsoft 53 Mill, Stuart 130 Miller, Merton 22, 101, 194 Milliken, Michael 282 Ministry of Finance, Japan 222 misogyny 75–7 mis-selling 238, 297–8 Mitchell, Edison 70 Mitchell & Butler 275–6 models financial 42–3, 141–2, 163–4, 173–5, 181–4, 189, 198–9, 205–10 of business processes 73–5 see also credit models Modest, David 168 momentum investment 111 monetization 260–1 monopolies in financial trading 124 moral hazard 151, 280, 291 Morgan Guaranty 37–8, 221, 232 Morgan Stanley 76, 150 mortgage-backed securities (MBSs) 282–3 Moscow, City of 277 moves of staff between firms 150, 244 Mozer, Paul 169 Mullins, David 168–70 multi-skilling 73 331 Mumbai 3 Murdoch, Rupert 247 Nabisco 220 Napoleon 113 NASDAQ index 64, 112 Nash, Ogden 306 National Australia Bank 144, 178 National Rifle Association 29 NatWest Bank 144–5, 198 Niederhoffer, Victor 130 ‘Nero’ 7, 31, 45–9, 60, 77, 82–3, 88–9, 110, 118–19, 125, 128, 292 NERVA 297 New Zealand 319 Newman, Frank 104 news, financial 133–4 News Corporation 247 Newton, Isaac 162, 210 Nippon Credit Bank 106, 271 Nixon, Richard 33 Nomura Securities 218 normal distribution 160–3, 193, 199 Northern Electric 248 O’Brien, John 202 Occam, William 188 off-balance sheet transactions 32–3, 99, 234, 273, 282 ‘offsites’ 74–5 oil prices 30, 33, 89–90, 95–7 ‘omitted variable’ bias 209–10 operational risk 158, 176 opinion shopping 47 options 9, 21–2, 25–6, 32, 42, 90, 98, 124, 197, 229 pricing 185, 189–98, 202 Orange County 16, 44, 50, 124–57, 212–17, 232–3 orphan subsidiaries 234 over-the-counter (OTC) market 26, 34, 53, 95, 124, 126 overvaluation 64 13_INDEX.QXD 17/2/06 4:44 pm Page 332 332 Index ‘overwhelming force’ strategy 134–5 Owen, Martin 145 ownership, ‘legal’ and ‘economic’ 247 parallel loans 35 pari-mutuel auction system 319 Parkinson’s Law 136 Parmalat 250, 298–9 Partnoy, Frank 87 pension funds 43, 108–10, 115, 204–5, 255 People’s Bank of China (PBOC) 276–7 Peters’ Principle 71 petrodollars 71 Pétrus (restaurant) 121 Philippines, the 9 phobophobia 177 Piga, Gustavo 106 PIMCO 19 Plaza Accord 38, 94, 99, 220 plutophobia 177 pollution quotas 320 ‘portable alpha’ strategy 115 portfolio insurance 112, 202–3, 294 power reverse dual currency (PRDC) bonds 226–30 PowerPoint 75 preferred exchangeable resettable listed shares (PERLS) 255 presentations of business models 75 to clients 57, 185 prime brokerage 309 Prince, Charles 238 privatization 205 privity of contract 273 Proctor & Gamble (P&G) 44, 101–4, 155, 298, 301 product disclosure statements (PDSs) 48–9 profit smoothing 140 ‘programme’ issuers 234–5 proprietary (‘prop’) trading 60, 62, 64, 130, 174, 254 publicly available information (PAI) 277 ‘puff’ effect 148 purchasing power parity theory 92 ‘put’ options 90, 131, 256 ‘quants’ 183–9, 198, 208, 294 Raabe, Matthew 217 Ramsay, Gordon 121 range notes 225 real estate 91, 219 regulatory arbitrage 33 reinsurance companies 288–9 ‘relative value’ trading 131, 170–1, 310 Reliance Insurance 91–2 repackaging (‘repack’) business 230–6, 282, 290 replication in option pricing 195–9, 202 dynamic 200 research provided to clients 58, 62–4, 184 reserves, use of 140 reset preference shares 254–7 restructuring of loans 279–81 retail equity products 258–9 reverse convertibles 258–9 reverse dual currency bonds 223–30 ‘revolver’ loans 284–5 risk, financial, types of 158 risk adjusted return on capital (RAROC) 268, 290 risk conservation principle 229–30 risk management 65, 153–79, 184, 187, 201, 267 risk models 163–4, 173–5 riskless portfolios 196–7 RJ Reynolds (company) 220–1 rogue traders 176, 313–16 Rosenfield, Eric 168 Ross, Stephen 196–7, 202 Roth, Don 38 Rothschild, Mayer Amshel 267 Royal Bank of Scotland 298 Rubinstein, Mark 42, 196–7 13_INDEX.QXD 17/2/06 4:44 pm Page 333 Index Rumsfeld, Donald 12, 134, 306 Rusnak, John 143 Russia 45, 80, 166, 172–3, 274, 302 sales staff 55–60, 64–5, 125, 129, 217 Salomon Brothers 20, 36, 54, 62, 167–9, 174, 184 Sandor, Richard 34 Sanford, Charles 72, 269 Sanford, Eugene 269 Schieffelin, Allison 76 Scholes, Myron 22, 42, 168–71, 175, 185, 189–90, 193–7, 263–4 Seagram Group 247 Securities and Exchange Commission, US 64, 304 Securities and Futures Authority, UK 249 securitization 282–90 ‘security design’ 254–7 self-regulation 155 sex discrimination 76 share options 250–1 Sharpe, William 111 short selling 30–1, 114 Singapore 9 single-tranche CDOs 293–4, 299 ‘Sisters of Perpetual Ecstasy’ 234 SITCOMs 313 Six Continents (6C) 275–6 ‘smile’ effect 145 ‘snake’ currency system 203 ‘softing’ arrangements 117 Solon 137 Soros, George 44, 130, 253, 318–19 South Sea Bubble 210 special purpose asset repackaging companies (SPARCs) 233 special purpose vehicles (SPVs) 231–4, 282–6, 290, 293 speculation 29–31, 42, 67, 87, 108, 130 ‘spinning’ 64 333 Spitzer, Eliot 64 spread 41, 103; see also credit spreads stack hedges 96 Stamenson, Michael 124–5 standard deviation 161, 193, 195, 199 Steinberg, Sol 91 stock market booms 258, 260 stock market crashes 42–3, 168, 203, 257, 259, 319 straddles or strangles 131 strategy in banking 70 stress testing 164–6 stripping of convertible bonds 253–4 structured investment products 44, 112, 115, 118, 128, 211–39, 298 structured note asset packages (SNAPs) 233 Stuart SC 18, 307, 316–18 Styblo Bleder, Tanya 153 Suharto, Thojib 81–2 Sumitomo Corporation 100, 142 Sun Tzu 61 Svensk Exportkredit (SEK) 38–9 swaps 5–10, 26, 35–40, 107, 188, 211; see also equity swaps ‘swaptions’ 205–6 Swiss Bank Corporation (SBC) 248–9 Swiss banks 108, 305 ‘Swiss cheese theory’ 176 synthetic securitization 284–5, 288–90 systemic risk 151 Takeover Panel 248–9 Taleb, Nassim 130, 136, 167 target redemption notes 225–6 tax and tax credits 171, 242–7, 260–3 Taylor, Frederick 98, 101 team-building exercises 76 team moves 149 technical analysis 60–1, 135 television programmes about money 53, 62–3 Thailand 9, 80, 302–5 13_INDEX.QXD 17/2/06 4:44 pm Page 334 334 Index Thatcher, Margaret 205 Thorp, Edward 253 tobashi trades 105–7 Tokyo Disneyland 92, 212 top managers 72–3 total return swaps 246–8, 269 tracking error 138 traders in financial products 59–65, 129–31, 135–6, 140, 148, 151, 168, 185–6, 198; see also dealers trading limits 42, 157, 201 trading rooms 53–4, 64, 68, 75–7, 184–7, 208 Trafalgar House 248 tranching 286–9, 292, 296 transparency 26, 117, 126, 129–30, 310 Treynor, Jack 111 trust investment enhanced return securities (TIERS) 216, 233 trust obligation participating securities (TOPS) 232 TXU Europe 279 UBS Global Asset Management 110, 150, 263–4, 274 uncertainty principle 122–3 unique selling propositions 118 unit trusts 109 university education 187 unspecified fund obligations (UFOs) 292 ‘upfronting’ of income 139, 151 Valéry, Paul 163 valuation 64, 142–6 value at risk (VAR) concept 160–7, 173 value investing 111 Vanguard 116 vanity bonds 230 variance 161 Vietnam War 182, 195 Virgin Islands 233–4 Vivendi 247–8 volatility of bond prices 197 of interest rates 144–5 of share prices 161–8, 172–5, 192–3, 199 Volcker, Paul 20, 33 ‘warehouses’ 40–2, 139 warrants arbitrage 99–101 weather, bonds linked to 212, 320 Weatherstone, Dennis 72, 268 Weil, Gotscal & Manges 298 Weill, Sandy 174 Westdeutsche Genosenschafts Zentralbank 143 Westminster Group 34–5 Westpac 261–2 Wheat, Allen 70, 72, 106, 167 Wojniflower, Albert 62 World Bank 4, 36, 38 World Food Programme 320 Worldcom 250, 298 Wriston, Walter 71 WTI (West Texas Intermediate) contracts 28–30 yield curves 103, 188–9, 213, 215 yield enhancement 112, 213, 269 ‘yield hogs’ 43 zaiteku 98–101, 104–5 zero coupon bonds 221–2, 257–8


pages: 476 words: 139,761

Kleptopia: How Dirty Money Is Conquering the World by Tom Burgis

active measures, Anton Chekhov, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Boris Johnson, British Empire, collapse of Lehman Brothers, coronavirus, corporate governance, COVID-19, Covid-19, credit crunch, Credit Default Swap, cryptocurrency, do-ocracy, Donald Trump, energy security, Etonian, failed state, Gordon Gekko, high net worth, Honoré de Balzac, illegal immigration, invisible hand, Julian Assange, liberal capitalism, light touch regulation, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Mohammed Bouazizi, Northern Rock, offshore financial centre, Right to Buy, Ronald Reagan, Skype, sovereign wealth fund, trade route, WikiLeaks

Instead, in a witness statement the length of a novel, he had tried to show how he had been playing a game by one set of rules but now found himself judged by another set, the rules of the West. ‘It is a fact of life in Kazakhstan that, because of the suppression of political opponents by Nazarbayev through the seizure of their assets, most high net worth individuals such as myself have no alternative other than to hold as many of their assets as possible through a structure of nominees and trustees based outside Kazakhstan. In other words, even those high net worth individuals who are not active opponents of the regime seek to protect themselves by holding their assets in this fashion so that Nazarbayev and his coterie of kleptocrats cannot simply seize them, in the event that they come to the attention of Nazarbayev and his regime. He has now moved up from petty strong-arming of individuals, and instead wants to own and control the whole Kazakhstan economy.’

As British power waned, many of its smaller possessions remained bound to the City, only now in the service of other people’s empires. Where once an island produced a particular crop, now it offered a particular flavour of financial secrecy: a type of trust, say, or a species of front company. BSI set up in the Bahamas and on Guernsey. Its bankers also needed to be near some actual rich people – high net worth individuals, as they were to be known – so they were stationed in New York, Hong Kong, Monte Carlo and of course London itself. The Swiss bankers didn’t do anything clever or original with the money. They just invested it in stocks and bonds like anyone else lucky enough to have a little to put aside. What mattered was that the money moved to a special place, a place beyond the reach of governments, of the law, of society.


pages: 302 words: 86,614

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja, Myron Scholes, Mohamed El-Erian

activist fund / activist shareholder / activist investor, Asian financial crisis, asset allocation, asset-backed security, backtesting, Bernie Madoff, Bretton Woods, business process, call centre, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, en.wikipedia.org, family office, fixed income, high net worth, interest rate derivative, Isaac Newton, Long Term Capital Management, Marc Andreessen, Mark Zuckerberg, merger arbitrage, Myron Scholes, NetJets, oil shock, pattern recognition, Ponzi scheme, quantitative easing, quantitative trading / quantitative finance, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, short selling, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, systematic trading, zero-sum game

Investors appreciate that level of focus on the portfolio, which is part of the reason Avenue has been able to continue to raise new funds over the years. The firm’s investor base has undergone a dramatic evolution from its start in 1995, when its capital came from friends and family. At the end of 2011, public and corporate pension fund capital comprised over 50 percent of the firm’s assets. Foundations, endowments, family offices, and insurance companies made up much of the remainder, with less than one percent drawn from high-net-worth individuals. Charles Spiller, Director of the Pennsylvania Public School Employees Retirement System, started investing with Avenue after an introduction from New York Life in late 2000 and has seen a 10-year track record in their private equity portfolio of between 15 percent and 17 percent. “Beyond being impressed with their track record, I was attracted to their very conservative utilization of debt—they really didn’t lever their portfolio,” Spiller says.

Like most investors, Loeb suffered during the financial crisis and the turbulence that immediately preceded it. In July 2007, amid great optimism, Loeb launched a public vehicle, Third Point Offshore Investors Limited, which was the first permanent capital vehicle for a U.S.-domiciled fund in Europe, and also the first float of an event-driven fund anywhere. Although staked at inception with investments from several large funds of hedge funds and high-net-worth investors, and with long holdings that included the New York Stock Exchange, DaimlerChrysler, and Phillips Electronics, it sailed into the first fears of market meltdown and struggled to meet its capital target. The initial public offering (IPO) managed to raise $525 million from listing a fund in London after a 24-hour delay, below its $690 million target but not a bad outcome given the uncertainty facing the markets at that time.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve

But the causes of the flash crash are still not really understood. That, right there, is really alarming.44 HNWI High net worth individual, a reference to a rich person as defined by the financial services industry. The definition is fixed: it means he or she has more than a million dollars in financial assets—meaning assets other than their “residences, collectables, consumer durables and consumables.” Globally, there are 11 million people in that category, with a total worth of $42 trillion. This way of defining a rich person is of use to people in the money business, who are on the lookout for individuals to advise—hence the emphasis on financial assets. You can have a house worth $10 million but not be an HNWI. An UNHWI is an ultra-high net worth individual, meaning more than $30 million in financial assets. According to the World Wealth Report, the USA has 3.44 million HNWI.45 holes in the balance sheet A strange metaphor, evoking the annoying ripped bit where your big toe accidentally went through the top sheet, whereas what it actually means is that some of the stuff listed on a bank’s books as its assets are worth less than the balance sheet says they are.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, anti-communist, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, failed state, falling living standards, family office, financial deregulation, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global supply chain, high net worth, income inequality, index fund, invisible hand, Jeff Bezos, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, price mechanism, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, The Chicago School, Thorstein Veblen, too big to fail, transfer pricing, wealth creators, white picket fence, women in the workforce, zero-sum game

The trust might own a range of shell companies, maybe also scattered across several offshore and onshore jurisdictions; each company may have directors in more places; and the assets themselves may be in yet another collection of places, typically where the trust’s grantors, beneficiaries and asset-enjoyers like to relax, go shopping or play. For citizens of the Commonwealth, the latter typically means London and New York; for Latin Americans it usually means Miami, Houston or New York; and for Francophone Africans it is more likely to be Paris and New York. This is a fast-growing profession, expanding much faster than the global economy. By 2017, according to Credit Suisse, 36 million people could call themselves HNWIs, high net worth individuals, with assets each worth more than $1 million; these people make up the top 0.7 per cent of the world’s population. HNWI numbers have been growing six times faster than the population as a whole, and in 2017 this group collectively held over $129 trillion in wealth, nearly half the world total. A good chunk of that is offshore, a good chunk is in trusts, and most is in both. But wealth managers mostly don’t work for these people, who are merely rich.

Tax havens are often about wealth protection rather than wealth appreciation. As a Citibanker in Mexico told the financial investigator James Henry, ‘The money my clients put offshore is for safekeeping: when they want 200 per cent returns, they keep the money here.’ James Henry, ‘The Price of Offshore Revisited’, Tax Justice Network, July 2012. 11. The inequality data comes from Thomas Piketty, Capital in the 21st Century, Belknap Press, 2014. The high net worth individuals data comes from the Credit Suisse ‘Global Wealth Report 2016’, principally Figure 4, p.26. But this data raises the question: what constitutes ‘ownership’? Does it include ‘ownerless’ wealth held in, say, discretionary trusts? The Credit Suisse report does not mention trusts, foundations and the like, but says (also p.26) that it uses survey data – which it notes is unreliable – supplemented with ‘rich lists’ such as the Forbes billionaires’ list, collated by journalists.

122, 136–7 Cadbury’s 113 Cameron, David 48 Capital Group 84 capital requirements 148–63 Careline Homecare Limited 190–3, 202–5, 206, 216, 220 care sector 4, 190–4, 202–9, 216–17, 220, 228, 229, 234 Carillion 46, 231, 237 Carlyle Group 214 Carvalho, Arnaldo Lago de 233 Cassano, Joe 161 Cayman Islands 1, 2, 3, 59–60, 62, 63–7, 93, 125, 136, 140, 141, 145, 150, 151, 152, 153–4, 157, 162, 179, 188, 200, 211, 228, 242 Cayman Trust Law (1967) 62 Celtic Tiger (Ireland economy) 4, 115, 116–39 Central Bank of Ireland 129, 136 Cheney, Dick 244 Cherwell, Lord 53 Chicago School 28, 29, 30, 46, 71, 74, 98, 110, 197, 209, 253 China 13, 23, 50, 55, 84, 85, 87, 92, 104, 108, 110, 117, 138, 200, 258, 262–7, 272, 274 China General Nuclear Power Corporation (CGN) 262–3 Chinese Communist Party (CCP) 258, 264, 265, 266, 267, 272 Christensen, John 5, 11, 48, 67–8 Christensen, Professor Clayton 197, 198 Citibank/Citigroup 11, 59, 83, 129, 140, 159 City of London 37, 38, 84, 92–3, 183, 185, 252, 271, 272, 273; Big Bang 104, 143–4; capture of British establishment 13, 142, 166–7, 257–60, 265, 266; Chinese influence upon 262–7; evidence machine/lobbying and 257–60; financial brain drain and 6, 108, 259; global financial crisis and see global financial crisis; monopolies and 84; neoliberalism and 37, 38; organised crime and other abusive activities linked to 11–12, 93, 97, 141–6, 154, 166, 167, 168; penetrated and captured by reckless global finance (London loophole) 140–68; rebirth as global financial centre after fall of British empire 4, 10, 50–69; tax havens and see tax havens; Third Way and 92–3, 97, 98, 102, 104, 108, 109, 113; UK economy and growth in size of 5–14, 108, 218–40, 257–61, 262–74 City of London Corporation 257–8 Clearing House Group 130–1 Clinton, Bill 91, 97, 101, 114, 115, 122, 159 Clinton, Hillary 91, 100 Coase, Ronald: The Problem of Social Cost 72–4, 79 Coelho, Tony 98–9 Cohen, Benjamin J. 57 Cohen, Sheldon 254 collateralised debt obligations (CDOs) 165, 235 collateralised loan obligations (CLOs) 165, 200 Commodity Futures Modernisation Act (CFMA) (2000) 159–60 Community Mental Health Fund, Missouri 44 comparative advantage concept 105, 108 Competition and Markets Authority 70 competitiveness of nations/competitiveness agenda 8–9, 13–14, 23, 28–49, 62, 68, 70–1, 73, 80, 95, 97–8, 100–15, 130, 131, 132–3, 136, 142, 143, 149, 159, 160, 161, 164, 165, 180–1, 184–5, 207, 218, 241–3, 246–7, 250, 252–3, 258, 266, 267, 270, 271, 273 Conservative Party 37, 53, 71, 78, 102, 157, 165, 168, 220, 229 consultants 40, 41, 42–3, 66, 117, 230, 232, 233 controlled foreign company (CFC) reforms, U.K. 249–50 Cook Islands 177, 186, 272 Cornfield, Bernie 93 corporation: complexity of 3, 205–6; concept of 196–7 credit, control of 21 credit default swap (CDS) 128, 141, 147, 155–9, 165 Credit Suisse 11, 180, 183 crime/criminal money 12, 56, 58, 61, 62, 63, 64–5, 93–4, 142–3, 144, 145, 153, 154, 167–8, 175, 180, 187, 223, 264, 272, 273 Cromwell, William 22 Daily Mail 113, 251, 252 Darling, Alistair 257 Davidson, Charles 182, 189 Davidson, Kenneth 81, 252 Davies, Will 36, 39, 102 Deaton, Angus 181 debt 7, 34, 58, 69, 121, 152, 160, 165, 169, 186, 190, 193–6, 198–201, 205, 206–7, 208, 210, 215, 221, 234, 235, 244, 248, 262 Delaware, U.S. 181 Deloitte 235, 237 Delors, Jacques 100 Democratic Party, U.S. 39, 97, 98–100, 102, 141, 245 Deng Xiaoping 117 Depfa 133 deregulation, financial 13, 31, 35, 64–5, 68–9, 91, 97, 104, 107, 109, 117–18, 138, 142, 143, 146, 152, 159–60, 164, 165, 260 derivatives 12, 140–1, 142, 144, 146–7, 149, 151, 155, 158–60, 161, 164, 193 Desmond, Dermot 129–30 de Tocqueville, Alexis 75–6 Deutsche Bank 83, 95, 111, 160 Devereux, Professor Mike 243 Director, Aaron 71–2, 78, 79 DIRT (Deposit Interest Retention Tax) 136 Down’s Syndrome North East Association (UK) (DNSE) 169–70, 174 Drexel Burnham Lambert 161, 195 drugs: gangs/money 12, 61, 64–5, 92, 142–3, 145, 167, 185–6; pharmaceutical/Big Pharma 85–6, 126, 247 Dunbar, Nicholas 152, 161 dynamic scoring/dynamic modeling 253–4 East India Company 50, 75 Eddy, Bruce 44 Efficient Markets Hypothesis 150 Elf Affair 94, 187 Enron 46, 141, 165, 235–6 Epstein, Professor Gerald 10–11, 259; Overcharged: The High Costs of Finance 10– 11 Ernst & Young 163, 235, 238 Espino, Ovidio Diaz: How Wall Street Created a Nation 23 Essilor 82; EssilorLuxottica 82 Eurodollar markets/Euromarkets 55–9, 60, 61, 62, 63, 64, 68, 69, 77, 91, 93, 104, 142 European Central Bank (ECB) 137 European Commission (EC) 84, 94, 100, 111, 137; Liikanen Report (2012) 135 European Economic Community (EEC) 77, 98, 118, 123, 124–5 European Round Table of Industrialists (ERT) 100 European Union (EU) 98, 109–10, 111, 124, 132, 147, 238 Export Profits Tax Relief 118 Facebook 23, 71, 84, 88, 171, 173, 185, 226, 271, 274 fallacy of composition 107–8, 247 Fallon, Padraic 124 Fanning, John 126 Fantus Factory Location Service 40 Farm Aid 87–8 Federal Reserve Bank of New York 57 Ferguson, Niall: The Ascent of Money 242 Fiat 250 Finance Acts, Ireland: (1968) 120; (1987) 131 finance curse, concept of 3–14, 15, 18, 19, 22, 31, 37, 48, 68, 71, 103, 108, 111, 132, 136, 174, 184–5, 193, 198, 216, 228, 239, 257, 261, 265, 267, 269, 270, 271, 272, 273, 274 financial capture 13, 68, 96, 153, 257, 259, 265, 266 Financial Conduct Authority (FCA) 25–6, 246 financial crisis, global (2007–8) 4, 6, 25, 83, 90, 99, 109, 113, 114, 116, 128, 130, 133–4, 135–6, 140–68, 169, 195, 202, 224–5, 233, 235, 236, 240, 257 financialisation 2–4, 6, 9, 10, 11, 37, 68–9, 71, 88, 90, 174, 180, 185, 190, 191, 194, 198, 205, 217, 224, 225, 226, 228, 232, 259, 267, 274 Financial Services Authority (FSA) 104, 160, 161, 166, 167 Financial Stability Board (FSB) 83 Financial Times 68, 84, 94, 107, 146, 214, 218, 226, 232, 243, 256 Finger, Bernd 168 Fischel, William 38 Fordism 80 foreign direct investment (FDI) 110, 118–19, 123, 124, 132, 250 Fox News 71, 253 Franks, Oliver 52 Fraser, Ian: Shredded 227 free markets 18–19, 71–2, 99, 126, 128, 241 free-rider problem 30–1, 43, 47, 38 free trade 31, 50–1 Friedman, Milton 28, 30, 37, 59, 72, 73–4; ‘The Social Responsibility of Business Is to Increase Its Profits’ 196–7, 198, 209 Friedmaniacs 28, 30 FTSE 100 228, 238 Gapper, John 232–3 Gash, Tom 230 Gates, Bill 127, 185 Gauke, David 249 Gaydamak, Arkady 186 Gazprom 84 GDP (gross domestic product) 6, 8, 111, 112, 123, 147, 153, 174, 241, 245, 254, 256, 260, 266 General Electric (GE) 86–7 Gensler, Gary 140–1 Gibraltar 60, 63 Giddens, Anthony: The Third Way 105 Gilbert, Martin 83 Gilead 85–6 Giles, Chris 218 Glasman, Baron 258 Glass-Steagall Act (1933) 76, 147, 158–9 globalisation 10, 35, 59, 93, 94–5, 97, 98, 101, 102, 103, 106, 107, 109, 165, 177, 251, 254 Golden Age of Capitalism 34, 69, 91, 92, 118, 196, 251, 254–5 Goldman Sachs 113, 159, 160, 183, 213, 235, 242 Google 71, 88, 226, 271 Graphite Capital Partners VIII A LP 191–2, 205, 206 Great Depression (1929–39) 31, 98 Greenspan, Alan 75, 159, 160 gross national income (GNI) 112, 119, 122–3, 134 Guernsey 60, 181, 191, 220, 222 Hahneman, Daniel 181 Haldane, Andrew 225 Hands, Guy 181 Hansen, Lee 28 happiness, wealth and 181–3, 189 Harlech, Lord 34 Harrington, Brooke 186, 188 Hartnett, Dave 113 Harvard Business School 101, 196, 197 Harvie, Alicia 87–8 Harvoni 86 Haughey, Charles 114–15, 120–3, 129–30, 136 Hayek, Friedrich 35–6, 37, 59, 76; The Road to Serfdom 36, 37 Hayes, Jerry 229 Heaton, David 234 hedge funds 6, 13, 83, 104, 108, 128, 130–1, 140–1, 154, 164, 177, 178, 189, 193, 200, 209, 213, 214–15, 217, 233 Henry, James 166, 260 Hewlett-Packard 39–40 Hinkley C 262–3 HMRC 62, 104, 113, 168, 173, 234, 241, 242, 245, 246, 249, 252–4; Computable General Equilibrium model 241, 252–4 HNWI (high net worth individuals) 180; ultra-HNWI 180 Hodge, Margaret 168, 239 Hofri-Windogradow, Adam 180 Hong Kong 50, 130, 138, 171–2, 266 HSBC 12, 54, 83, 107–8, 167, 266 Hundred Group 242 Hunt Companies 221 HypoVereinsbank 133 Industrial Development Authority (IDA), Ireland 118, 124–5, 126, 129, 131, 135 inequality 4, 11, 31, 34, 36, 47, 48, 59, 90, 109, 138, 179, 187, 225, 251, 255, 256, 257, 259, 267–8, 270, 272, 274 inflation 34, 80, 107, 129 Innes, Abby 229 Institute for Fiscal Studies (IFS) 247 Intel 125 internal rate of return (IRR) 198, 211 International Financial Services Centre (IFSC), Dublin 128–35, 251 International Monetary Fund (IMF) 137, 164, 219, 250, 251, 257 International Public Partnerships Limited (INPP) 220–1 International Swaps and Derivatives Association (ISDA) 158 Intruders 113 Investec Wealth & Investment Limited 220 investment funds 2, 88, 110, 140 Investors Overseas Services (IOS) 93 Iran 53–4 Ireland: Celtic Tiger economy in 4, 114–15, 116–39 Isle of Man 60, 136 Jackson County, Missouri, U.S. 44 Jenkins, Robert 11 Jensen, Professor Michael 196, 197, 198, 209, 215 Jersey 1, 2, 3, 5, 60, 63, 67–8, 131, 136, 169, 171, 173, 174, 202, 221, 222, 223, 228, 258 Jiang Zemin 117 Johnson, Boris 218, 219, 222 Johnson County, Kansas, U.S. 41–4 Johnson, Paul 247 Johnson, Simon 257 Joly, Eva 187 Journal of Political Economy 29, 46 JP Morgan Chase 83, 95, 141, 146, 147, 155, 158, 160, 214 Juncker, Jean-Claude 94–5, 97, 102, 103, 104, 111, 114, 122 Kansas, U.S. 41–4, 244–5, 255–6 Kay, John 9 Kennedy, Edward 78–9 Keynes, John Maynard 31–2, 34, 37, 38, 52, 59, 68, 251 KKR (Kohlberg Kravis Roberts) 2, 3, 195, 214 Koch, Charles 74 Kohlberg Junior, Jerome 194, 195, 199 Kohl, Marius 95 KPMG 114, 235, 237, 238–9 Kraft Heinz 81, 113 Kravis, Henry 2, 195 Kroes, Neelie 110 Krugman, Paul: ‘Competitiveness: A Dangerous Obsession’ 105 Labour Party 77, 97, 102–5, 132, 192, 220, 247, 257 Lack, Simon 214; The Hedge Fund Mirage 214 Laffer, Arthur/Laffer curve 244–5, 254 Lazonick, Bill 225, 226 Leaver, Professor Adam 207, 224–5, 234 Lehman Brothers 140, 162–4 Leigh-Pemberton, Robin 145 LeRoy, Greg 40–1 leveraged buyout (LBO) 195–6 Levin, Carl 134 Liberty Global 250 Libor (London Inter-Bank Offered Rate), manipulation of 12, 85, 109, 166 Linares, Adolfo 185, 188 Linklaters 163 Lloyds Bank 52 Local Government Association (LCA) 224 Loch Alpine Economics 253 London School of Economics (LSE) 37, 105, 229 London Stock Exchange (LSE) 167, 220 London Whale 141 Long-Term Capital Management (LTCM) 140–1 Luxembourg 1, 2, 3, 13, 55–6, 92, 93–7, 98, 111–13, 125, 130, 138, 142, 166, 201, 211, 221, 222, 228, 243 Luxleaks scandal (2014) 95, 109 Luxottica 82 Lycamobile 168 Lydian Capital Partnership 202 Lynn, Barry 87, 88 Macdonald, Ken 168 Macmillan, Harold 34, 53–4 MacSharry, Ray: The Making of the Celtic Tiger 118, 127 Madoff, Bernie 94, 96 Madrid, Miguel de la 58 Major, John 220 Maloney, Carolyn 141 Manafort, Paul 183 Manne, Henry 74 Marchant, David 157 Marx, Karl 15, 18 Masters, Blythe 158 Maugham, Jolyon 156 Maurer, Ueli 45–6 Mazerov, Michael 255 McAlpin, Clovis 62 McCarthy, Joseph 29 McCarthy, Justine 119 McCreevy, Charlie 132 McDonald, Duff 197 Mellon, Tamara 208 mergers and acquisitions (M&A) 26, 71, 81, 82, 83, 84, 87, 99, 110, 155, 225, 226, 251 Metcalf, Stephen 36 Microsoft 125, 185 Midland Bank 34, 54–5 Milken, Michael 195 Missouri, U.S. 41, 43, 44, 244–5, 255 money laundering 12, 145–6, 167, 168, 183 Money Trust Investigation, U.S.


pages: 535 words: 158,863

Superclass: The Global Power Elite and the World They Are Making by David Rothkopf

airport security, anti-communist, asset allocation, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, Bob Geldof, Branko Milanovic, Bretton Woods, BRICs, business cycle, carried interest, clean water, corporate governance, creative destruction, crony capitalism, David Brooks, Doha Development Round, Donald Trump, financial innovation, fixed income, Francis Fukuyama: the end of history, Gini coefficient, global village, high net worth, income inequality, industrial cluster, informal economy, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, knowledge economy, liberal capitalism, Live Aid, Long Term Capital Management, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, mass immigration, means of production, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, Nelson Mandela, old-boy network, open borders, plutocrats, Plutocrats, Ponzi scheme, price mechanism, shareholder value, Skype, special economic zone, Steve Jobs, Thorstein Veblen, too big to fail, trade liberalization, trickle-down economics, upwardly mobile, Vilfredo Pareto, Washington Consensus, William Langewiesche

Within this group, however, according to a 2007 report by Merrill Lynch and Capgemini, there are 9.5 million individuals whose financial assets exceed $1 million. And that group, which a Merrill Lynch study has termed High-Net-Worth Individuals (HNWIs), controls over $37 trillion in global assets—double what it controlled just ten years earlier. (Interestingly, growth among this group was most rapid in Latin America, Eastern Europe, the Asia Pacific Region, Africa, and the Middle East, due in part to rapidly appreciating emerging markets asset values.) However, within this group of exceptionally fortunate individuals is another group cited earlier—the 1 percent of them, or roughly 95,000, who each own financial assets in excess of $30 million (these are the UHNWIs, or Ultra-High-Net-Worth Individuals), for a total of $13 trillion. And we know that within this group there is another approximately 1 percent elite, the world’s thousand or so billionaires.

Then throw in leading thinkers, scientists, academics, and artists who also influence millions across borders. Take them all together and you arrive at a rough membership in the superclass of around six thousand, perhaps a few hundred more. Could you define a group of exceptionally influential individuals that is two or three times that? Yes. Are there even smaller circles of ultra-elites within the superclass? Certainly. Are the lower tiers of elites—the ninety-five thousand Ultra-High-Net-Worth Individuals, for example, or additional senior business executives—important? Of course. But this core group of approximately six thousand remains as good a definition of the world’s most influential international actors as one might want for the purpose of understanding the nascent power structures they comprise and how they shape the lives of each and every one of us. It is a sample large enough to be representative of groups that altered definitions might make several times larger, yet small enough to be manageable for analysis.


pages: 262 words: 93,987

The Buy Side: A Wall Street Trader's Tale of Spectacular Excess by Turney Duff

asset-backed security, Berlin Wall, buy low sell high, collateralized debt obligation, fixed income, Gordon Gekko, high net worth, urban sprawl, white picket fence

They’re dressed just like me, in bargain suits and ties. I take the empty chair and look up at Stephanie. The smile I remember from my interview is gone. She looks stern, almost angry. She allows the silence to settle in the air. It cues the two other guys to sit up a little straighter and focus on our boss. “Welcome to Private Client Services,” she says. My uncle told me PCS is as close to the trading desk as I can get. These brokers manage high-net-worth individuals’ money instead of institutions. They are retail brokers, but their client lists aren’t your mom-and-pops down the street. They only manage money for people with ten, twenty, thirty million plus. “I know a few of you have already been at Morgan Stanley for a couple of weeks now and some of you”—she looks directly at me—“are starting today.” She begins to walk around the room. “It’s my job to train and develop you into the best sales assistants on the planet.”

On my way to the Garden before tip-off I had my driver stop by my apartment on Park Avenue to pick up my floor seats,” he might say. Josh is olive-skinned and wears similar glasses. He’s almost too nice for Wall Street. Andy takes advantage of Josh’s gentle demeanor. But together, they’re the golden boys of the firm. They get the hottest leads, the best allocations, and all the resources they need. “We’d like to offer Turney a position with our team,” Andy tells Stephanie. Sometime in the mid-1990s, high-net-worth departments, like Morgan Stanley’s Private Client Services, underwent a seminal shift in their approach. It used to be that these brokers primarily helped their clients trade. Brokers were instructed to generate revenue by commission trades. The new model is to gather “assets under management,” using the heft of $10, $20, even $100 million parcels in investments and charge a fee to manage the money.


pages: 329 words: 95,309

Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

algorithmic trading, AltaVista, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, business cycle, business intelligence, business process, business process outsourcing, buy and hold, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, Google Glasses, high net worth, informal economy, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, MITM: man-in-the-middle, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, Pingit, platform as a service, Ponzi scheme, prediction markets, pre–internet, QR code, quantitative easing, ransomware, reserve currency, RFID, Satoshi Nakamoto, Silicon Valley, smart cities, social intelligence, software as a service, Steve Jobs, strong AI, Stuxnet, trade route, unbanked and underbanked, underbanked, upwardly mobile, We are the 99%, web application, WikiLeaks, Y2K

My point is purely to say that the bank architects of the last few decades used branches as those foundations but today would use IP infrastructures. This does not mean that branches or people are irrelevant. The branch and face-to-face discussion is more to do with what type of house you want to build. In other words, it’s the design, the vision, the interior decoration, the furniture and the other bits. The designers may say: “I want to build a high net worth house, with sales advisory centres for people who want face-to-face engagements”. In this case, you build your bank house with IP foundations and lots of snazzy advisory centres, or branches, in the physical world. Others may say: “I want to build a low-cost high volume processing house, with minimal physical contact” in which case you build your bank house with IP foundations and hardly any branches in the physical world.

Therefore, if their call centre operator takes five minutes more than their competitor’s to answer a call and resolve a problem ... it’s ok. Because their competitor has $25 per minute in extra costs to cover wasted branch space. What about the future? Well, as mentioned, the bank is going through a technology platform refresh and will continue to be focused upon gaining and retaining their core high net worth, higher educated client. Whilst HSBC will be focused upon how to combine the wonders of remote servicing without scripts through a human approach to a global operation that can live in harmony with branch services, as branches close. An interview with Paul Say, Chief Marketing Officer at First Direct, September 2010. According to Paul Volker the last great innovation in banking was the ATM, but do you think being a bank without branches is innovative?


pages: 294 words: 89,406

Lying for Money: How Fraud Makes the World Go Round by Daniel Davies

bank run, banking crisis, Bernie Madoff, bitcoin, Black Swan, Bretton Woods, business cycle, business process, collapse of Lehman Brothers, compound rate of return, cryptocurrency, financial deregulation, fixed income, Frederick Winslow Taylor, Gordon Gekko, high net worth, illegal immigration, index arbitrage, Nick Leeson, offshore financial centre, Peter Thiel, Ponzi scheme, price mechanism, principal–agent problem, railway mania, Ronald Coase, Ronald Reagan, short selling, social web, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, time value of money, web of trust

A hedge fund with good (reported) performance won’t get many requests from investors for their money back – they want to keep it in the fund if it’s doing well. Ponzi’s scheme fell apart because of the redemption dates for his ‘notes’ and the Pigeon King scheme fell apart when cash ran out to buy birds as they hatched. But a hedge fund investment account has no set maturity date. Sam Israel also knew enough about the high-net-worth investing game to select the right kinds of investors – mainly overworked institutional investors operating with other peoples’ money and a defined series of checks, all of which were based off analysis of the ‘audited’ accounts. As far as possible he avoided taking money from wealthy individuals, because they tended to have sons and daughters with too much time on their hands who might make site visits or ask questions around Wall Street.

W. von 198 Goffman, Erving 78 gold alluvial 130 Golden Boos see Erni, Barbara golden rule of fraud detection 288 Goldman Sachs 65, 68, 11, 239 Goodfellas 80 Goodman, George 142 Goodman, Myron 63–72 goodwill (accounting) 176 government in general 53, 76, 174, 211, 218, 263–82 South American, possibly fictitious 7, 8 USA 51, 57, 91 Portugal 121, 122 secret global, definitely fictitious 110 Indonesian 132 Gowex 150, 154 Grant Thornton 106 Greece 10–11, 116, 208, 224–6, 287 Ancient 34, 225–6 Greenspan, Alan 240 ‘guinea pigs’ 228–9 H Hanseatic League 225 Hasin, Sidney 66, 69 Hayek, F. A. 201–3,205 Henry VIII 216 high-net worth investors tendency to have time on hands 109 tax strategies of a proportion of 266–8 Hippocratic Oath 134 hire purchase scam (Leslie Payne) 36, 39–40 homomorphism 209, 212 Hooley, Ernest ‘The Millionaire’ 230 hotel bills 37 House of Commons 1 Howe, Sarah 90, 116–19, 222 HSBC 188, 189, 280 Hudson Oil 249, 251 Humphery, John Stanley 228 I IBM 64–8 Iceland 218–22 Inca Empire 226–7 Incentives 13, 22, 62, 74, 115, 135, 159, 165, 174, 185–6, 205, 210 incidental fraud vs entrepreneurial 213, 215, 287, 288 Infinity Game 92–9 information 24, 71, 199–208, 211–15, 238 control of by fraudsters 41, 65, 71, 115, 173 insider, securities fraud 23, 239–42, 260 inheritance 117, 217, 218–22, 235, 266 insider dealing 23, 106, 129, 241–43, 260 insurance 36, 39–40, 65, 163–4, 171, 225, 228 medical 74–7, 84 Payment Protection Insurance (PPI) 187–97 insurance scam (Leslie Payne) 40–41 International Reply Coupons see Ponzi, Charles investors 1, 16 in OPM leases 65–7, 69–71 Charles Ponzi’s 86–9 hedge fund 96, 104–9, 113 in pigeons 100, 103 institutional 104 nineteenth century female 118–20 mining 126–30 reliance on accounts 142–54 expectations of UK banks 188 Victorian 228, 231 Retail 240–43 in Piggly Wiggly 256–61 IRS vs UBS 263–4 Israel, Sam see Bayou Capital drug habit of as potential indicator something was wrong 116 J Jehoash (high priest) 217 John Bull 230 K Keating Five 182 Keating, Charles 177–83, 214 Kennedy, John Fitzgerald 61 Kerviel, Jerome 165 King, Don 163 Knights of Industry 234, 237 Kolnische Volkszeitung 232, 234, 236, 237 KPMG 150 Kray, Ronnie and Reggie 26–7, 31, 36, 39, 41 Kutz Method 152–3 KYC (know your customer) 281 L Lab fraud anaemia 74 Ladies’ Deposit Bank (Boston) 116–19 lawyers 19, 27, 33–4, 39, 45, 71, 115, 117, 161, 180, 182, 194, 196, 225, 267, 271, 272, 281 (they’re usually in the background even when not specifically mentioned) professional qualifications of 114 extreme expensiveness of 234 leasing tax advantages of 64 see also OPM Leasing importance of residual value 66 accountancy issues 152 Leeson, Nick 17, 165–73, 285 Lehman Brothers collapse 13 relationship with OPM Leasing 65, 71 Lehnert, Lothar 235–7 Lernout & Hauspie 150 Let’s Gowex see Gowex letterhead 31, 70, 80, 122 Levi, Michael 81, 216, 283 Levy, Jonathan 224 libel 77, 236–8 LIBOR 1–4, 12–16, 193, 205, 215, 244 Liman & Co 235–6 limited liability 34, 225, 231 Lincoln Savings & Loan 177–8, 180, 182–3 livestock 100 Livingstone, Jesse 259 Lloyd’s of London 164, 225 Lomuscio, Joe 59 Long firms 21, 23, 27, 29, 35, 41–2, 43–50, 61, 63, 72, 73–5, 77, 79–82, 96, 141, 142, 163, 164, 212, 224, 283, 284 ‘sledge-drivers’ 232–4 against government 271–4 Lucifer’s Banker 263 M MacGregor, Gregor 5, 8, 9, 17, 77, 78, 214 dubious knighthood of 7, 162 military career 7 previous frauds 18 Madden, Steve 147 Madoff, Bernard 96, 104–5, 113 Mafia 41, 253 Mahler, Russ 249–53 management scientific 19, 200, 206–12, 215 risk management 212–13, 287 strategic 248 public sector 264 marginal cost pricing 248 Marino, Dan (fraudster) 107–9, 113, 115 Marino, Dan (quarterback) 107 maritime capitalism 34, 224–6 market corner 259 market crimes 23, 24, 58, 194, 239–62, 271, 282, 289 markets general characteristics of 23, 197, 201–4, 208, 278, 289 financial 3, 4, 8, 13, 26, 58–60, 99, 100, 107–8, 129, 132, 142–5, 147–8, 149, 150–56, 161, 163, 166, 171–2, 176, 195, 230–31, 239–40, 242–4, 256–61 pharmaceutical, ‘grey’ 136–7 drugs, illegal 43–50 prime bank securities 110–11, 184 real estate 179–80 supermarkets 213, 255 Marx, Groucho 66 Marx, Karl 84, 232, 247 McGregor, Ewan 165, 173 McVitie, Jack ‘The Hat’ 26, 41 Medicare 73–6,134–5, 199, 289 Merchant of Venice 34 Merck Pharmaceuticals 138–40 Michaela, Maria 215, 222 military planning 204, 207, 211 Milken, Michael 177, 183 Miller, Norman 52 mis-selling 194–6 money laundering 278–82 Monopolies Commission (UK) 247 mortgages 38, 77, 101, 175–9, 188, 191, 194, 215, 238 multi-level marketing 94–5 N New England Journal of Medicine 139 New Zealand 9, 172, 241 newspapers 9, 125, 152, 230, 237, 252, 262 Nichols, Robert Booth 110–12 Nikkei index 170–71, 173 nobility Scottish 7 phony scottish 5–9, see Gregor MacGregor phony 223 North Wales Railway Company 229 notaries 114, 125, 133 indiscriminate stamping of documents by in 1920s Portugal 121–2 O ODL Securities 112–13 OECD 268 oil recycling 249–54 OODA loop 208 operations research 204, 208–10, 289 OPM Leasing 63–72 snowball effect of interest expense 98 accounting trick 152–3 options markets 163–4, 171–2 Optitz, Gustav 235–7 Opus Dei 53, 57 Original Dinner Party 92 Other People’s Money 63, 285 P Paddington Buys A Share 20, 43 Parmalat 155 Patsies see fronts Payment Protection Insurance (PPI) 187–97 Payne, Leslie 26–8, 30, 33–6, 39–42, 67, 73, 98, 163, 237, 283 petrol stations 190, 247–8 pharmaceutical industry 133–41 track and trace 136 Philadelphia Savings Fund 70–71 Pigeon King International see Galbraith, Arlan pigeons, racing 100–103 Piggly Wiggly 255–61 Ponzi, Charles 84–90, 96, 109, 116 trial of 90 takeover of Hanover Trust 88–9 launch of scheme 86 Portuguese Banknote Affair 120–25 Powers, Austin 263 Poyais 5–9, 15, 78, 121, 162, 215, 219, 287, 297 prime bank securities 110–13, 122, 184 Prince 135 Prince Albert 228 Princess Caraboo see Baker, Mary Princesses 6, 223 Principles of Scientific Management 206 Prison 18, 61, 112, 119, 125, 173, 208, 252, 270 debtor’s 34, 225 private equity 144 psychology 17, 87 public choice theory 210–11 pump and dump 147 pyramid schemes 91–5, 116, 184, 222 Q Quakers 118 quality control 184, 207, 213–15, 287 Quanta Resources 251–2 Quarterly Review 162 Queen Victoria 228 Queenan, Joe 10 Qwest 150 R Rabelais, Francois 120 Railway Mania 176, 231 Ranbaxy Laboratories 137 Reagan, Ronald 174–5, 251 real estate 89, 177–81, 214, 281 Reddit 48 regulators financial 2, 4, 14, 18, 99, 165, 177–83, 194–5, 240, 260–61, 280–81, 289 softness of in 1960s London 40 environmental 250–51 pharmaceutical 136, 137, 140 Reuschel, Rollo (Stanislaus Reu) 232–8 libel case 237 Richmond-Fairfield 107 Robb, George 228 Rockwell Industries 66–71 Rogers, Will 283 rogue traders 98, 165–73, 215 Royal Canadian Mounted Police 129 S salting (mining fraud technique) 127 Sarbanes-Oxley 194, 202 Saunders, Clarence 255–61 Savings and Loans 174–84, 185, 196, 285, 289 economic theories of failure 174 business model 175 settlement, securities 60, 107, 108, 112, 163, 257, 261 Sherman Antitrust Act 246 shipowners 10, 116, 117, 164, 224–6 ships 164, 207, 221, 224–6 US Navy 89, 249 short firm 73–5, 93 short selling 147, 258–9, 261, 283 shotgun/rifle technique 76–7, 134 signatures, forged 67, 123 Silk Road (online market) 44, 47–8, 50 simplified summary which hopefully captures the important structural features see homomorphism Sketch of the Mosquito Shore 8, 162 Skilling, Jeff 17, 142, 153 slaves 34, 219–21, 225 ‘sledge-drivers’ 232–8 SLK Securities 108, 115 Smith, Adam 11, 213 on cartels 246 snowball effect see compound interest societies, high and low trust 10, 16, 62, 125, 166–7, 264, 287 Soviet planning 204, 208, 227 Sparrow, Malcolm 74, 76 St Joseph (fictitious city) 5 stock exchanges Alberta 11, 129 Toronto 129 Vancouver 11, 126 London 9, 117 New York 59–60,147, 228–31, 256–61 Chicago 59–60, 256 Singapore 170–72 Osaka 170 Tokyo in general 142–5, 147, 163–4,241–2 NASDAQ 240 Strangeways, Thomas 162, see also Gregor MacGregor Strathclyde Genetics see Galbraith, Arlan Stratton Oakmont 145–8 Sufficient Variety, Law of 209 Sullivan, Scott 154 Susquehanna River 251, 252 T tacit knowledge 202–3 Tarantino, Quentin 105 tax 32, 64, 69, 98, 155, 159, 177, 191, 263–71 value added see VAT Taylor, F.


Driverless Cars: On a Road to Nowhere by Christian Wolmar

Airbnb, autonomous vehicles, Beeching cuts, bitcoin, Boris Johnson, BRICs, carbon footprint, Chris Urmson, cognitive dissonance, congestion charging, connected car, deskilling, Diane Coyle, don't be evil, Elon Musk, high net worth, RAND corporation, ride hailing / ride sharing, self-driving car, Silicon Valley, smart cities, Tesla Model S, Travis Kalanick, wikimedia commons, Zipcar

Robert Maxwell, for whom I worked briefly in the 1980s, was in the habit of flying in one between his Oxfordshire home and the Daily Mirror office in Holborn. However, he was very much an exception in having somehow obtained a dispensation from the aviation authorities. For the most part, the disbenefits of noise and risk to the general public caused by helicopters far outweigh the advantages to a few high-net-worth individuals, and city authorities across the world have consequently effectively killed off the idea of helicopter commuting. Another example is the Kindle. Remember that this technology was supposed to eliminate books, but despite the proliferation of devices (including the simple smartphone) on which it is possible to read, after a bit of a blip when e-readers first became available, book sales have started to rise again.


pages: 328 words: 96,141

Rocket Billionaires: Elon Musk, Jeff Bezos, and the New Space Race by Tim Fernholz

Amazon Web Services, autonomous vehicles, business climate, Charles Lindbergh, Clayton Christensen, cloud computing, Colonization of Mars, corporate governance, corporate social responsibility, disruptive innovation, Donald Trump, Elon Musk, high net worth, Iridium satellite, Jeff Bezos, Kickstarter, low earth orbit, Marc Andreessen, Mark Zuckerberg, minimum viable product, multiplanetary species, mutually assured destruction, new economy, nuclear paranoia, paypal mafia, Peter H. Diamandis: Planetary Resources, Peter Thiel, pets.com, planetary scale, private space industry, profit maximization, RAND corporation, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, shareholder value, Silicon Valley, skunkworks, sovereign wealth fund, Stephen Hawking, Steve Jobs, trade route, undersea cable, We wanted flying cars, instead we got 140 characters, X Prize, Y2K

At the time, commercial satellites existed, but expense limited their use to entertainment companies broadcasting television shows and live sporting events to a mass market. Putting a satellite communications network into orbit was a much more complex technological challenge, one that would need huge amounts of capital up front. The kinds of institutions with billions of dollars to invest in a business, however, tended to the conservative side. But as the stock market rose behind Microsoft, Netscape, PayPal, and eBay, it created a class of super-high-net-worth individuals who thought they understood the technology and fully embraced risk. Among the first to take a swing was Bill Gates, who, with his childhood friend Paul Allen, cofounded a little company called Micro-Soft in 1975. By the nineties, it dominated the digital economy to the point of monopoly. Led by telecom entrepreneur Craig McCaw and backed by Saudi prince Alwaleed bin Talal, Gates financed a company called Teledesic.

“My point was . . . if you just spend on a payload that goes to Mars, you’re not going to change things. At the end of the day, it’s still going to cost the same amount, and how many people can afford to send a payload to Mars? But if you introduce low-cost launch, now you’re changing the equation.” Besides backing the goal, Garvey saw something else in Musk that seemed to distinguish him from both Big Space and other high-net-worth dabblers. Musk embraced risk. At the time, Garvey was collaborating with a team at UC Santa Cruz on a new kind of propulsion technology known as an aerospike engine; Mueller, the TRW engineer who built rocket engines in his garage, was a technical adviser. This was another attempt to one-up the industry establishment: the theory behind the aerospike was decades old, but it had never been tested on a rocket.


All About Asset Allocation, Second Edition by Richard Ferri

activist fund / activist shareholder / activist investor, asset allocation, asset-backed security, barriers to entry, Bernie Madoff, buy and hold, capital controls, commoditize, commodity trading advisor, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, equity premium, estate planning, financial independence, fixed income, full employment, high net worth, Home mortgage interest deduction, implied volatility, index fund, intangible asset, Long Term Capital Management, Mason jar, money market fund, mortgage tax deduction, passive income, pattern recognition, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, stocks for the long run, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve

Hedge funds are pooled investment vehicles that are privately organized and administered by professional investment managers. What makes a hedge fund uniquely different is the manager’s freedom to invest capital. A hedge fund may hold a large, concentrated stock position; employ a liberal use of leverage; use futures, options, swaps, and other derivatives; or sell investments short. Investors became obsessed with the mystique of hedge funds from 2000 to 2008 as stock returns waned. This is especially true in the high-net-worth marketplace, where investors clamor for access to some hedge fund opportunities. Hedge funds are very expensive. If the fund makes a gain, much of that gain goes to the hedge fund manager as a bonus in addition to his or her regular management fee. The funds are also illiquid, with many funds requiring months or even years before you are allowed to withdraw money. Finally, truly skilled hedge fund managers are not interested in managing your messy little pot of money, and you will not gain access to their fund unless you have many millions to put in.

On the negative side, hedge funds are very expensive. The average management fee for a single fund is 1.5 percent per year, plus there is a profit incentive averaging 20 percent. In addition, hedge fund performance is notoriously inconsistent. Good performance by a fund one year does not ensure or even predict good performance the next. Finally, there are high barriers to entry. Hedge funds are available only to high-net-worth investors. The minimum investment of some funds is $1 million or more. There are three broad categories of hedge funds and several subcategories: ● Arbitrage strategies. Arbitrage is the practice of exploiting price inefficiencies in the marketplace. Pure arbitrage has no risk. The trades guarantee a return. Consider this very simple example. Assume XYZ stock is trading for $42 per share on the New York Stock Exchange and $41.90 on the London Stock Exchange.


pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

activist fund / activist shareholder / activist investor, assortative mating, bank run, barriers to entry, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversification, East Village, Elon Musk, eurozone crisis, family office, financial repression, Gini coefficient, glass ceiling, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, John Meriwether, Kenneth Arrow, Kenneth Rogoff, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, money market fund, Myron Scholes, NetJets, Network effects, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, rolodex, Satyajit Das, shareholder value, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, women in the workforce, young professional

In addition, it provides a platform for the Basel Committee on Banking Supervision, the Committee on the Global Financial System, the Committee on Payment and Settlement Systems, and the Financial Stability Board (FSB).9 Set up in 1930 primarily to manage Germany’s World War I reparations, the BIS’s unusual history has to a large extent been driven by the strong personalities of central bankers.10 Its offices are located on sovereign soil not subject to Swiss law, and its employees enjoy quasi-diplomatic status and Swiss tax exemption. A Primer on Banks: Regular and Shadow Banks “Regular” banks take deposits and in turn pay interest to depositors. Then they put the deposits to work to generate revenue, usually by giving loans for which they receive interest or by investing. Savings banks are focused on accumulating money, commercial banks on working with businesses, and private banks on servicing high-net-worth individuals. Investment banks do not have banking licenses and do not take deposits from savers. Rather, they invest on their clients’ behalf, render investment advice, and engage in corporate transactions such as mergers, acquisitions, and initial public offerings. Their deals are usually a bit riskier because they deal with sophisticated clients. Shadow banks is a catchall term for all financial service providers that lack a banking license, such as investment banks, broker dealers, investment funds, and money market funds.

Such was the scene of one of the family office gatherings that I regularly attended. Bodyguards clad in black pants and turtlenecks protected the family principals and their top executives, who represented a net worth of about $150 billion under one roof. Throughout my career, I had only dealt with institutional investors, but after starting my own company, I stumbled into the private wealth space. Because I knew many ultra-high-net-worth individuals globally, the family office of an IT billionaire asked me to assist in building a global nonprofit platform for family offices, where they could meet to exchange views and cooperate without the involvement of financial intermediaries, such as bankers or other service providers like attorneys and tax advisers. Such gatherings are among the most exclusive and private, because these families and their representatives only open their ranks if you are one of them.


pages: 332 words: 97,325

The Launch Pad: Inside Y Combinator, Silicon Valley's Most Exclusive School for Startups by Randall Stross

affirmative action, Airbnb, AltaVista, always be closing, Amazon Mechanical Turk, Amazon Web Services, barriers to entry, Ben Horowitz, Burning Man, business cycle, California gold rush, call centre, cloud computing, crowdsourcing, don't be evil, Elon Musk, high net worth, index fund, inventory management, John Markoff, Justin.tv, Lean Startup, Marc Andreessen, Mark Zuckerberg, medical residency, Menlo Park, Minecraft, minimum viable product, Paul Buchheit, Paul Graham, Peter Thiel, QR code, Richard Feynman, Richard Florida, ride hailing / ride sharing, Sam Altman, Sand Hill Road, side project, Silicon Valley, Silicon Valley startup, Skype, social graph, software is eating the world, South of Market, San Francisco, speech recognition, Stanford marshmallow experiment, Startup school, stealth mode startup, Steve Jobs, Steve Wozniak, Steven Levy, TaskRabbit, transaction costs, Y Combinator

He said, “Anyone doing it with the idea that they can simply find the next Google, invest a bunch of money, and then get super rich is going to be very disappointed.” Buchheit has done well with his investments, but the chances that the value of any given investment will drop to zero are quite high. Congress bars members of the general public from investing in startups like YC’s, which don’t make their basic financial information public. On Demo Day, the audience will consist entirely of individuals with a high net worth or annual income, what the SEC calls “accredited investors.” This originates in the Securities Act of 1933, which seeks to protect unsophisticated investors from losing their life savings. The law requires formal disclosure of essential financial information before stocks, bonds, or other securities can be issued and offered for sale. It does waive disclosure requirements in a few cases, however, such as when the offering would be limited to accredited investors who, presumably, are sufficiently sophisticated that they can evaluate the offering without the enforced disclosures required by the SEC.11 Another year would go by before Congress opened a new path to public financing of startups when it passed the JOBS Act (Jumpstart Our Business Startups).

On the roof, three industrial air-conditioning units—two of which were added in preparation for this day—are laboring. But they cannot handle the combination of summer temperatures and the heat produced by the mass of bodies packed into the main hall. Inside, it’s not comfortable. The attendees are partners at venture capital firms or tech company founders or executives who are retired and now doing angel investing full-time. YC is now known well enough among high-net-worth individuals with a special interest in tech startups that today’s Demo Day has drawn a husband-wife pair of celebrities from the entertainment world. Demi Moore comes in first, and many minutes later she is joined by Ashton Kutcher.1 YC founders, who are banished to the outside until their individual turns come, set upon Kutcher when he arrived—they knew he was coming—and tried to introduce themselves and their startups, scrabbling to get his attention.


pages: 130 words: 32,279

Beyond the 4% Rule: The Science of Retirement Portfolios That Last a Lifetime by Abraham Okusanya

asset allocation, diversification, diversified portfolio, high net worth, longitudinal study, market design, mental accounting, Paul Samuelson, quantitative easing, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, transaction costs

From age 75 onwards, even the ‘Just Getting By’ group, which is the lowest income group, starts to save. This is because they spend less on non-essential items towards the end of life. These findings are consistent with findings19 in the US, where researchers found that retirement spending tends to decrease by at least 1% a year in real terms throughout retirement! Additional research by JP Morgan Chase (2015)20 shows that, even for high-net worth (HNW) households (US), spending in retirement tends to decline as they get older. Care costs jump in later life but not enough to upend decline in other discretionary expenses. Of course, many people will need care in later life, but this isn’t typical. Consider the following data from Age UK (2016)21. Only 16% of people aged 85+ in the UK live in care homes. The median period from admission to the care home to death is 462 days. (15 months) Around 27% of people lived in care homes for more than three years.


pages: 375 words: 105,067

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen

American ideology, asset allocation, Bernie Madoff, buy and hold, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, London Whale, longitudinal study, Mark Zuckerberg, money market fund, mortgage debt, oil shock, payday loans, pension reform, Ponzi scheme, post-work, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, Stanford marshmallow experiment, stocks for the long run, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise

Porter would, over a period of years, develop the genre of personal finance out of this fulcrum, and can be fairly labeled the mother of the personal finance industrial complex, embracing the can-do practical spirit of the self-help movement, while eschewing its magical-thinking aspects. “I write for a faceless image of myself,” she told Time magazine. “I figure if I’m interested in a subject, other people will be too.” In these days of around-the-clock financial news and investment advice available everywhere from the Web to television, it is easy to forget how revolutionary all this was. Prior to Porter, the vast majority of financial guidance was aimed at high-net-worth readers of newspapers like the Wall Street Journal. Porter was among the first financial writers to understand that people without megabucks needed help managing their money, too. Through her conversational and straightforward writing style, she explained how broad financial trends impacted one’s pocketbook and then told people how to handle the money contained therein. Her recipe for success combined explaining economics with simple, easy to understand advice, while holding government officials’ feet to the fire when necessary.

Prudential, for example, found that more than half the women they interviewed felt “‘very’ comfortable letting another take the ‘lead’ to do planning, research and analysis” to determine what financial products would be best for them. Many others over the years have come to similar conclusions. Ameriprise found 46 percent of women had sought help with retirement planning from a financial services professional. Men? Thirty-eight percent. This differential is seen in even high-net-worth individuals. When the Spectrem Group, a marketing group that studies the affluent and retirement markets, looked at the investment habits of those worth more than $5 million, 46 percent of women felt they had needed the advice of financial professionals, versus 34 percent of men. As a result, taking care of the ladies is increasingly viewed as a good business model, a way to establish a profitable outpost in the money management business as women are “a loyal and lucrative niche,” in the words of the Christian Science Monitor.


pages: 372 words: 109,536

The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money by Frederik Obermaier

banking crisis, blood diamonds, credit crunch, crony capitalism, Deng Xiaoping, Edward Snowden, family office, high net worth, income inequality, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, mega-rich, Mikhail Gorbachev, mortgage debt, Nelson Mandela, offshore financial centre, optical character recognition, out of africa, race to the bottom, We are the 99%, WikiLeaks

And on top of that, sometimes it’s difficult to get the money there, and a roundabout approach is required. That’s how Mossfon sees it too: a Mossfon employee writes to an interested party from Germany, telling him that ‘the vast majority’ of its clients are ‘so-called high-net-worth individuals’, who may have assets ‘of more than $500,000’. The Mossfon employee alerts the individual to the fact that ‘structures that require the highest degree of confidentiality and professionalism can often cost many thousands of dollars each year’. Not a problem for the super-rich. And there are richer people still: in the world of asset managers, ‘ultra-high-net-worth individuals’ are those who can generally be expected to invest at least $30 million. There are currently around 103,000 people who fall into this category, and the number is increasing year on year. This group certainly includes a large number of sheikhs from the Middle East, who own companies managed by Mossfon.


pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile by Alexander Davidson

accounting loophole / creative accounting, algorithmic trading, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Big bang: deregulation of the City of London, buy and hold, capital asset pricing model, central bank independence, corporate governance, Credit Default Swap, dematerialisation, discounted cash flows, diversified portfolio, double entry bookkeeping, Edward Lloyd's coffeehouse, Elliott wave, Exxon Valdez, forensic accounting, global reserve currency, high net worth, index fund, inflation targeting, intangible asset, interest rate derivative, interest rate swap, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Nick Leeson, North Sea oil, Northern Rock, pension reform, Piper Alpha, price stability, purchasing power parity, Real Time Gross Settlement, reserve currency, Right to Buy, shareholder value, short selling, The Wealth of Nations by Adam Smith, transaction costs, value at risk, yield curve, zero-coupon bond

Government bonds Bonds are short to long-term debt vehicles. As an asset class, they are more stable than equities, although they show much lower long-term gains. Pension funds and insurance companies (see Chapter 18) are the largest traditional investors because bonds can help to match their liabilities more precisely than equities or other instruments. Rates on annuities (see Chapter 31) are linked to bond returns. Mutual funds, central banks and high net-worth individuals favour bonds. In September 2006, the outstanding value of bonds from UK issuers was £1,854 billion, up 10 per cent on the end-2005 total, and more than three times the amount 10 years earlier, according to the May 2007 edition of International Financial Markets in the UK, published by International Financial Services, London (IFSL). In the UK, there has been a movement away from government into nongovernment bonds, the IFSL report said.

The VCT plans an exit from its investments through a stock market listing or a takeover. If the company achieves a London Stock Exchange (LSE) listing, it may remain a VCT investment for five years. Should the VCT be taken over, its investors will be entitled to a cut of the payment. VCTs may be bought directly, or though a stockbroker or financial adviser. The range of buyers has broadened beyond high net-worth investors, sophisticated investors and corporates. There are specialist VCTs and generalist VCTs, involving listed and unlisted companies. Independent financial advisers may be keen to sell VCTs because of the high commission structure, typically 5 to 7 per cent, and have been known to highlight the tax break. The FSA has in the past expressed concerns that the risks are not being explained adequately. _______________________________________ POOLED INVESTMENTS 169  Real estate investment trusts A real estate investment trust (REIT) is a quoted company that conducts a property rental business.


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

"Robert Solow", affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, high net worth, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, Plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Silicon Valley, single-payer health, special economic zone, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

Governments have clearly realized that citizenship is indeed an asset and that it may be in the interest of current citizens for their government to sell it, assuming implicitly that the monetary gain from the sale of that asset will more than offset the loss of sharing citizenship with one more person. It is in the interest of current citizens to set the price of citizenship high. Citizenship is thus marketed only to rich individuals. The costs of acquiring it, either directly or through first obtaining a residency permit, are high: they range from €250,000 in Greece to £2 million in the United Kingdom. But these are hardly insuperable costs for high-net-worth individuals (people whose financial assets are between $1 million and $5 million): it is estimated that about one-third of these wealthy individuals, that is, about 10 million people worldwide, have a second passport or dual citizenship (Solimano 2018, 16, calculated from 2017 Credit Suisse Global Wealth Report). Subcitizenship To address the subject of citizenship as it exists in reality, we have to recognize that there are different categories (levels) of citizenship.

Enablers of worldwide corruption in recipient countries The second ground for believing that corruption has been increasing has to do with the enabling framework. I have already touched upon it by showing how currency controls, which were common across the world including in advanced economies, as well as nonconvertible currencies, limited the ability to transfer money abroad. In addition, there was not much of a framework in place to enable corruption in countries that were potential recipients of money. The growth of banks that specialize in high-net-worth individuals and of legal offices whose main role is to facilitate transfers of illegally acquired money happened in tandem with globalization. Greater opportunities for corruption, or in this case an increased “supply” of parties interested in hiding or investing their money abroad, called forth greater “demand” for such funds, as reflected in the creation of new occupations that specialize in helping illegally acquired money find a new home.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

Air France Flight 447, Andrei Shleifer, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, business cycle, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, financial independence, Flash crash, Gary Taubes, George Santayana, Gini coefficient, Henri Poincaré, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, meta analysis, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

As I was depleting the topics of conversation with the (Polish) driver, I wondered whether Haussmann was not right, and whether London would be better off if it had its Haussmann razing neighborhoods and plowing wide arteries to facilitate circulation. Until it hit me that, in fact, if there was so much traffic in London, as compared to other cities, it was because people wanted to be there, and being there for them exceeded the costs. More than a third of the residents in London are foreign-born, and, in addition to immigrants, most high net worth individuals on the planet get their starter pied-à-terre in Central London. It could be that the absence of these large avenues and absence of a dominating state is part of its appeal. Nobody would buy a pied-à-terre in Brasilia, the perfectly top-down city built from scratch on a map. I also checked and saw that the most expensive neighborhoods in Paris today (such as the Sixth Arrondissement or Île Saint-Louis) were the ones that had been left alone by the nineteenth-century renovators.

(As I said, if you see fraud …) Let us call it the Alan Blinder problem. The story is as follows. At Davos, during a private coffee conversation that I thought aimed at saving the world from, among other things, moral hazard and agency problems, I was interrupted by Alan Blinder, a former vice chairman of the Federal Reserve Bank of the United States, who tried to sell me a peculiar investment product that aims at legally hoodwinking taxpayers. It allowed the high net worth investor to get around the regulations limiting deposit insurance (at the time, $100,000) and benefit from coverage for near-unlimited amounts. The investor would deposit funds in any amount and Prof. Blinder’s company would break it up into smaller accounts and invest in banks, thus escaping the limit; it would look like a single account but would be insured in full. In other words, it would allow the super-rich to scam taxpayers by getting free government-sponsored insurance.

Dalio: Bridgewater-Associates-Ray-Dalio-Principles. BOOK IV: Optionality, Technology, and the Intelligence of Antifragility The Teleological Aristotle and his influence: Rashed (2007), both an Arabist and a Hellenist. The nobility of failure: Morris (1975). Optionality Bricolage: Jacob (1977a, 1977b), Esnault (2001). Rich getting richer: On the total wealth for HNWI (High Net Worth Individuals) increasing, see Merrill Lynch data in “World’s wealthiest people now richer than before the credit crunch,” Jill Treanor, The Guardian, June 2012. The next graph shows why it has nothing to do with growth and total wealth formation. FIGURE 39. Luxury goods and optionality. On the vertical the probability, on the horizontal the integral of wealth. Antifragility city: the effect of change in inequality on the pool of very rich increases nonlinearly in the tails: the money of the superrich reacts to inequality rather than total wealth in the world.


Small Change: Why Business Won't Save the World by Michael Edwards

Bernie Madoff, clean water, corporate governance, corporate social responsibility, different worldview, high net worth, invisible hand, knowledge economy, light touch regulation, Mahatma Gandhi, Mark Shuttleworth, market bubble, microcredit, Nelson Mandela, New Journalism, Ponzi scheme, profit motive, Robert Shiller, Robert Shiller, shareholder value, Silicon Valley, Silicon Valley startup, Social Responsibility of Business Is to Increase Its Profits, The Fortune at the Bottom of the Pyramid, The Spirit Level, The Wealth of Nations by Adam Smith, transaction costs

Lee Scott, the CEO of Walmart.17 So let’s hold these leaders to their commitments and ensure that they deliver on their promises. Some wealthy individuals are already heading in this direction. For example, the Arcus Foundation in the United States (founded by the medical equipment entrepreneur Jon Stryker) invests in efforts to promote and protect gay and lesbian rights and other areas of social and racial justice; and the Resource Generation network works with young high-net-worth individuals to “support and challenge each other” to use their wealth to contribute to “social, racial and economic justice.”18 The Omidyar Network recently gave $2.1 million to Harvard University to “identify and adapt military tools and approaches that aim to prevent genocide.” Corporate Voices for Working Families links over fifty companies that have developed family-support policies for their own workforces and that advocate together for government policies that do the same; and the Hewlett Foundation’s recent gift of $113 million to create one hundred endowed chairs at the University of California, Berkeley is a great demonstration of support for public goods.


pages: 121 words: 36,908

Four Futures: Life After Capitalism by Peter Frase

Airbnb, basic income, bitcoin, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cryptocurrency, deindustrialization, Edward Snowden, Erik Brynjolfsson, Ferguson, Missouri, fixed income, full employment, future of work, high net worth, income inequality, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), iterative process, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, litecoin, mass incarceration, means of production, Occupy movement, pattern recognition, peak oil, plutocrats, Plutocrats, post-work, postindustrial economy, price mechanism, private military company, Ray Kurzweil, Robert Gordon, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart meter, TaskRabbit, technoutopianism, The Future of Employment, Thomas Malthus, Tyler Cowen: Great Stagnation, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, We are the 99%, Wolfgang Streeck

Another island, the island of Manhattan, is also gradually being turned into an enclave of the global rich: in 2014, over half of Manhattan real estate sales worth $5 million or more were to foreigners or anonymous buyers behind shell companies (most of whom are believed to be non-American).15 These purchases serve the dual purpose of laundering money and hiding it from prying governments, as well as providing a landing place in case of unrest in their home countries. At the intersection of paranoia and tasteless consumption, there’s Vivos, whose website promises “the ultimate life assurance solution for high net worth families.” The company is building an eighty-apartment, radiation-proof megabunker, carved into a mountain in Germany. These aren’t your ordinary bomb-shelters, but rather luxury apartments featuring all the leather and stainless steel trappings of the nouveau riche. Company founder Robert Vicino described the complex to the Vice website as comparable to “an underground yacht.” For a mere 2.5 million Euros and up, you too can wait out the apocalypse in style.


pages: 561 words: 114,843

Startup CEO: A Field Guide to Scaling Up Your Business, + Website by Matt Blumberg

activist fund / activist shareholder / activist investor, airport security, Albert Einstein, bank run, Ben Horowitz, Broken windows theory, crowdsourcing, deskilling, fear of failure, high batting average, high net worth, hiring and firing, Inbox Zero, James Hargreaves, Jeff Bezos, job satisfaction, Kickstarter, knowledge economy, knowledge worker, Lean Startup, Mark Zuckerberg, minimum viable product, pattern recognition, performance metric, pets.com, rolodex, Rubik’s Cube, shareholder value, Silicon Valley, Skype

With Series A and subsequent rounds, this is a risk you may have to take. This is a good reason to avoid VCs in angel rounds. Throwing $200,000 into an idea is extremely low-risk for a VC but they will only provide follow up investment for a handful of those deals. If yours isn’t one they follow up on, you could be sunk. Angel Investors Though there are institutional “angel” groups, angel investors are typically high-net-worth individuals who put personal money into a company. The Good: Angels are often your friends and family, so they don’t play hardball when negotiating terms. The Bad: Angels are typically your friends and family, so every dinner party you attend has the potential to morph into an ad hoc investor relations conference. You can blunt this by designating some social times as “work-free zones,” but it’s still there, lurking in the background.

Great investors never have a ready-made list of the ways they add value to companies—and they specifically never talk about the help they give in recruiting executives or making sales/biz dev introductions. 10. Great investors recognize when they have a conflict around a portfolio company and are clear to represent their points of view with proper context, recusing themselves from meetings or votes when appropriate. You owe it to yourself to have great investors backing you. Find ones who meet every criterion on this list. DEBT If you don’t have access to high-net-worth individuals—and you don’t have significant savings yourself—starting a company can be extremely difficult. There are a number of types of debt you can take on to finance your business. While debt typically makes more sense for mature business, there are times when debt can work for a startup. Convertible Debt Sometimes angel investors, or even early stage venture capitalists, will want to structure a deal as convertible debt instead of equity.


pages: 401 words: 115,959

Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

Albert Einstein, anti-communist, barriers to entry, battle of ideas, Bernie Madoff, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean water, cleantech, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, don't be evil, family office, financial innovation, full employment, global pandemic, global village, God and Mammon, Hernando de Soto, high net worth, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Harrison: Longitude, joint-stock company, knowledge economy, knowledge worker, Live Aid, lone genius, Marc Andreessen, market bubble, mass affluent, microcredit, Mikhail Gorbachev, Nelson Mandela, new economy, offshore financial centre, old-boy network, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, Plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

“This is a momentum thing; the more people that are involved, the more it draws other people in.” “But what proportion of the new rich will ultimately start to give back? I think it’ll be a high percentage,” says Gates, “more like seventy percent than fifteen percent.” The annual Capgemini/Merrill Lynch World Wealth Report noted a 20 percent surge in giving by the rich in North America in 2006. This trend is not confined to America. “Led by the ranks of the ultra-wealthy, [high-net-worth individuals] are increasing the financial resources, time and thought they donate to philanthropic causes,” concluded the report, which found that those wealthy individuals who engaged in philanthropy typically gave away around 7 percent of their wealth, far more than did the average citizen. “Veteran fund raisers say the outlook for giving is the most upbeat in a generation,” reported the house journal of the American giving business, the Chronicle of Philanthropy, in 2006.

There is a responsibility to give something back.” An expectation that the state will take care of things is perhaps the single most important factor in the tendency of wealthy Europeans and Britons to give less than Americans. This difference was highlighted in the British investigation Why Rich People Give, by Theresa Lloyd, a philanthropy consultant. In her 2004 study, based on interviews with seventy-three high-net-worth individuals, Lloyd ascribes higher U.S. giving rates to the attachment of the rich in America to a more individualistic social model without universal welfare provision. But this is changing, reports Handy in The New Philanthropists: a European tycoon who once would have said that paying taxes was enough to fulfill his responsibilities is nowadays more likely to give back as well. The causes that the superrich feel a responsibility to address often start with a personal experience.


pages: 364 words: 112,681

Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back by Oliver Bullough

banking crisis, Bernie Madoff, bitcoin, blood diamonds, Bretton Woods, BRICs, British Empire, capital controls, central bank independence, corporate governance, cryptocurrency, cuban missile crisis, dark matter, diversification, Donald Trump, energy security, failed state, Flash crash, Francis Fukuyama: the end of history, full employment, high net worth, if you see hoof prints, think horses—not zebras, income inequality, joint-stock company, liberal capitalism, liberal world order, mass immigration, medical malpractice, offshore financial centre, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, rent-seeking, Richard Feynman, risk tolerance, Sloane Ranger, sovereign wealth fund, WikiLeaks

The Moneyland ratchet always leads to looser and laxer regulations for the rich. And the highly intelligent bankers, accountants and lawyers will keep hunting for tunnels for their clients to slip their money through. Wealth-X, a consulting company that maps the movements of the super-rich as if they are wildebeest, calculates that in 2016 there were 226,450 people in the world with assets worth more than $30 million (it calls them ultra-high-net worth people, or UHNWs), a 3.5 per cent increase on the year before. Collectively, their wealth had increased over the previous twelve months by 1.5 per cent to $27 trillion, which is roughly equivalent to the entire output of China and the United States added together. And the outlook for further increases is good: ‘SOLID GROWTH EXPECTED ACROSS THE ULTRA WEALTHY SECTOR,’ proclaims the company’s World Ultra Wealth Report 2017.

157–8 Henley & Partners 136–9, 149–51, 155–6, 251 Henry, James 47 Herbert, William ‘Billy’ 144, 145–8 Hergé 38 Heritage Foundation 261 Heydarov, Kamaladdin 273–4 Heydarov, Nijat 11, 274 Heydarov, Tale 11, 274, 275 Holder, Eric 186 Hong Kong 19, 46, 98, 143–4 Hoppner, Harold 137 Human Rights Watch 119 Hydra Lenders 54 IBC Bank of Laredo 270 Idaho 57, 255 Iglesias, Julio 226 incorporation agents 77–8, 83–4, 93, 94–5 Indian Creek, Florida 226–7, 229 Indonesia 9, 10 inequality 5–6, 11, 14–15, 27, 102 and plutonomy 233–5, 240–1 International Maritime Organization (IMO) 159, 162 International Monetary Fund (IMF) 28, 34, 277 Angola 213 and corruption 133–4 illegal money 181 Russia 65, 66, 67 St Kitts and Nevis 151 Ukraine 192 Isle of Man 19, 21, 186, 265 Ismaylova, Khadija 55 Israel 240 Italy 81 Ivanov, Viktor 206 Ivanyushchenko, Yuri 194 Jackson, Michael 183 Japan 85–6, 166 Jersey 19, 46, 60–4, 71, 184, 250, 269, 276, 278 Christensen 61–2 and FIMACO 66–7 Powell and Harper 62–4 Kadyrov, Ramzan 166, 239 Kalin, Christian 135–6, 137, 149–51, 155–6 Kaplin, Sergei 116 Kapur, Ajay 233–7, 240–1 Karimova, Gulnara 97–8 Karpov, Pavel 179–80 Kasko, Vitaly 189–90, 191–2, 194–5 Kazakhstan 10, 92, 184 Kelly, Karen 242 Kensington and Chelsea 221–3 Kenya 184–5 Keogh, Jim 35 Keynes, John Maynard 28, 277 Khan, Nadeem 83–4 King, Justice Eleanor 52 Kleinfeld Bridal 210, 211, 212, 216 kleptocracy 122, 123, 125, 130 see also corruption Klitgaard, Robert 130–1 Knight, Pau 81 Korner, Eric 41–2 Kovtun, Dmitry 203–4, 206, 207 Kramer, Al 264–5 Kyrgyzstan 6 Labour Party (St Kitts and Nevis) 142–3, 144–5, 149 Landscape of Lies 81 Las Vegas 254 Latvia 98, 189, 193 Lawrence, Laurie 52 Legal Nominees Ltd 82–3, 84 Lenin, Vladimir 209 Lesin, Mikhail 208 Lethal Weapon 2 160–1 libel tourism 169, 172–5, 179–80 Liberia 19, 49 Libya 9, 11, 91, 195 Liechtenstein 19, 76, 183 Limited Liability Companies (LLCs) 50, 91 Lindblad, Göran 274 Litvinenko, Alexander 196–209 Litvinenko, Marina 196–200, 205 Lombard Odier 98 London 9, 23, 25, 33 Harley Street 74–84 Kleptocracy Tours 17–20 Litvinenko murder 196–209 private banking 99, 101, 102 property 10, 17–20, 87, 218, 221–4, 237, 269 see also City of London London Kleptocracy Tours 17–20 Los Angeles 9 Low, Jho 156 Lugovoy, Andrei 203–4, 205–7 Luxembourg 17, 46, 71 eurobonds 39, 40, 41 McGown, Ally 211, 214 Macias Nguema, Francisco 119, 130 McLean, Andrea 81 Macpherson, Elle 229 Macron, Emmanuel 55, 59 Magnitsky, Sergei 55, 92, 178–80 Mainichi Shimbun 85–6 Malaysia 7, 9, 240, 270 Malta 136, 137, 138, 155, 156 Manafort, Paul 13–14, 17, 19, 69, 270–1 Marchenko, Oleg 112 Marcos, Imelda 121 Marcovici, Philip 250 Marshall Islands 274 Marx, Karl 209 Mauritius 19 May, Theresa 187 Mayer, Jane 272 MC Brooklyn Holdings LLC 14 MCA Shipping 19 Merrill Lynch Bank 240 Mexico 15, 99–100, 111, 270 Mezhyhirya palace 1–3, 9 Miami 9, 23, 87–8, 226–30 Miller, Jed 18–19 Miller, Jonathan 220–1 Mishcon de Reya 162 Mitchell, Daniel 261 Mitchell, Don 146 Moghadam, Alizera 156 Monaco 9, 19, 186 Moneyland 21, 22–6, 278 creation 26, 27–48, 70–1 defending 20, 24, 135–209 fighting back 24, 242–53, 269–78 hiding wealth 10, 12–14, 24, 49–102, 254–68 spending 17–20, 24, 210–17, 218–41 stealing 1–12, 14–16, 23, 24, 103–34, 270–1 Montana 95 Montenegro 136 Montfler SA 275 Moore, Michael 237 Moran, Rick 242 Morgenthau, Henry 87, 272 Morning Star 50, 57 Moscow, John 61–2 MPLA 212, 213, 214 Mueller, Robert 12–13, 14, 69, 270 Murray, Andy 269 Musy, Oleg 113–15 NAV Sarao Milking Markets Fund 54 Nazarabayev, Nursultan 184 Netherlands 91, 98 Netherlands Antilles 43 Neufeld, David 50 Nevada 269, 278 company formation 93–4, 95, 96 trusts 255, 256–8, 261–5, 266 Nevis 49–60, 139, 144, 266–8, 269, 277 Nevis International Trust Company (NITC) 57 New York 9, 23, 25, 98 banking 33, 36, 101, 102 Manafort 12–14 property 10, 218–21, 224–6, 230–1, 269 New York Times 156 New Zealand 16, 92 Nigeria 10–11, 12, 270 Achebe 123–5 advanced fee fraud 128–9 asset recovery 10, 54–5, 182, 183, 184, 185 corruption 9, 86–7, 123–6, 128–30, 132, 269 Nisbett Invest SA 275 No Longer At Ease (Achebe) 123–4 Nobre, Luis 80–1, 84 Nominee Director Ltd 84 North Korea 16 Northern Ireland 272 Norway 81 Novata Gazeta 72–3 Obama, Barack 267 Obiang, Teodorin 131–2, 133, 237–8 Obiang, Teodoro 119, 131, 183, 237–8 Oesterlund, Robert 53 offshore 36, 45–7, 273 eurobonds 39–43 eurodollars 36, 252 sharing data 246, 248–53, 259 see also Moneyland offshore radio stations 35–6 O’Flaherty, Victoria 140–2 Okemo, Chrysanthus 184 Olenicoff, Igor 244 Olson, Mancur 21–2 Olswang 179 One Hyde Park 224 Onipko, Natalya 104–5, 108–10 Orange Revolution 23 Oregon 96 Organisation for Economic Cooperation and Development (OECD) 251 Organised Crime and Corruption Reporting Project (OCCRP) 57 Orwell, George 121 Owen, Robert 207 Oxfam 133, 251 P&A Corporate Services Trust Reg 76 Pakistan 12 Palmer, Richard 69–70 Panama 19, 270 Panoceanic Trading Corporation 19 passports 20, 136–56, 251, 277 Paton, Leslie 75 Pawar, Charlotte 83, 276 Penney, Andrew 258 Pennsylvania 95 People’s Action Movement (PAM) (St Kitts and Nevis) 142–3, 145, 149 People’s Prosecutor 116 Perepada, Gennady 224–6, 271 Perepilichny, Alexander 208 person with significant control (PSC) 276 Peru 7 Peters & Peters 171, 188, 191, 192 Philippines 7, 9, 121, 182–3, 240 Pichulik, Dylan 230–1 Piketty, Thomas 14, 233 pirate radio stations 35–6 plutonomy 217, 233–41 Poland 125 Politically Exposed Persons (PEPs) 100 polonium-210 202–3, 204, 207, 208 Pompolo Limited 270 Power, Graham 62–4 PR agencies 176–7 Premier Trust 257 privacy 273 bank accounts 245–53, 259–61, 270, 276 corporate structures 82–4, 275–6 trusts 261–3 private banking 99–101, 132–3 Professional Nominees 82–3, 84 Proksch, Reinhard 76 property 10, 57, 218–32, 237, 269, 276 London 17–20, 87 Purnell, Jon 98 Pursglove, Sarah 53 Putin, Vladimir 5, 16, 72–3, 272 and Browder 178 and Litvinenko 201, 204, 206 and organised crime 172–3 and Skuratov video 72 and Ukraine 166 Pyatt, Geoffrey 192–3 Qualified Intermediary (QI) scheme 245, 246, 247, 249 Rajatnaram, Sinnathamby 121–2, 125 Raven, Ronald 75 Rejniak, Marek 80 Reno 253, 254–5, 257–8, 261–3, 265 Riggs Bank 131 Rijock, Kenneth 146–7, 148 Robins, Craig 229 Rolling Stones 31 Romania 81 Rothschild & Co 258, 265 Rowling, J.K. 271 Russia 11, 121, 270 Bentley cars 5–6 Berezniki 219–20 Browder 177–80 corruption 17, 25, 65–70, 72–3, 95, 173 and Crimea 11–12, 105 FIMACO 65–8, 72 inequality 5–6, 15–16, 240 and Litvinenko murder 203–9 Magnitsky affair 92 and Nevis 55, 57, 58, 59 offshore wealth 9, 47, 66–70, 95, 182 overseas property 219–20, 222, 225, 228 sanctions 137, 166 Teva Pharmaceutical 111 and Ukraine 11–12, 166 and US presidential election 13, 271, 272 watches 238–9 Yukos oil company 96 Rybolovlev, Dmitry 219–20 Saez, Emmanuel 233 St Kitts 56, 139 St Kitts and Nevis 49, 139, 142, 278 Economic Citizenship Programme 139–56 see also Nevis St Lucia 138, 155, 159–60, 161–4 St Vincent and the Grenadines 17, 19 Sakvarelidze, David 192, 193, 194, 195 Salinas, Raul 99–100 Sanchez, Alex 260 Sarao, Navinder 54 Saviano, Roberto 127 Savills 223 Say Yes to the Dress 210–12, 214–16 Schwebel, Gerry 270 Scotland 9 Second World War 26, 27 secrecy see privacy Securities and Exchange Commission (SEC) (US) 111 Semivolos, Andrei 105–6, 116, 117 Serious Fraud Office (SFO) (UK) 187, 189, 190–1, 194 Seychelles 9, 19, 84 Sharp, Howard 184–5 Shchepotin, Igor 103, 105, 110, 114, 115–17 Shedada, Kamal 154–5 shell companies 10, 17, 19, 50–5, 87–97 Sheridan, Jim 274 Sherpa 89 Sherwin & Noble (S&N) 78–80 Shvets, Yuri 206 Sidorenko, Konstantin 104, 110–11 Sigma Tech Enterprises 84 Silkenat, James 89 Simmonds, Kennedy 144, 148, 153 Singapore 46, 121, 240 Skripal, Sergei 208 Skuratov, Yuri 65–6, 72 Sloane Rangers 221–2 Smith, Mr Justice Peter 90 Smith, Vaughan 171–2 Snyder, Shawn 51 Soffer, Donald 229 Soffer, Jackie 229 Soffer, Jeffrey 229 Soloman, Sam 83 Somalia 16, 91, 127 Sonangol 213 Sooliman, Imtiaz 137 South Dakota 255, 258, 263 South Sudan 16 Soviet Union and Angola 212–13 dissolution 4–5 eurodollars 34, 35 healthcare 106 see also Azerbaijan; Kazakhstan; Kyrgyzstan; Russia; Ukraine; Uzbekistan SP Trading 92 Spain 206–7 spending 24, 216–17, 235–6 Say Yes to the Dress 210–16 watches 238–9 whisky 240 wine 239 see also property Spink, Mike 224 Spira, Peter 39, 40–1 Stephens, Mark 160 Stolen Asset Recovery (StAR) initiative 89 succession planning 60 sugar 149 Sukholuchya shooting lodge 3–4, 5, 8–9, 75–6 Sunny Isles Beach, Florida 228–30 Sutton, Heidi-Lynn 58–60, 277 Sweden 182 Switzerland 46, 102, 266 asset recovery 98, 182–3, 184, 185 bank secrecy 37–9, 40, 41, 42, 71, 99, 242–8, 253, 259–60, 261 sharing data 251 and United States 24, 242–8 watches 238 Syria 20 Taiwan 55, 59, 240 Takilant 98 Tax Justice Network 62, 89 TEAS (The European Azerbaijan Society) 273–5 Teliasonera 98 Teva Pharmaceutical 111–12 Thurlow, Edward 91 Tintin 38 Tobon, John 87–9, 228, 276 Tonga 143 Tornai, Pnina 210–12, 214–15, 216 Transparency International (TI) 16, 89, 119, 127, 174 Trump, Donald 210, 277–8 election 13, 69, 270, 277 properties 1, 220 Russian ties 228 trust 117 trusts 60, 255–8, 261–6 Tunisia 7 Turover, Felipe 72–3 UBS 61, 245, 246–7, 248, 258–9 Ukraine 11 2014 revolution 1–4, 10, 23, 104, 105–6, 113–14, 186 asset recovery 186–95 Aveiro 275 company reporting 275 corruption 6–7, 9, 11–12, 15, 17, 20, 103–17, 170–2, 269, 270 Crimea 11–12, 105 healthcare 103–17, 170–2 Manafort 13 Mezhyhirya palace 1–3, 9 and Nevis 55, 59 Orange Revolution 23 sanctions 166–9, 194 Sukholuchya shooting lodge 3–4, 5, 8–9, 75–6 ultra-high-net worth people (UNNWs) 101–2 UNITA 212, 213, 214 United Kingdom (UK) anti-corruption agenda 278 asset recovery 185, 186–95 and Azerbaijan 273–5 Brexit referendum 138, 271, 272, 278 Bribery Act 89 companies 77, 82, 91, 276 corruption 17, 127 currency crisis 34 Financial Conduct Authority 89 inequality 235 inflows of money 182 libel laws 169–75, 179 and Nevis 57 pirate radio stations 35–6 and Russia 173, 204–5, 222, 266 and St Lucia 161 sharing data 249–50 Skripal poisoning 208 and Ukraine 186–95 visas 138 Welfare State 31 see also City of London; London United Nations 126–7 United States 2016 presidential election 271, 272 and Angola 212, 213 anti-bribery measures 277–8 asset recovery 183–4, 185, 186, 190, 192–3 bank secrecy 260–1, 270 banks 31, 44, 45 Bretton Woods system 28, 34, 43–4 corruption 17 and Equatorial Guinea 131, 183–4 eurobonds 43 eurodollars 35 FATCA 248–9, 251, 252–3, 258, 259, 261, 262, 266 Flash Crash 54 free speech 174–5 inequality 14, 15, 235, 237 and Jersey 61–2 limited liability companies 91 Magnitsky laws 178 and Nevis 50–2, 54–5, 57, 58 offshore wealth 47 and Russia 68–70 and St Kitts 156 shell companies 87–90, 92–7 and Swiss banks 24, 242–8 trusts 255–8, 261–6 and Ukraine 166, 186, 190, 192–3 visas 138 see also individual states; Miami; New York Uralkali 219, 220 Uzbekistan 97–8, 184 Vanish (yacht) 151–2 Vedomosti 238–9 Venezuela 91, 228, 270 Ver, Roger 154 Vimpelcom 98 Virchis, Andres 200 Vlasic, Mark 195 Vogliano, Ernest 247–8 Wall Street Journal 61–2 Warburg, Siegmund 36–7, 38–9, 45, 262 Washington Post 193 watches 238–9 Wealth-X 101–2 weapons smuggling 92, 148 Wegelin 248, 261 Weill, Sandy 219 whisky 240 White, Harry Dexter 28, 272 Windward Trading Limited 184 wine 239 Wisconsin 255 World Bank Doing Business 91–2 Equatorial Guinea 130 StAR initiative 195 Stolen Asset Recovery initiative 89 Wyoming 50, 95, 258 Xiao Jianhua 165 Yanukovich, Viktor 1, 6, 7, 8–9, 71, 75–7, 188 assets blocked 193 Cancer Institute visit 103–5 and Manafort 13 Mezhyhirya palace 1–3, 9 and Nevis 55, 59 Sukholuchya shooting lodge 3–4, 5, 8–9, 75–6 Yeltsin, Boris 65, 66, 67, 220 Young, Robert 61 Yukos 96 Zambia 238 Zhang, Lu 92 Zlochevsky, Mykola 170–2, 187–93, 275 Zucman, Gabriel 37–8, 46–7, 266 ALSO FROM PROFILE BOOKS Red Card: FIFA and the Fall of the Most Powerful Men in Sports Ken Bensinger The full story behind the FIFA’s headline-grabbing corruption scandal, soon to be a major film.


pages: 426 words: 115,150

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, Monique Tilford

asset allocation, Buckminster Fuller, buy low sell high, credit crunch, disintermediation, diversification, diversified portfolio, fiat currency, financial independence, fixed income, fudge factor, full employment, Gordon Gekko, high net worth, index card, index fund, job satisfaction, Menlo Park, money market fund, Parkinson's law, passive income, passive investing, profit motive, Ralph Waldo Emerson, Richard Bolles, risk tolerance, Ronald Reagan, Silicon Valley, software patent, strikebreaker, Thorstein Veblen, Vanguard fund, zero-coupon bond

—and be accurate. Let it become a habit to record any and all movements of money, the exact amount and the reason for the exchange. Every time you spend or receive money, make it second nature to note it instantly. In The Millionaire Next Door the authors, Thomas J. Stanley and William D. Danko, note that people who have achieved a high net worth relative to income know how much they are spending on clothes, travel, housing, transportation, etc., and those who don’t achieve high net worth relative to income have no idea how much they spend. It’s a stark contrast. Figure 2-3 is a fictional example of two days’ entries. Note the degree of detail given for each expenditure. Notice how expenditures at work are specifically labeled as such. Observe the differentiation of the expenditures at the convenience store between snacks (“chips, dip, soda”) and batteries.


eBoys by Randall E. Stross

barriers to entry, business cycle, call centre, carried interest, cognitive dissonance, disintermediation, edge city, high net worth, hiring and firing, Jeff Bezos, job-hopping, knowledge worker, late capitalism, market bubble, Menlo Park, new economy, old-boy network, passive investing, performance metric, pez dispenser, railway mania, rolodex, Sand Hill Road, shareholder value, Silicon Valley, Silicon Valley startup, Steve Ballmer, Steve Jobs, Y2K

Arthur Rock, the senior dean of American venture capitalists and an early investor in Intel, always insisted whenever his venture firm put money into a start-up that the entrepreneur co-invest one third of his total net worth, whether it be large or small. If the entrepreneur was extremely wealthy, the venture firm had higher expectations about his co-investing. The venture guys didn’t want the high-net-worth entrepreneur to regard the start-up as a hobby. To prove commitment, he was asked to have skin in the game, and that was what Beirne asked of Borders, whose net worth Beirne assumed to be around $100 million. Borders put in $3.5 million, along with Benchmark’s $3.5 million, and $3.5 million was sought from another venture firm, not to spread financial risk—the amount involved was too small relatively for that to be a pressing issue—but in order to tap the other firm’s access to capital markets—more OPM—which would be needed.

As the negotiations stretched out, the West Coast discovered that there was far more opposition to collaboration on the East Coast, within the prospective partner’s ranks, than had initially seemed to be the case. Even the corporate change master who had approached Benchmark originally, the person who had professed that he had seen the light, that he got it, got a shaky hand when given a pen to sign. After eight weeks of courtship, Henry Paulson, Jr., Goldman Sachs’s CEO who had seemed so ready to commit to founding with Benchmark an entirely new online banking service for high-net-worth individuals, balked in the end. “What if there were to be another Meg Whitman?” he asked Dunlevie. What would happen, that is, if the head of this new Goldman Sachs entity, which would be structured like a Silicon Valley start-up, and its CEO, given an equity stake similar to that given to other Valley CEOs, was very successful, went public, and its CEO—like eBay’s Whitman—became extraordinarily wealthy?


pages: 420 words: 126,194

The Strange Death of Europe: Immigration, Identity, Islam by Douglas Murray

anti-communist, Ayatollah Khomeini, Berlin Wall, borderless world, Boris Johnson, British Empire, centre right, cognitive dissonance, deindustrialization, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, glass ceiling, high net worth, illegal immigration, low skilled workers, Mark Zuckerberg, mass immigration, open borders, post-industrial society, white flight

And among those who had qualifications many were, in any case, entering a society where these qualifications were not recognised as having parity and so they had to start down the chain in their profession. But the only way to present migrants as contributing not just equally but actually more than those already working and paying taxes in Britain is if we talk almost exclusively about highly educated, high net-worth individuals from first-world countries. The cliché of the ‘average immigrant’ being an economic boon for the country only works when such exceptions are made to appear as though they are the rule. All efforts to make an economic case for mass immigration rely on this trick. Among those to have used it are EU Commissioner Cecilia Malmström and UN Representative Peter Sutherland. In a 2012 piece they suggested that unless Europe opens its borders to mass migration, ‘Entrepreneurs, migrants with Ph.Ds’ and others will all be ‘flocking to places like Brazil, South Africa, Indonesia, Mexico, China, and India’, thus leaving Europe to be a more impoverished place.2 One of the few studies in this area is from the Centre for Research and Analysis of Migration at University College London.

For although UCL’s own estimate suggested that ‘recent migrants from the EEA between 2001 and 2011 had contributed around £22 billion into the UK economy’, the fiscal impact of all migrants, regardless of origin, told an entirely different story. Indeed ‘recent’ arrivals from the EEA were the sole migrants for whom such a positive claim could be made. Away from the spin, what UCL’s own research quietly showed was that non-EEA migrants had actually taken out around £95 billion more in services than they had paid in in taxes, meaning that if you took the period 1995–2011 and included all immigrants (not just a convenient high net-worth selection), then by UCL’s own measurements, immigrants to the United Kingdom had taken out significantly more than they had put in. Mass migration, in other words, had made the country very significantly poorer over the period in question. After some criticism for its methodology, manner of spinning and burial of crucial data, the following year UCL published its completed findings. By that point, and taking into account only UCL’s own figures, the results were even starker.


pages: 433 words: 125,031

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

affirmative action, Asian financial crisis, big-box store, BRICs, cognitive dissonance, creative destruction, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, NetJets, offshore financial centre, profit motive, rent-seeking, risk/return, Rubik’s Cube, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, We are the 99%, William Langewiesche

He dressed immaculately, in a well-tailored navy blue suit, crisp tie, and fashionable rimmed glasses. We drank espresso at a conference table overlooking Brickell Avenue’s shining new office buildings, vacant for years in the wake of the crash but now filling up again. Santiago runs a “multifamily office.” His job is to help UHNW families maintain their money from generation to generation—I had to learn acronyms like this: ultra-high-net-worth. His company created games to teach young heirs to deal with the burdens of wealth. For five-year-olds, he has a sectioned piggy bank with slots labeled SAVE, SPEND, DONATE, and INVEST. For ages eight and up, he has a Monopoly-like game called “Shirtsleeves to Shirtsleeves”—a reference to how fortunes built in the first generation tend to dissipate in the third. The board game’s cover asks How Long Will Your Money Last?

See also specific stations coronéis or “colonels” and, 90 Marinho’s monoply, 84, 89, 90 shaping of perception and, 89, 96, 97 telenovelas, 79–80, 81, 87–88, 97, 100–101, 299n97 Telles, Marcel, 30, 196, 197, 206–7, 209 Temer, Michel, 285TK Tesla, 277 Texaco, 290n39 Thatcher, Margaret, 198 3G Capital, 196, 197, 204, 210, 310n204 Time-Life, 84, 85, 86, 88 Tiririca (Grumpy), 33 Transamazônica, 68–69, 78, 139 transportation Amazon ferry service, 175, 177 public, 10, 30, 39, 53, 56, 231, 232, 237, 239, 313n239, noteTK railroads, 21, 61, 175–76, 279 railroad tycoons of the 1800s, 55, 244 roads, 21, 61, 68–69, 78, 139 World Cup 2014 and, 56, 237 Trump, Donald, 152, 277, 304n152 Tucuruí dam, 72, 295n72 Turkey, 236 TV Globo, 81, 84–89, 95, 97–98, 100, 122, 252, 299n97 Anos Rebeldes miniseries, 92 Avenida Brasil, 80, 81, 93, 97 crusade against Macedo, 120 Fantástico, 262 government ad buys, 88, 95, 297n88 government favors and, 90, 298n90 influence of, 96, 97, 131, 299n96 Jornal Nacional, 81, 86, 87, 88, 92, 95, 299n96 licensing, 84, 88, 297n84, 297n88 Lula debate editing and, 92, 95 protests of 2013 and, 233–34, 313n234 Que Rei Sou Eu?, 91 Salve Jorge, 100–101, 102–7, 131 TV Record, 108, 110, 115, 121–22, 123, 126, 300n110 Macedo’s takeover of, 119–22, 301n120 R7 news, 231 TV SBT, 256 TV Tupi, 84, 297n84 TVX, 153–54, 155–56, 170, 180, 187–88 UBS (Swiss bank), 28, 218 UHNW (ultra-high-net-worth), 23 Ulloa, Santiago, 22–23 Ultragaz, 40, 42, 291n41, 291n42 Ultrapar, 291n41 United Arab Emirates, 180, 181, 183, 184, 217–18, 253 United States billionaires, 24, 26 Brazilian investment in, 18, 19, 144 campaign financing, 286, 317n286 capitalism and bubbles, 244 CIA and Brazilian politics, 39 crony capitalism, 55 Federal Reserve and 2008 crisis, 181 Hoover’s “Buy American Act,” 184 interest rates, 18 prosperity gospel and, 109 shale gas extraction, 67 “too big to fail” banks, 274 Universal Church of the Kingdom of God, 108–18, 123–26 Congress of Winners, 116–17, 124–25 cures and liberation, 115–17 Fogueiras Santas campaigns, 118 Globo targeting of, 122 Love Therapy, 114, 115 number of churches, 108, 110, 300n109 number of followers, 109, 300n109 radio network, 301n118 revenues, 110, 112, 118–19, 300n110 São Paulo church, 111, 114, 301n114 solicitation, 118–19, 125, 301n119 Solomon’s Temple replica, 126, 301n114 suits against, 301n118, 301n119 tax fines against, 123, 302n123 in the U.S., 109–10 University of São Paulo, 11 Uruguay, 24, 177 Vale, 136, 137, 138, 140, 160, 168, 171, 214, 305n160, 306n167 Valor Econômico, 244–45 Vanguarda Agro, 59 Vargas, Getúlio, 83, 86, 96, 172 Veja, 44–45, 120, 164, 166 Vilardi, Celso, 228–29 Villela family, 290n39 Volkswagen, 290n39, 294n69 Voz da Comunidade, 101, 106–7, 208 “Wagner,” 178, 179, 180–81, 205 Waimiri-Atroari tribe, 69 Wallace, David Foster, 194 Wallach, Joe, 88 Walton, Sam, 197 Warby Parker, 213 Wealth of Nations, The (Smith), 176, 280 Welch, Jack, 197 White, Richard, 244 Wilson, Charlie, 293n56 Winkler, Matt, 96 Workers Party, 54, 55, 56, 67, 95, 96, 131, 183, 191, 239–40, 257, 275.


pages: 368 words: 145,841

Financial Independence by John J. Vento

Affordable Care Act / Obamacare, Albert Einstein, asset allocation, diversification, diversified portfolio, estate planning, financial independence, fixed income, high net worth, Home mortgage interest deduction, money market fund, mortgage debt, mortgage tax deduction, oil shock, Own Your Own Home, passive income, risk tolerance, the rule of 72, time value of money, transaction costs, young professional, zero day

c05.indd 127 26/02/13 11:09 AM 128 Financial Independence (Getting to Point X ) taxes will be due on both your estates, and they usually must be paid within nine months of the death of the second spouse. A secondto-die life insurance policy could theoretically be used to cover the payment of these estate taxes. If you have a substantial net worth and believe your estate will be subject to significant estate taxes, a permanent life insurance policy may then be the right choice for you. Although most people only need term insurance, high-net-worth individuals can take advantage of the significant tax savings a permanent insurance policy can offer. When combining a permanent life insurance policy with an irrevocable life insurance trust (ILIT), you can significantly preserve your family’s financial legacy. (Estate planning with life insurance is covered in more detail in Chapter 10, Preserving your Estate.) As you can see, having the right type of life insurance at different stages in your life is an essential part of any high-quality financial plan.

As a result, it is imperative that you keep complete and accurate records, and store them for at least three years, or to be on the safe side, for six years. bapp03.indd 339 26/02/13 3:06 PM About the Author J ohn J. Vento1 is the president of a New York City-based certified public accounting firm as well as the Certified Financial Planning® firm of Comprehensive Wealth Management Ltd., since 1987. His firm works with clients throughout the country and is focused on professional practices, high-net-worth individuals, and those committed to becoming financially independent. He has been the keynote speaker at various seminars and conferences throughout the United States, which focus on tax and financial strategies that create wealth. John has been ranked among the most successful advisors of a nationwide investment service firm and has held this distinction since 2008. John graduated from Pace University with a bachelor’s degree in business administration in public accounting, and continued on to earn an MBA in taxation from St.


pages: 457 words: 143,967

The Bank That Lived a Little: Barclays in the Age of the Very Free Market by Philip Augar

activist fund / activist shareholder / activist investor, Asian financial crisis, asset-backed security, bank run, banking crisis, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, break the buck, call centre, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, family office, financial deregulation, financial innovation, fixed income, high net worth, hiring and firing, index card, index fund, interest rate derivative, light touch regulation, loadsamoney, Long Term Capital Management, Martin Wolf, money market fund, moral hazard, Nick Leeson, Northern Rock, offshore financial centre, old-boy network, out of africa, prediction markets, quantitative easing, Ronald Reagan, shareholder value, short selling, Sloane Ranger, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, too big to fail, wikimedia commons, yield curve

Its chief executive was a big star on the Canadian business scene: in 1994, Barrett was made an Officer of the Order of Canada, the country’s highest civilian honour, was named the country’s ‘Outstanding chief executive of the year’ in 1995 and won the Canadian Catalyst Award for fostering the advancement of women in banking. By the time he left, BMO had a strong position in everything it did: retail, commercial and investment banking and private banking for high net worth individuals. It made over half of its earnings outside Canada and was indeed a mini-version of everything that Barclays wanted to be. Could Barrett do it again on a bigger stage? The country boy who had started by carrying cheques around the City in 1962 was now a thoroughly modern chief executive. The Irish lilt had been overlain by a Canadian accent, as he discussed shareholder value, economic profit (profits adjusted for the cost of capital) and other fashionable business concepts.

A credit default swap is an insurance policy against a company defaulting. An equity swap is an agreement for two parties to exchange future payments from specified financial instruments. 13: Dutch Courage, 2007 fn1 The exchange rate was €1.50 to the pound. 15: Night Falls, 16 September – 13 October 2008 fn1 Myners has not disclosed the identity of the caller other than to say ‘It’s not who you might think.’ fn2 The money can come directly from high net worth individuals (HNWIs) but more usually comes from pooled investment vehicles such as pension funds, insurance companies or the various types of investment companies in which investors can buy units or make contributions. fn3 Most asset management firms at the time employed fund managers to weigh up investment decisions based on advice and analysis and invest in stocks and markets accordingly.


pages: 505 words: 142,118

A Man for All Markets by Edward O. Thorp

3Com Palm IPO, Albert Einstein, asset allocation, beat the dealer, Bernie Madoff, Black Swan, Black-Scholes formula, Brownian motion, buy and hold, buy low sell high, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial innovation, George Santayana, German hyperinflation, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Meriwether, John Nash: game theory, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, margin call, Mason jar, merger arbitrage, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stocks for the long run, survivorship bias, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

Partnership capital had grown from the initial $1.4 million to $7.4 million, and the general partners’ compensation increased proportionately. Since the Investment Company Act limited us to ninety-nine partners, each investor’s stake would have to average over $1 million in order for our pool to reach $100 million. Therefore we wanted high-net-worth individuals and institutional investors who would make an initial investment in PNP that would be substantial for us but a small part of their overall funds. We also liked that high-net-worth investors tended to be more knowledgeable, more experienced, and better able to judge the risks of the partnership, as well as having their own advisers. To increase the amount of new capital we could get from the dwindling number of spots available for new partners, we raised the minimum to join from our initial $50,000 to $100,000, then $250,000, $1,000,000, and eventually $10,000,000.


pages: 166 words: 49,639

Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson

Albert Einstein, barriers to entry, Bernie Madoff, business cycle, collapse of Lehman Brothers, corporate governance, corporate social responsibility, creative destruction, credit crunch, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators

Too many entrepreneurs think formal venture capital is the place to look for start-up funding, when in reality venture capitalists tend to focus on making very large bets in industries like high technology and biotech. In short, VC money is probably not for you if you’re just starting out. Operations in mainstream sectors like retailing and restaurants almost invariably secure backing not from VCs but from angel investors, high-net-worth individuals or the founder’s savings. Funding start-ups and new technology is exceedingly risky, but it has enabled the development of many of the most important companies of the last fifty years, including DEC, Intel, FedEx, Cisco and Google. Most of them, of course, are US based. That is where most of the world’s true venture capital is managed. The failure rate is high, and the expertise needed in spotting and monitoring potential winners is immense.


pages: 186 words: 49,251

The Automatic Customer: Creating a Subscription Business in Any Industry by John Warrillow

Airbnb, airport security, Amazon Web Services, asset allocation, barriers to entry, call centre, cloud computing, commoditize, David Heinemeier Hansson, discounted cash flows, high net worth, Jeff Bezos, Network effects, passive income, rolodex, sharing economy, side project, Silicon Valley, Silicon Valley startup, software as a service, statistical model, Steve Jobs, Stewart Brand, subscription business, telemarketer, time value of money, zero-sum game, Zipcar

To get into this private club, you need a minimum of $10 million in investable assets.2 TIGER 21 members meet monthly in small regional groups of about a dozen members each. Once the meeting starts, mobile phones are turned off, doors are closed to outsiders, and the members get down to business. At the center of every meeting is the Portfolio Defense—a one-hour presentation from a member who is asked to reveal the intimate details of his portfolio so that the other members can critique his investment approach. Asking high-net-worth investors, successful entrepreneurs, and captains of industry to reveal the intimate details of their financial lives is not easy, but it works for TIGER 21 because the Portfolio Defense is a requirement of all members. Further, because each member has crossed the threshold of wealth required for membership, there is mutual respect within the group. Subscribing for Status In some ways, the private club model sells social status—think of it as social climbing on subscription.


pages: 190 words: 53,970

Eastern standard tribe by Cory Doctorow

airport security, call centre, forensic accounting, high net worth, moral panic, offshore financial centre, old-boy network, pirate software, Silicon Valley, the payments system

Daylight savings time is a widowmaker: stay off the roads on Leap Forward day! Here is the second character in the morality play. She's the love interest. Was. We broke up, just before I got sent to the sanatorium. Our circadians weren't compatible. 4. April 3, 2022 was the day that Art nearly killed the first and only woman he ever really loved. It was her fault. Art's car was running low on lard after a week in the Benelux countries, where the residents were all high-net-worth cholesterol-conscious codgers who guarded their arteries from the depredations of the frytrap as jealously as they squirreled their money away from the taxman. He was, therefore, thrilled and delighted to be back on British soil, Greenwich+0, where grease ran like water and his runabout could be kept easily and cheaply fuelled and the vodka could run down his gullet instead of into his tank.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

accounting loophole / creative accounting, Albert Einstein, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, Boris Johnson, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, high net worth, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, Kickstarter, labour market flexibility, laissez-faire capitalism, land value tax, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, Plutocrats, popular capitalism, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

What right has anyone to say their consumption is excessive? Couldn’t the rich cut their carbon footprints by switching to low-carbon consumption? Wouldn’t the world miss their philanthropy and the ‘trickle-down effects’ of their spending? In fact, isn’t this book just an example of ‘the politics of envy’ – directed at those whom former UK Prime Minister Tony Blair used to call ‘the successful’? Shouldn’t we thank, rather than begrudge, these ‘high net worth individuals’? It’s the objections regarding the alleged role of the rich in wealth extraction, as opposed to wealth creation, that present the biggest challenge and occupy the bulk of this book, though I’ll attempt to answer other objections too. In the process it will become clear that this is not about the politics of envy – a cheap slur used by those who want to duck the arguments and evidence – but the politics of injustice.

, CRESC Discussion Paper, p 8. 121 Canada, US, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan. 122 Wikileaks (2013) ‘Secret Trans-Pacific Partnership agreement (TPP)’, https://wikileaks.org/tpp/pressrelease.html. 123 Wikileaks (2013). 124 Monbiot, G. (2013) ‘The lies behind this transatlantic trade deal’, Guardian, 2 December, http://www.theguardian.com/commentisfree/2013/dec/02/transatlantic-free-trade-deal-regulation-by-lawyers-eu-us. 125 Corporate Europe Observatory (2013) ‘A transatlantic corporate bill of rights’, 3 June, http://corporateeurope.org/trade/2013/06/transatlantic-corporate-bill-rights. 126 McDonagh, T. (2013) ‘Unfair, unsustainable and under the radar’, San Francisco: Democracy Center, http://democracyctr.org/new-report-unfair-unsustainable-and-under-the-radar/. Chapter Eighteen: What about philanthropy? 127 Blair, T. (2012) Speech to conference on philanthropy, China Philanthropy Forum, Beijing, 28 November. 128 Wikipedia Hélder Cámara, http://en.wikipedia.org/wiki/Hélder_Câmara 129 According to research by Barclays Bank, 97% of the world’s ‘high net worth individuals’ give annually to charity. But only one third of these give away over 1% of their net worth:Too Much (2013) ‘A Whistleblower for Philanthropy’, 5 August, http://toomuchonline.org/weeklies2013/aug052013.html. See also Brennan, P. and Saxton, J. (2007) ‘Who gives to charity?’, nfpSynergy report, and Rowlingson, K. and McKay, S. (2011) Wealth and the wealthy, Bristol: Policy Press, pp 136 ff. 130 Buffett, P. (2013) ‘The charitable-industrial complex’, New York Times, 27 July, http://www.nytimes.com/2013/07/27/opinion/the-charitable-industrial-complex.html?


pages: 562 words: 146,544

Daemon by Daniel Suarez

Berlin Wall, Burning Man, call centre, digital map, disruptive innovation, double helix, failed state, Fall of the Berlin Wall, game design, high net worth, invisible hand, McMansion, offshore financial centre, optical character recognition, peer-to-peer, plutocrats, Plutocrats, RFID, Stewart Brand, telemarketer, web application

What sort of idiot hung the keys to his business out on the street—and more than that, broadcast a declaration from his router telling the world where the keys were? These people shouldn’t be left home alone, much less put in charge of people’s investments. Gragg cleaned up the router’s connection log. More than likely the scam wouldn’t be detected for months, and even then, the company probably wouldn’t tell their clients. They’d just close the barn door long after the Trojan horses were gone. So far, Gragg had a cache of nearly two thousand high-net-worth identities to sell on the global market, and the Brazilians and Filipinos were snapping up everything he offered. Gragg knew he had a survival advantage in this new world. College was no longer the gateway to success. Apparently, people thought nothing of hanging their personal fortunes on technology they didn’t understand. This would be their undoing. Gragg finished his mocha latte and glanced around the coffeehouse.

Few, if any, would be able to connect him to Heider, but just in case he decided to lay low for a few weeks. He had about fifty or sixty thousand in cash on hand at various banks under various identities. Good thing, because he couldn’t trade the identity database he had copied from the Filipino server with any of his Abkhazian contacts. It was just too hot. He felt a wave of humiliation again. Over twenty thousand high-net-worth identities down the drain—a fortune on the open market. How did they know it was him? Gragg had cracked their database through a Unicode directory traversal that allowed him to install a back door on their Web server. They hadn’t properly patched it, and the sample applications were still on the server, so it was a fairly trivial matter to gain Administrator rights. He was pretty certain that a network admin was lying at the bottom of Manila Harbor over that simple mistake.


pages: 497 words: 144,283

Connectography: Mapping the Future of Global Civilization by Parag Khanna

"Robert Solow", 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, charter city, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital map, disruptive innovation, diversification, Doha Development Round, edge city, Edward Snowden, Elon Musk, energy security, Ethereum, ethereum blockchain, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, global supply chain, global value chain, global village, Google Earth, Hernando de Soto, high net worth, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, LNG terminal, low cost airline, low cost carrier, low earth orbit, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, mittelstand, Monroe Doctrine, mutually assured destruction, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, plutocrats, Plutocrats, post-oil, post-Panamax, private military company, purchasing power parity, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, TaskRabbit, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, transaction costs, UNCLOS, uranium enrichment, urban planning, urban sprawl, WikiLeaks, young professional, zero day

Leveraging the tax-free status and location inside America’s security perimeter, Puerto Rico’s massive new Port of the Americas will subsume the entire southern city of Ponce and allow for efficient transshipment of smaller cargoes up and down the entire East Coast as well. Puerto Rico has also become a favored American tax haven, changing its laws in 2013 to eliminate capital gains taxes to attract the investment of ultra-high-net-worth hedge fund managers such as John Paulson, who calls it the “Singapore of the Caribbean.”8 Just as Tennessee and Michigan compete for automotive assembly, America’s onshore is now competing with America’s offshore in ports, shipping, and finance as well. Over the horizon, America’s southern ports may also be welcoming goods from what just a few years ago seemed the most unlikely of origins: Cuba.

Through the 1970s, the U.A.E.’s population quadrupled as throngs of South Asians came to work in the thriving oil sector and service industries. The gold and textile trade surged as well. Today Dubai’s population is 70 percent South Asian, and Asians label the Gulf region not “Middle East” but rather “West Asia.” Remittances from the U.A.E. to India amount to $30 billion per year, far larger than from any other part of the twenty-five-million-strong diaspora. When private bankers need to service their high-net-worth Indian clients, they usually head to Dubai. For both Pakistan’s Bhutto clan and its recently ousted military leader, Pervez Musharraf, Dubai is the exile of choice. As the world’s main interregional gateway, Dubai caters to all continents at the same time. As capital and demographic flows from south to south and south to north augment the traditional flows from north to south and west to east, Dubai is the conduit for entire new patterns of investment.


pages: 579 words: 160,351

Breaking News: The Remaking of Journalism and Why It Matters Now by Alan Rusbridger

accounting loophole / creative accounting, Airbnb, banking crisis, Bernie Sanders, Boris Johnson, centre right, Chelsea Manning, citizen journalism, cross-subsidies, crowdsourcing, David Attenborough, David Brooks, death of newspapers, Donald Trump, Doomsday Book, Double Irish / Dutch Sandwich, Downton Abbey, Edward Snowden, Etonian, Filter Bubble, forensic accounting, Frank Gehry, future of journalism, G4S, high net worth, invention of movable type, invention of the printing press, Jeff Bezos, jimmy wales, Julian Assange, Mark Zuckerberg, Menlo Park, natural language processing, New Journalism, offshore financial centre, oil shale / tar sands, open borders, packet switching, Panopticon Jeremy Bentham, pre–internet, ransomware, recommendation engine, Ruby on Rails, sexual politics, Silicon Valley, Skype, Snapchat, social web, Socratic dialogue, sovereign wealth fund, speech recognition, Steve Jobs, The Wisdom of Crowds, Tim Cook: Apple, traveling salesman, upwardly mobile, WikiLeaks

The fashion expert recommends ostrich-feather adorned jeans (‘top of my lust list this season’) for £1,200. The jewellery specialist has gasped when the chairman of a diamond company shows her a £70 million stone he has recently bought. The watch specialist recommends eight watches, average price about £20,000. The property writer praises a new apartment block in Mayfair, London, for UHNWI (‘ultra-high net-worth individuals’). They are likely to sell at £25 million each. The motoring writer contemplates buying a Bugatti Chiron – prices start at £2.08 million – and test drives a £575,000 Aston Martin (‘there is a healthy queue of eager buyers’). At the other end of the magazine from the Gucci adverts is a gentle interview with the ‘fashion world’s favourite CEO’ – Marco Bizzarri of Gucci. To be clear – the Guardian would have loved such advertising, and did its best to take some crumbs off the table.

Sullivan case (1964) ref1 New Yorker (magazine) ref1, ref2, ref3 Newland, Martin ref1 Newmark, Craig ref1 Newmarket Road (Cambridge) ref1, ref2, ref3 News Corporation ref1, ref2, ref3, ref4, ref5, ref6, ref7n News Digital Media ref1 News Group Newspapers (NGN) ref1, ref2, ref3 News International (NI) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10n News Network ref1 Newsday.com ref1 Newseum (US) ref1 Newsnight (TV) ref1 Newspaper Money (Hirsch/Gordon) ref1 Newsworks’ Shift conference ref1n NHS ref1 Nielsen NetRatings ref1 1984 (Orwell) ref1 Nixon, President Richard ref1, ref2, ref3, ref4 North Africa ref1, ref2 North Briton (newspaper) ref1 North Korea ref1 Northcliffe, Lord ref1 Northcliffe Media ref1 ‘Not Invented Here’ (NIH) resentment ref1 Nottingham Evening Post (newspaper) ref1 Nougayrède, Natalie ref1 Obama, President Barack ref1, ref2, ref3, ref4, ref5, ref6 Ofcom ref1, ref2, ref3 Official Secrets Act (OSA) ref1, ref2 Official Secrets (Hooper) ref1 O’Hagan, Andrew ref1 oil companies ref1, ref2, ref3 O’Kane, Maggie ref1 Old Bailey ref1, ref2, ref3, ref4 Oliver, Craig ref1, ref2 Omidyar, Pierre ref1 On Demand ref1 ‘On Journalism’ (Scott essay) ref1, ref2n, ref3n Open Democracy ref1, ref2, ref3 Open Weekend (2012) ref1, ref2 Operation Weeting ref1 O’Reilly, Tony ref1 ‘original sin’ ref1 Orphan ref1 Orwell, George ref1, ref2, ref3, ref4, ref5 Osborne, Peter ref1, ref2, ref3, ref4 Oscars ref1 ownership model ref1 Oxford University ref1 Pacino, Al ref1 page views ref1 Panopticon ref1, ref2, ref3n Panorama (TV) ref1 Paris climate talks ref1, ref2 Parker, Andrew ref1 Paton, John ref1 Patriot Act (2001) ref1, ref2 PayPal ref1 paywalls ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11n ‘hard’ ref1, ref2 metred ref1, ref2 Peake, Maxine ref1 Pearson & Co ref1, ref2 Pemsel, David ref1, ref2, ref3, ref4, ref5n, ref6n, ref7n Pentagon ref1, ref2, ref3, ref4, ref5, ref6 People Like Us (Luyendijk) ref1 Perch, Keith ref1n Perettu, Jonah ref1 Periscope ref1 perjury ref1 Permira Advisers Ltd ref1 Peterloo Massacre ref1, ref2, ref3 Petraeus, General David ref1 Pfauth, Ernst-Jan ref1 PFE (Proudly Found Elsewhere) ref1 philanthropy ref1 Philby, Kim ref1 Piano, Renzo ref1 Pilhofer, Aron ref1, ref2n Plastic Logic ref1 Plender, John ref1 podcasts ref1, ref2n Podemos ref1 Podesta emails ref1, ref2 Poitras, Laura ref1, ref2, ref3, ref4 police ref1, ref2, ref3 passim, ref1, ref2, ref3, ref4, ref5, ref6n, ref7n, ref8n political subsidy ref1 Politico ref1 Politics.co.uk ref1 Popbitch ref1 Popplewell, Sir Oliver ref1, ref2 Porter, Henry ref1 Post Office Act (US 1792) ref1 Pound, Ezra ref1 power ref1 Prescott, John (MP) ref1 Press Acquisitions Ltd ref1 Press Association ref1, ref2 Press Complaints Commission (PCC) ref1, ref2, ref3, ref4, ref5, ref6, ref7n Press Holdings Ltd ref1 Preston, Peter ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 price war ref1, ref2 Price Waterhouse Cooper ref1 Pride and Perjury (Aitken) ref1 The Printing Press as an Agent of Change (Eisenstein) ref1 printing presses ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 prisons ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12 privacy ref1 Private Eye (magazine) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8n private investigators ref1, ref2, ref3, ref4, ref5, ref6 private sector ref1 Proctor & Gamble ref1 Prodigy Internet Service ref1 Product Development Unit (PDU) ref1, ref2, ref3, ref4 Professional Footballers’ Association ref1 proportionality ref1 ProPublica ref1, ref2 Proudler, Gerald ref1, ref2, ref3, ref4 public goods ref1, ref2 public interest ref1, ref2, ref3, ref4 passim, ref1, ref2 passim, ref1 passim, ref1, ref2, ref3, ref4, ref5n, ref6n Public Library of Science (PLoS) ref1 public service ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10 passim, ref1, ref2, ref3 public space ref1, ref2, ref3, ref4 ‘publicness’ ref1 ‘purchase driver’ ref1 Putnam, Robert ref1 pyjama injunction ref1 Qantas ref1 Qatar ref1, ref2, ref3 Quatremer, Jean ref1 Qur’an ref1 R2 ref1 Raines, Howell ref1 Randall, Mike ref1 rape ref1, ref2, ref3n Rath, Matthias ref1 Ray Street offices ref1, ref2, ref3, ref4 ‘reach before revenue’ model ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 readers ref1 American ref1, ref2, ref3, ref4, ref5 knowledge ref1, ref2, ref3, ref4, ref5, ref6 letters ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 readers’ editor ref1, ref2, ref3n response ref1, ref2, ref3, ref4, ref5, ref6 talkboards ref1, ref2, ref3, ref4, ref5n see also circulation Reading Football Club ref1 Real Networks ref1 Reckless, Mark (MP) ref1 Reddit ref1, ref2, ref3, ref4 Redford, Robert ref1, ref2 Reds (film) ref1 Rees, Jonathan ref1, ref2, ref3 referendum (UK 2016) ref1, ref2 regulation ref1, ref2, ref3, ref4 Regulatory Funding Council ref1 Reid, Harry ref1 religious stories ref1 rendition, Gibson report on ref1 Reuters ref1, ref2, ref3, ref4, ref5n Institute for the Study of Journalism (RISJ) ref1, ref2, ref3, ref4, ref5 Richard (reporter) ref1 Rinehart, Gina ref1 riots ref1, ref2, ref3, ref4, ref5n Ritz hotel (London) ref1, ref2, ref3 Ritz hotel (Paris) ref1, ref2, ref3, ref4 rivalry ref1, ref2, ref3, ref4, ref5, ref6, ref7n Robards, Jason ref1 Roberts, Brian ref1 Roberts, Justine ref1 Robinson, Geoffrey (MP) ref1 Robinson, Stephen ref1 Rockefeller Foundation ref1 Rohm, Wendy Goldman ref1 Rolling Stones ref1 Rosen, Jay ref1, ref2, ref3 Rosenstiel, Tom ref1 Rossetto, Louis ref1 Rothermere, Lord ref1n, ref2n Rowlands, Tiny ref1 Royal Air Force (RAF) ref1 Royal Courts of Justice ref1, ref2, ref3 Rusbridger, Alan ref1, ref2n, ref3n, ref4n, ref5n Russian intelligence service ref1, ref2, ref3, ref4 Ryanair ref1 Saatchi, Maurice ref1 Sachs, Jeffrey ref1 Saffron Walden (Essex) ref1 Said Business School (Oxford) ref1 St Paul’s Cathedral ref1 Salon ref1 samizdat methods ref1 Sampson, Anthony ref1 San Jose Mercury (newspaper) ref1 Sanandaji, Tino ref1 Sandel, Michael ref1 Sanders, Bernie ref1, ref2 Sandy Hook ref1 Sandys, Duncan (MP) ref1 Sardar, Ziauddin ref1 Sark ref1, ref2 Sark Newspaper ref1 SAS ref1 Saudi Arabia ref1, ref2, ref3 Savoy Hotel (London) ref1, ref2, ref3 Savoy Taylors Guild ref1 Sawers, Sir John ref1 Schirrmacher, Franz ref1 Schmidt, Eric ref1, ref2 Schneier, Bruce ref1 Schudson, Michael ref1n science ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8n scoop ref1 Scoop (Waugh) ref1 Scotland Yard ref1, ref2, ref3, ref4, ref5, ref6, ref7 Scotsman (newspaper) ref1, ref2, ref3 Scott, C.P. ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9n, ref10n Scott, David ref1 Scott, Edward ref1 Scott, Henry E. ref1 Scott, John ref1 Scott, Richard ref1 Scott Trust ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15n Sellers, Frances Stead ref1 Selvey, Mike ref1 Senate Church committee (US) ref1 Senate Intelligence committee (US) ref1 Sensenbrenner, Jim ref1 September 11 (2001) ref1, ref2, ref3, ref4, ref5, ref6 Serious Fraud Office (SFO) ref1 Shadid, Anthony ref1 Shainin, Jonathan ref1 Shaw, Fiona ref1 Sheehan, Neil ref1 Sheen, Michael ref1 Shenker, Jack ref1 Sherwood, Charles ref1 Shirky, Clay ref1, ref2, ref3, ref4, ref5, ref6 Siegal, Allan M. ref1 Silicon Valley ref1, ref2, ref3 passim, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12 comes to Oxford (SVCO) ref1 Simon, David ref1 Simonds, Gavin ref1 Simpson, O.J. ref1 Singer, Marc ref1 Skype ref1 Slate Group ref1 smartphones ref1, ref2 Smith, Ben ref1 Smith, Brad ref1 Smith, Julian (MP) ref1 Smith, Shane ref1 Smith, Tim (MP) ref1 Snapchat ref1 Snowden, Edward ref1, ref2, ref3, ref4 passim, ref1 passim, ref1 passim, ref1, ref2n, ref3n Snowden (film) ref1 Soho offices ref1 Sony ref1 Soros ref1 Sorrell, Martin ref1 sources ref1 South Africa ref1, ref2, ref3 South, Christopher ref1 Sparrow, Andrew ref1 Spectator (magazine) ref1, ref2, ref3, ref4 Spielberg, Steven ref1, ref2, ref3, ref4, ref5, ref6n sponsorship ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10 sport ref1 Spotify ref1, ref2 Springer, Axel ref1 The Square and the Tower (Ferguson) ref1 Stalin ref1, ref2 Standage, Tom ref1 Starr, Paul ref1, ref2 ‘Start Me Up’ (song) ref1 Start the Week (radio) ref1 State of the Union speech (Clinton) ref1 Steele, Christopher ref1 Steele, Jonathan ref1 Stephenson, Sir Paul ref1, ref2, ref3 Stewart, Mr Justice ref1 Stone, Biz ref1 Stone, Oliver ref1, ref2, ref3n Strathairn, David ref1 Streep, Meryl ref1 subscription ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14n ‘subsidariat’ ref1, ref2n Suez ref1 Sullivan, Andrew ref1, ref2n Sulston, John ref1 Sulzberger, A.G. ref1, ref2, ref3n Sulzberger, Arthur ref1n super-injunctions ref1 Supreme Court (UK) ref1 Supreme Court (US) ref1, ref2 Sweden ref1, ref2, ref3, ref4n Sweeney, John ref1 Swift, Jonathan ref1 Switzerland ref1, ref2, ref3 Sydney Morning Herald (newspaper) ref1, ref2 Sykes, Richard ref1 Syria ref1, ref2 tabloids ref1, ref2, ref3, ref4 passim, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9n, ref10n Tahrir Square (Cairo) ref1 Taliban ref1, ref2, ref3 talkboards ref1, ref2, ref3, ref4, ref5n Tapscott, Don ref1 Task Force 373 ref1 tax ref1 avoidance ref1, ref2, ref3, ref4, ref5n havens ref1, ref2, ref3 Taylor, Gordon ref1, ref2, ref3 Taylor, John Edward ref1, ref2 Taylor, Matthew ref1 Technorati ref1 Terrorism Act (2000) (UK) ref1, ref2 terrorists ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12 counter-terrorism ref1, ref2, ref3 Terry, Quinlan ref1 Tesco ref1, ref2, ref3n, ref4n Thailand ref1, ref2, ref3n Thalidomide ref1, ref2n Thatcher, Prime Minister Margaret ref1 Thatcher, Carol ref1 Thatcher, Mark ref1 The Onion Router (TOR) ref1 Thewlis, David ref1 Thirty Club ref1 Thompson, Bill ref1 Thompson, E.P. ref1, ref2 Thompson, Robert ref1 threads ref1, ref2, ref3, ref4, ref5, ref6, ref7 ‘threat reports’ ref1 Three Little Pigs boiling the Big Bad Wolf (film) ref1 Thurlbeck, Neville ref1 Time (magazine) ref1 Times Educational Supplement (magazine) ref1 Tomasky, Michael ref1 Tomlinson, Ian ref1, ref2 Topix.net ref1 torture ref1 Tow Center for Digital Journalism ref1, ref2 toxic waste ref1 Trafigura ref1, ref2, ref3n training ref1, ref2, ref3, ref4 travel writing ref1, ref2n Travis, Alan ref1 Treanor, Jill ref1 Tribune Co (US) ref1 Trinity Mirror ref1, ref2, ref3 TripAdvisor ref1, ref2, ref3, ref4, ref5n trolls ref1, ref2, ref3, ref4, ref5, ref6, ref7 Trump, President Donald ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15 Trump Bump ref1, ref2, ref3n, ref4n trust ref1, ref2 passim, ref1, ref2, ref3, ref4 passim, ref1, ref2, ref3, ref4, ref5, ref6, ref7 passim, ref1n Trust ownership ref1 truth ref1 passim, xxiv, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12 reverse burden of ref1, ref2n Tucker Carlson Tonight (TV) ref1 Tugendhat, Mr Justice ref1 Turkey ref1 Tweetdeck ref1 Twitter ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 passim, ref1, ref2, ref3, ref4, ref5, ref6, ref7n Tyas, John ref1 typesetting ref1, ref2, ref3, ref4, ref5n UHNWI (ultra-high net-worth individuals) ref1 UKIP ref1, ref2, ref3, ref4n, ref5n Ukraine ref1 unions ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11 Unique Selling Point ref1 unique users ref1 United Nations (UN) ref1, ref2 University of California (Berkeley) ref1 Upworthy ref1 USA Today (magazine) ref1, ref2 Usenet ref1 Utley, T.E. ref1, ref2n van Beurden, Ben ref1 The Vanishing Newspaper (Meyer) ref1, ref2 Vanity Fair (magazine) ref1, ref2 Vaz, Keith (MP) ref1 Verizon ref1 ‘verticals’ ref1 Vice (magazine) ref1, ref2 Vickers, Paul ref1 video ref1, ref2, ref3 Vietnam War ref1 ‘viewspaper–newspaper’ ref1, ref2, ref3 Vignette ref1 Viner, Kath ref1, ref2, ref3 Vodafone ref1 Volkswagen ref1 Vyshinsky, Andrey ref1 Wadsworth, A.P. ref1 Wagner, Adam ref1 Waldman, Simon ref1, ref2, ref3, ref4n, ref5n Wales, Jimmy ref1 Walker, Christopher ref1 Wall Street ref1 Wall Street Journal (newspaper) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 Wallis, Neil ref1 Walter, Justin ref1 WAN-IFRA ref1 WannaCry ref1n Wapping ref1, ref2, ref3, ref4 War Office ref1 Watergate ref1, ref2, ref3, ref4 Watson, Tom (MP) ref1 Waugh, Evelyn ref1 We the Media (Gillmor) ref1, ref2 Weatherup, James ref1 Web 1.0 ref1, ref2 Web 2.0 ref1, ref2, ref3, ref4, ref5, ref6 ‘web monkeys’ ref1 Webster, Phil ref1 Weinstein, Harvey ref1 Weisberg, Jacob ref1 Wellcome Trust ref1, ref2, ref3 Wells, Holly ref1 West Africa ref1 West Coast giants see Silicon valley Westminster ref1, ref2, ref3, ref4, ref5, ref6 What the Media Are Doing to Our Politics (Lloyd) ref1 whistleblowers ref1, ref2, ref3, ref4, ref5, ref6 White House (US) ref1, ref2, ref3, ref4 White, Michael ref1 Whitehall ref1, ref2, ref3 Whittam Smith, Andreas ref1 Whittow, Hugh ref1 ‘Why I Write’ (Orwell essay) ref1 WikiLeaks ref1, ref2, ref3, ref4, ref5, ref6, ref7 Wikinomics (Tapscott) ref1 Wikipedia ref1, ref2, ref3, ref4, ref5, ref6, ref7 Wilby, Peter ref1 Wilkes, John ref1, ref2, ref3, ref4, ref5, ref6n Williams, Francis ref1 Wilton’s (restaurant) ref1 Windows 95 ref1 The Wire (TV) ref1 Wired (Anderson) ref1 Wired (magazine) ref1 Witherow, John ref1, ref2 witnesses ref1, ref2, ref3, ref4, ref5 Witty, Andrew ref1 Wolf, Armin ref1 women ref1, ref2 Wood, Graeme ref1 Woodward, Bob ref1, ref2 Workthing ref1, ref2 World Cup (football) ref1 World Economic Forum ref1 A World Without Bees (Benjamin) ref1 Worsthorne, Peregrine ref1 WPP plc ref1 Wu, Tim ref1 Yahoo ref1, ref2, ref3, ref4, ref5, ref6 Yates, John ref1, ref2, ref3 The Year the Future Began (Campbell) ref1 Yemen ref1 Yo!


pages: 261 words: 57,595

China's Future by David Shambaugh

Berlin Wall, capital controls, demographic dividend, demographic transition, Deng Xiaoping, facts on the ground, financial intermediation, financial repression, Gini coefficient, high net worth, Kickstarter, knowledge economy, low skilled workers, market bubble, megacity, Mikhail Gorbachev, New Urbanism, offshore financial centre, open economy, Pearl River Delta, rent-seeking, secular stagnation, short selling, South China Sea, special drawing rights, too big to fail, urban planning, Washington Consensus, working-age population, young professional

The second telltale sign that the regime is corroding from within (in addition to widespread corruption) is that the economic elites—who in many cases also are Party members (given the nexus of commercial cronyism)—have begun to leave the country in increasingly large numbers.40 China’s economic elite have one foot out the door, and they are ready to flee en masse if the system really begins to crumble. In 2014, Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that 64 percent of “high net worth individuals” it polled—393 millionaires and billionaires—were either emigrating or planning to do so.41 Rich Chinese are sending their children to study abroad in record numbers (in itself, an indictment of the quality of the Chinese higher education system). They are buying property abroad at record levels and prices, and are parking their financial assets overseas, often in well-shielded tax havens and shell companies.


pages: 199 words: 57,599

Secrets of the Millionaire Mind by T. Harv Eker

Buckminster Fuller, Build a better mousetrap, Donald Trump, fear of failure, high net worth, Maui Hawaii, Parkinson's law, passive income

Net worth is the ultimate measure of wealth because, if necessary, what you own can eventually be liquidated into cash. Rich people understand the huge distinction between working income and net worth. Working income is important, but it is only one of the four factors that determine your net worth. The four net worth factors are: Income Savings Investments Simplification Rich people understand that building a high net worth is an equation that contains all four elements. Because all of these factors are essential, let’s examine each one. Income comes in two forms: working income and passive income. Working income is the money earned from active work. This includes a paycheck from a day-to-day job, or for an entrepreneur, the profits or income taken from a business. Working income requires that you are investing your own time and labor to earn money.


pages: 251 words: 63,630

The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World by Shaun Rein

business climate, credit crunch, Deng Xiaoping, Donald Trump, facts on the ground, glass ceiling, high net worth, illegal immigration, income per capita, indoor plumbing, job-hopping, Maui Hawaii, price stability, quantitative easing, Silicon Valley, Skype, South China Sea, Steve Jobs, thinkpad, trade route, trickle-down economics, upwardly mobile, urban planning, women in the workforce, young professional, zero-sum game

This leaves an opening for private enterprise to cater to consumer demands and move quickly to take market share away from lumbering, state-owned giants. For instance, according to our research, many state-owned banks like ICBC and Bank of China focus more on their business dealings with other state-owned enterprises, leaving private companies and retail consumers highly dissatisfied with their service. China Merchants Bank recognized this and concentrated heavily on delivering better service for high-net-worth individuals and credit card holders. The company has since become the dominant credit card player. Consumers give it one of the highest satisfaction levels of any Chinese company about which my firm has conducted surveys. Similarly, one of the last major sectors to undergo meaningful reform in China is the education and training sector. The government has not been able to reform the educational system swiftly enough to keep up with demands for more education in business skills.


Big Bucks: The Explosion of the Art Market in the 21st Century by Adam, Georgina(Author)

BRICs, Frank Gehry, greed is good, high net worth, inventory management, Kickstarter, Mark Zuckerberg, new economy, offshore financial centre, plutocrats, Plutocrats, Silicon Valley, too big to fail, upwardly mobile

All the art world was there, of course – curators, critics, dealers, collectors, and artists – along with journalists and photographers to record the occasion. This ‘event’ side of art fairs mirrors the luxury-goods industry, which is aware that to bring the consumer into a shop, it has to offer an ‘experience’ that goes beyond just walking in and buying a product, which after all could be as easily bought online. Banks also spotted the opportunity that art fairs presented, with sponsorship giving them the chance to offer something to their high net worth individual (HNWI) clients as well as enhancing their ‘cultural’ credentials. Frieze sponsor Deutsche Bank has a separate area, with its own entrance, where clients can await the 11 am opening: they are then launched into the heart of the fair while other VIP visitors are still queuing up outside. The tie-up between art fairs and banks went horribly wrong, however, in 2008 when one month before Art Basel Miami Beach opened, a Florida jury indicted the head of UBS’s worldwide wealth management business, Raoul Weil, for allegedly helping thousands of Americans hide their money in secret accounts.


pages: 241 words: 63,981

Dirty Secrets How Tax Havens Destroy the Economy by Richard Murphy

banking crisis, barriers to entry, Bernie Sanders, centre right, corporate governance, Donald Trump, Double Irish / Dutch Sandwich, en.wikipedia.org, high net worth, income inequality, intangible asset, light touch regulation, moral hazard, Occupy movement, offshore financial centre, race to the bottom, Social Responsibility of Business Is to Increase Its Profits, The Wealth of Nations by Adam Smith, transfer pricing, Washington Consensus

5.Are the accounts of all companies available on a public register the can be inspected at low cost? 6.Does the jurisdiction require that companies include country-by-country reporting in their accounts? Tax and financial regulation 7.Are all people making payments of interest and dividends to non-resident people required to report this to the jurisdictions tax authority? 8.Does the jurisdictions tax authority have a unit dedicated to reviewing the affairs of high-net-worth individuals, and does it use standardised systems ensuring that information they receive regarding a taxpayer’s affairs are automatically matched to the right file? This is, in effect, a measure of the tax authorities likely efficiency in tackling tax abuse. 9.Are the worldwide income and capital gains of tax resident people and companies in the jurisdiction subject to taxation within it? This is important because if they are not then tax abuse is much easier to arrange. 10.Does the jurisdiction prevent the use of entities likely to be of use for serious tax avoidance?


pages: 526 words: 158,913

Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America by Greg Farrell

Airbus A320, Apple's 1984 Super Bowl advert, bank run, banking crisis, bonus culture, call centre, Captain Sullenberger Hudson, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial innovation, fixed income, glass ceiling, high net worth, Long Term Capital Management, mass affluent, Mexican peso crisis / tequila crisis, Nelson Mandela, plutocrats, Plutocrats, Ronald Reagan, six sigma, sovereign wealth fund, technology bubble, too big to fail, US Airways Flight 1549, yield curve

You can never say there’s no risk. We’re in a trading business. Trading businesses take risks. That’s okay. It’s making sure we really understand it.” Another question involved Merrill’s stake in BlackRock, and whether it would make sense for Merrill to sell it in order to raise more capital. “No,” Thain declared. “That’s a strategic stake and it’s important to us going forward. It fits very well with our high net worth business.” FROM A MERRILL LYNCH point of view, the interview was a success. Thain projected an image of authority in what amounted to “the trenches,” the place where Merrill had lost money under O’Neal and would now make money under Thain. The interview also showed that under Tutwiler, who had learned her craft in Washington, D.C., with the “A team” of Republican Party communications experts, public relations would be handled differently from the way it was handled at other Wall Street banks, where the focus tended to be on the institution first, then the CEO.

Fleming countered with the arguments he’d used before: Selling BlackRock would hurt Merrill’s earnings, jeopardize its credit rating, and, given the decline in BlackRock’s share price in recent weeks, result in much smaller gain than the stake was potentially worth. After another extended back-and-forth, Thain relented. Finally, Fleming suggested, it might be a good time to sell a stake in Financial Data Services, a processing business catering to high net worth individuals housed within Merrill’s wealth management unit. Todd Kaplan had brought FDS to Fleming’s attention in April, when the Merrill Lynch president was brainstorming for ideas on how to raise capital without selling more shares. Among other things, FDS marketed a software product that allowed big-ticket investors to retrieve historical prices of all kinds of stocks, making it easier to place a value on their portfolio.


pages: 575 words: 171,599

The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund by Anita Raghavan

airport security, Asian financial crisis, asset allocation, Bernie Madoff, British Empire, business intelligence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, delayed gratification, estate planning, Etonian, glass ceiling, high net worth, kremlinology, locking in a profit, Long Term Capital Management, Marc Andreessen, mass immigration, McMansion, medical residency, Menlo Park, new economy, old-boy network, Ponzi scheme, risk tolerance, rolodex, Ronald Reagan, short selling, Silicon Valley, sovereign wealth fund, stem cell, technology bubble, too big to fail

But the opening of the capital markets in the early eighties and the advent of technology that powered the way to the growth of complex mathematically driven trading strategies changed Wall Street. What securities firms needed most were financial wizards who actually had the brains to dream up newfangled products—derivatives and junk bonds—and sell them to an ever-increasing number of clients, savings and loans, pension funds, and high-net-worth individuals. It needed analysts who could understand the sophisticated products and technologies of the corporations they analyzed—and not simply swallow the spoon-fed and curdled explanations that companies served them. With their highly quantitative backgrounds, the new emigrants from South Asia were perfect for the job. Men like Indian native Vikram Pandit, the former CEO of Citigroup, and Sri Lankan Raj Rajaratnam heeded the call.

As he did with everything in his life, he approached it with lofty aspirations. Gupta and a friend, Ravi Trehan, whom Gupta met one summer when Trehan rented a guesthouse in Connecticut from Gupta, had come to sound out Rajaratnam on the idea of buying an investment management company. The firm—which Trehan had found in Florida—was a so-called fund of funds, which raises money from institutional and high-net-worth investors and then allocates money to different kinds of hedge funds. Gupta and Trehan, a seasoned investor with an enviable track record of structuring deals, told Rajaratnam that they thought they could buy the company for 2 percent of assets. At the time, investment managers were trading at about ten times assets. Gupta and Trehan were looking for $100 million from Rajaratnam as equity capital to buy the company.


pages: 552 words: 163,292

Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art by Michael Shnayerson

activist fund / activist shareholder / activist investor, banking crisis, Bonfire of the Vanities, corporate raider, diversified portfolio, Donald Trump, East Village, estate planning, Etonian, high net worth, index card, Jane Jacobs, mass immigration, NetJets, Peter Thiel, plutocrats, Plutocrats, rent control, rolodex, Silicon Valley, tulip mania, unbiased observer, upwardly mobile, Works Progress Administration

These included Ron Perelman, the dealmaker of MacAndrews & Forbes; LA real-estate developer Eli Broad; hedge funder Steve Cohen; private equity king Leon Black of Apollo Global Management; casino magnate Steve Wynn; entertainment mogul David Geffen; British über collector Charles Saatchi; media maven Peter Brant; the Nahmads and the Mugrabis; and Condé Nast publisher S. I. Newhouse. These were Gagosian’s inner circle, not unlike Gagosian in personality. “Larry is inherently impatient,” noted one of his staffers, “so he gravitates to other impatient people.” Irving Blum, the grand old gallerist of the sixties, liked to note, too, that everyone in Gagosian’s circle was a man: a happy, swaggering group of high-net-worth, high-testosterone captains of finance. With collectors like these, Gagosian saw no threat from Zwirner. He barely knew the guy. His rival was Arne Glimcher. The two dealers were often pitted against each other on a field of battle utterly foreign to David Zwirner and Iwan Wirth: Hollywood. Gagosian had been dealing in Hollywood for some two decades now, thanks to Barry Lowen, Doug Cramer and his ex-wife Joyce Haber, and above all David Geffen, who had gone on to buy most of S.

That the very rich bought art was no great surprise, even at a scale not hitherto seen. The novelty was that art now was more than a rarefied pleasure or sign of social status. With the bursting of the dot-com bubble in early 2000, interest rates had dropped to near zero and stayed down. For many, art was perceived to be a better investment than stocks. And so grew the exciting if not always reliable notion of art as an alternative asset. Several banks with high-net-worth client divisions jumped in, making loans against brand-name art, earning fee income for the bank and building relationships with dealers and collectors, though as Gagosian and other dealers had learned in the last recession, terms tended to be short and interest rates high. Dealers became bankers in a sense, too, making interest-free loans to collectors, sometimes even enlisting them as partners in pricey purchases.


pages: 251 words: 69,245

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality by Branko Milanovic

Berlin Wall, Branko Milanovic, colonial rule, crony capitalism, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, endogenous growth, Fall of the Berlin Wall, financial deregulation, full employment, Gini coefficient, high net worth, illegal immigration, income inequality, income per capita, Joseph Schumpeter, means of production, open borders, Pareto efficiency, plutocrats, Plutocrats, purchasing power parity, Simon Kuznets, very high income, Vilfredo Pareto, Washington Consensus, zero-sum game

People began to live by accumulating ever-rising debts on their credit cards, taking on more car debts or higher mortgages. President George W. Bush famously promised that every American family, regardless of its income, would be able to own a home. Thus was born the great American consumption binge that saw the household debt increase from 48 percent of GDP in the early 1980s to 100 percent of GDP before the crisis. The interests of several large groups of people became closely aligned. High-net-worth individuals and the financial sector were, as we have seen, keen to find new lending opportunities. Politicians were eager to “solve” the irritable problem of middle-class income stagnation. The middle class and those poorer than them were happy to see their tight budget constraints removed as if by a magic wand, consume all the fine things purchased by the rich, and partake in the longest U.S. economic expansion since World War II.


pages: 233 words: 67,596

Competing on Analytics: The New Science of Winning by Thomas H. Davenport, Jeanne G. Harris

always be closing, big data - Walmart - Pop Tarts, business intelligence, business process, call centre, commoditize, data acquisition, digital map, en.wikipedia.org, global supply chain, high net worth, if you build it, they will come, intangible asset, inventory management, iterative process, Jeff Bezos, job satisfaction, knapsack problem, late fees, linear programming, Moneyball by Michael Lewis explains big data, Netflix Prize, new economy, performance metric, personalized medicine, quantitative hedge fund, quantitative trading / quantitative finance, recommendation engine, RFID, search inside the book, shareholder value, six sigma, statistical model, supply-chain management, text mining, the scientific method, traveling salesman, yield management

These changes cleared the path for an enterprise-wide initiative to improve BankCo’s analytical orientation, beginning with the creation of an integrated and consistent customer database (to the extent permitted by law) as well as coordinated retail, trust, and brokerage marketing campaigns. At the same time, an enterprise-wide marketing analytics group was established to work with the marketing teams on understanding client values and behavior. The group began to identify new market segments and offerings, and to help prioritize and coordinate marketing efforts to high-net-worth individuals. It also began to develop a deeper understanding of family relationships and their impact on individual behavior. By bringing together statisticians and analysts scattered throughout the business, BankCo could deploy these scarce resources more efficiently. As demand quickly outstripped supply, it hired analytical specialists with industry expertise and arranged to use an offshore firm to further leverage its scarce analytical talent.


pages: 213 words: 70,742

Notes From an Apocalypse: A Personal Journey to the End of the World and Back by Mark O'Connell

Berlin Wall, bitcoin, blockchain, California gold rush, carbon footprint, Carrington event, clean water, Colonization of Mars, conceptual framework, cryptocurrency, disruptive innovation, diversified portfolio, Donald Trump, Donner party, Elon Musk, high net worth, Jeff Bezos, life extension, low earth orbit, Marc Andreessen, Mikhail Gorbachev, mutually assured destruction, New Urbanism, off grid, Peter Thiel, post-work, Sam Altman, Silicon Valley, Stephen Hawking, Steven Pinker, the built environment, yield curve

He had set up shop in the Black Hills in the hope of drawing some customers from the multitude of bikers who had descended on South Dakota that week for the Sturgis Motorcycle Rally. Vicino was among the most prominent and successful figures in the doomsday preparedness space, a real estate magnate for the end of days. His company specialized in the construction of massive underground shelters where high-net-worth individuals could weather the end of the world in the style and comfort to which they had become accustomed. The company was named Vivos, which is the Spanish word for living. (As in los vivos—as distinct, crucially, from los muertos.) Vivos claimed to operate several facilities across the United States, all in remote and undisclosed locations, far from likely nuclear targets, seismic fault lines, and large urban areas where outbreaks of contagion would be at their most catastrophically intense.


pages: 233 words: 71,775

The Joy of Tax by Richard Murphy

banking crisis, banks create money, carried interest, correlation does not imply causation, en.wikipedia.org, failed state, full employment, Gini coefficient, high net worth, land value tax, means of production, offshore financial centre, quantitative easing, race to the bottom, savings glut, seigniorage, The Spirit Level, The Wealth of Nations by Adam Smith, transfer pricing

This has encouraged the appointment of directors with little or no knowledge of tax, and the appointment of non-executive directors to its Board all of whom8 are drawn from the large-business community even though there are only 700 such companies in the UK and 31 million taxpayers in all. This corporate structure has very clearly failed. HMRC has failed to act in the public interest, as many hearings before the Public Accounts Committee have shown,9 and has, too often, appeared to enter into cosy relationships with large companies10 and high net worth individuals11 that have resulted in them either enjoying what seem generous tax settlements or not being brought to account for the tax crimes that they may have committed. If there is to be confidence in the tax system in the United Kingdom then it is essential that this cosy relationship is ended between big business, its directors and tax advisers, and HMRC. It is also vital that HMRC is subject to proper scrutiny by Parliament in future.


pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial independence, financial innovation, financial thriller, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Mikhail Gorbachev, Milgram experiment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, plutocrats, Plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, survivorship bias, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

In an adjustable rate bond, the interest rate is reset periodically by reference to market rates. Between 2002 and 2004, Jefferson County issued more than $3 billion of adjustable rate bonds, predominantly auction rate securities (ARSs), bonds with a long maturity where the rate is regularly reset through a Dutch auction6 typically held every 7, 28, or 35 days. ARSs provided borrowers with low cost, adjustable rate debt. Institutional investors and high-net-worth individuals received a higher interest for short-term investments because of the assurance of liquidity through the auction process. The investor’s risk was low, as highly rated bond or monoline insurers guaranteed repayment. Jefferson County entered into interest rate swaps, with JP Morgan, Bank of America, and Lehman Brothers, to hedge its exposure to fluctuating interest rates. Under the swaps, the County paid a pre-agreed fixed rate in return for receiving floating rate payments.

In 2007 Gary Gorton wrote that “while financial intermediaries have changed in many ways, at root their problems remain the same. Indeed, the old problem of banking panics can reappear in new guises.”29 Now, AIG simply did not have the cash. FP dealt with a “global swath” of sovereigns, supranationals (like the World Bank), municipalities, banks, investment banks, insurance companies, pension funds, endowments, hedge funds, fund managers, and high-net-worth individuals. All major market participants were linked to each other by a complex network of contracts that few fully understood. In October 2008, Gorton wrote: You have this very, very complicated chain of...risk, which made it very opaque about where the risk finally resided...the whole infrastructure of the financial market became kind of infected, because nobody knew exactly where the risk was.30 If AIG failed, then the institutions that relied on it to insure its risk would have a problem, and then the institutions that relied on those institutions, and so on.


pages: 733 words: 179,391

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

"Robert Solow", Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Berlin Wall, Bernie Madoff, bitcoin, Bonfire of the Vanities, bonus culture, break the buck, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, Diane Coyle, diversification, diversified portfolio, double helix, easy for humans, difficult for computers, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, interest rate derivative, invention of the telegraph, Isaac Newton, James Watt: steam engine, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, merger arbitrage, meta analysis, meta-analysis, Milgram experiment, money market fund, moral hazard, Myron Scholes, Nick Leeson, old-boy network, out of africa, p-value, paper trading, passive investing, Paul Lévy, Paul Samuelson, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Shiller, Sam Peltzman, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, survivorship bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

During bad times, hedge funds are the “canary in the coal mine”; they’re the first to suffer from any kind of financial dislocation. Watching the hedge fund industry can give us tremendous insight into what’s happening to the market environment. Hedge funds innovate rapidly, and because they tend to be highly leveraged, they have a disproportionate impact on markets. Central banks and sovereign wealth funds, insurance companies, and pension funds invest in hedge funds alongside high net worth individuals. How well these large institutions fare affects the financial lives of the everyday consumer, people who are just a single step away in the financial ecology. You may not be interested in hedge funds, but hedge funds may be interested in you. The Galapagos Islands of Finance • 231 AN EVOLUTIONARY HISTORY OF THE HEDGE FUND Let’s use the Adaptive Markets Hypothesis to take a closer look at hedge funds.

When Bear Stearns collapsed in March 2008, Cayne’s 2006 stock bonus had fallen to a meager 6 percent of its original value, and his 2006 option bonus expired, worthless. This is exactly how Wall Street bonus culture is intended to work. However, Murphy’s conclusion comes with an important caveat. His results only apply to the top level of banking executives—they don’t translate to other employees. Lower-level employees with lower levels of wealth also had much less to lose from risk-taking. The financial penalties that matter to a high net worth individual may not matter to someone with little wealth or stake in a company. Did low-level employees of financial firms take excessive risks in pursuit of potential profit? As we’ve seen with rogue traders, the Wall Street bonus culture isn’t sufficient to prevent low-level employees from taking excessive risk; other forms of monitoring and risk management are needed. Here is a possible counternarrative, but one that will require further evidence to verify or refute.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, commoditize, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Kickstarter, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, Nelson Mandela, New Urbanism, off grid, offshore financial centre, oil shock, open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Bill Gates, Bill Clinton, Warren Buffett, George Soros, Richard Branson, and foundations including Ashoka, Schwab, Skoll, and the Omidyar Network (the latter two named for eBay’s founders) all provide a steady flow of capital to ventures that aim to level the economic playing field. Led by Gates and Buffett, forty billionaires have pledged half their net wealth to charity during their lifetimes. Synergos, the Global Philanthropy Forum, and other groups turn high-net-worth individuals and dot-com billionaires into social entrepreneurs with portfolios of progressive activities. Today’s students of the Skoll Center for Social Entrepreneurship at Oxford’s Saïd Business School learn to be social intrapreneurs as well: going inside large corporations and changing their psychology and mission from within. The best thing these new social investors can do is—like celebrity actors—inspire their counterparts in other parts of the world.


pages: 325 words: 73,035

Who's Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life by Richard Florida

active measures, assortative mating, barriers to entry, big-box store, blue-collar work, borderless world, BRICs, business climate, Celebration, Florida, correlation coefficient, creative destruction, dark matter, David Brooks, David Ricardo: comparative advantage, deindustrialization, demographic transition, edge city, Edward Glaeser, epigenetics, extreme commuting, Geoffrey West, Santa Fe Institute, happiness index / gross national happiness, high net worth, income inequality, industrial cluster, invention of the telegraph, Jane Jacobs, job satisfaction, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, megacity, new economy, New Urbanism, Peter Calthorpe, place-making, post-work, Richard Florida, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, Seaside, Florida, Silicon Valley, Silicon Valley startup, superstar cities, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, World Values Survey, young professional

Housing costs reflect what people are willing to pay to live in a particular location. Prices rise in places that are hotly desired, and stagnate or fall where demand is lower. Low prices mean that fewer people, relatively speaking, want to live in any given location, which would make hiring more complicated and difficult if a firm were to relocate. Location matters more than ever in the era of spiky globalization. A 2008 report by real estate giant Knight Frank asked high net worth individuals to name the most important factors in the location of a primary residence or second home. Accessibility topped the list, with 76 percent naming it for a primary residence and 71 percent citing it for a second home. When the list was narrowed to even more specific factors, access to work came in first, crime and security second, and access to airports third, well ahead of social networks, taxes, educational institutions, and leisure activities.3 Star Struck Using long-term trends in housing prices as their gauge, Wharton real estate expert Joseph Gyourko and his colleagues Todd Sinai and Chris Mayer of Columbia University identified the rise of what they call “superstar cities” (comprising central cities and their suburbs) across North America.4 According to Gyourko and his collaborators, the dramatic real estate appreciation in superstar cities is a long-term trend.


pages: 278 words: 74,880

A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Carbon Emissions by Muhammad Yunus

active measures, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, clean water, conceptual framework, crony capitalism, distributed generation, Donald Trump, financial independence, fixed income, full employment, high net worth, income inequality, Indoor air pollution, Internet of things, invisible hand, Jeff Bezos, job automation, Lean Startup, Mark Zuckerberg, megacity, microcredit, new economy, Occupy movement, profit maximization, Silicon Valley, the market place, The Wealth of Nations by Adam Smith, too big to fail, unbanked and underbanked, underbanked, urban sprawl, young professional

Or will we take the destiny of the planet into our hands by reimagining a world where we put the needs of all people at the center, and where our creativity, wealth, and other resources become a means to achieve those needs? Rethinking and remaking our economic system is not simply a nice idea. There really is no viable alternative if we hope to enjoy a future on this planet. While short-term trends may appear to benefit a few of us at the expense of many others, in the long run only policies that will allow all the people of the world to share the progress are truly sustainable. The fate of high-net-worth investors served by bankers on Wall Street and that of poor women working in a garment factory in Bangladesh are linked together. The fate of a sorghum farmer in Uganda, a maize farmer in Mexico, and a soybean farmer in Iowa are all intertwined. Over the past decade, we’ve seen our world lurch from one crisis to another: financial disasters, famines, energy shortages, environmental catastrophes, military conflicts, floods of refugees, rising political instability.


pages: 267 words: 71,941

How to Predict the Unpredictable by William Poundstone

accounting loophole / creative accounting, Albert Einstein, Bernie Madoff, Brownian motion, business cycle, butter production in bangladesh, buy and hold, buy low sell high, call centre, centre right, Claude Shannon: information theory, computer age, crowdsourcing, Daniel Kahneman / Amos Tversky, Edward Thorp, Firefox, fixed income, forensic accounting, high net worth, index card, index fund, John von Neumann, market bubble, money market fund, pattern recognition, Paul Samuelson, Ponzi scheme, prediction markets, random walk, Richard Thaler, risk-adjusted returns, Robert Shiller, Robert Shiller, Rubik’s Cube, statistical model, Steven Pinker, transaction costs

Should an informed person want to hack into your accounts, and should that someone have money and time (and the law?) on his side, he’s likely to succeed. The only countermeasure is using a random password long enough to guarantee search times of your life expectancy or greater. Don’t be too sure you couldn’t be a target. A small business’s competitors may be willing to steal a laptop and expend the needed resources. So may a high-net-worth spouse in a divorce case. Hackers may take a disliking to someone’s business or politics. Twitter, meaning the whole site, was once compromised because an administrator unwisely chose the password happiness. In 2009 a hacker learned the Twitter password in a dictionary attack and posted it on the Digital Gangster site, leading to hijackings of the Twitter feeds of Barack Obama, Britney Spears, Facebook, and Fox News.


pages: 283 words: 77,272

With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful by Glenn Greenwald

Ayatollah Khomeini, banking crisis, Bernie Madoff, Clive Stafford Smith, collateralized debt obligation, Corrections Corporation of America, crack epidemic, Credit Default Swap, credit default swaps / collateralized debt obligations, David Brooks, deskilling, financial deregulation, full employment, high net worth, income inequality, Julian Assange, mandatory minimum, nuremberg principles, Ponzi scheme, Project for a New American Century, rolodex, Ronald Reagan, too big to fail, Washington Consensus, WikiLeaks

Hurlbert’s explanation for not charging Erzinger with any felonies was blunt: “Felony convictions have some pretty serious job implications for someone in Mr. Erzinger’s profession.” In other words, Erzinger engages in such vital activity that charging him with a felony would be wrong because it might seriously disrupt his work: managing the money of multimillionaires and billionaires. According to Worth magazine, Erzinger “oversees over $1 billion in assets for ultra high net worth individuals, their families and foundations.” If he were charged with a felony, he would be required to report that fact to licensing agencies; a felony conviction could result in his fund manager license being rescinded. Apparently, as far as the district attorney was concerned, it would be terribly unfair to subject someone like Erzinger to the risk of damaging his career, though presumably someone with less to lose could—and would—be charged as a felon without any such worries.


pages: 300 words: 77,787

Investing Demystified: How to Invest Without Speculation and Sleepless Nights by Lars Kroijer

Andrei Shleifer, asset allocation, asset-backed security, Bernie Madoff, bitcoin, Black Swan, BRICs, Carmen Reinhart, cleantech, compound rate of return, credit crunch, diversification, diversified portfolio, equity premium, estate planning, fixed income, high net worth, implied volatility, index fund, intangible asset, invisible hand, Kenneth Rogoff, market bubble, money market fund, passive investing, pattern recognition, prediction markets, risk tolerance, risk/return, Robert Shiller, Robert Shiller, selection bias, sovereign wealth fund, too big to fail, transaction costs, Vanguard fund, yield curve, zero-coupon bond

In short, I felt at a competitive disadvantage to others who had looked at but passed on the investment, and I did the same as a result. There was no edge. There is unfortunately not a great amount of good and reliable data on private investments (outside the more institutional methods like venture capital, etc.). Many involved with private investments are notoriously bad at sharing performance data with the wider world. This is probably because many high-net-worth investors are reluctant to share information about their private portfolios, although exposure to the tax authorities may also play a role. Poor information non-withstanding, according to a recent survey of studies on angel investing6 the average annual return to angel investors was 27.3%, which is obviously phenomenal. I would, however, suggest that there is an extremely heavy selection bias (only good results get reported, or people start reporting only after getting good results), and that if you had blindly invested in all angel deals the returns would have been substantially lower and perhaps fairly unimpressive.


pages: 243 words: 77,516

Straight to Hell: True Tales of Deviance, Debauchery, and Billion-Dollar Deals by John Lefevre

airport security, blood diamonds, buy and hold, colonial rule, credit crunch, fixed income, Goldman Sachs: Vampire Squid, high net worth, income inequality, jitney, lateral thinking, market clearing, Occupy movement, Sloane Ranger, the market place

We’d get friends or clients asking us to help them out with internships or analyst positions for their kids or relatives, and we’d simply pass them on to New York with a kind word and a nudge for special consideration that we knew would typically go ignored. New York didn’t give a shit at all. They didn’t want or need to do us, or our clients, any favors; Asia was still a rounding error in terms of revenue for most of the larger global banks. But by 2006, everything had changed. We started recruiting many of the new analysts for Asia from the pool of résumés that were sent in to the private bank by their ultra-high-net-worth clients looking for favors. JPMorgan, Goldman Sachs, HSBC, UBS, Morgan Stanley, and most other firms would do the same thing through their respective private wealth management divisions. It became the running joke any time one of our counterparts at another bank brought a new analyst to a meeting or roadshow luncheon. “So, who is his [or her] father?” was the first question, unless she was hot, then it was “Is she single?”


The Code: Silicon Valley and the Remaking of America by Margaret O'Mara

"side hustle", A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, affirmative action, Airbnb, AltaVista, Amazon Web Services, Apple II, Apple's 1984 Super Bowl advert, autonomous vehicles, back-to-the-land, barriers to entry, Ben Horowitz, Berlin Wall, Bob Noyce, Buckminster Fuller, Burning Man, business climate, Byte Shop, California gold rush, carried interest, clean water, cleantech, cloud computing, cognitive dissonance, commoditize, computer age, continuous integration, cuban missile crisis, Danny Hillis, DARPA: Urban Challenge, deindustrialization, different worldview, don't be evil, Donald Trump, Doomsday Clock, Douglas Engelbart, Dynabook, Edward Snowden, El Camino Real, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Frank Gehry, George Gilder, gig economy, Googley, Hacker Ethic, high net worth, Hush-A-Phone, immigration reform, income inequality, informal economy, information retrieval, invention of movable type, invisible hand, Isaac Newton, Jeff Bezos, Joan Didion, job automation, job-hopping, John Markoff, Julian Assange, Kitchen Debate, knowledge economy, knowledge worker, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, mass immigration, means of production, mega-rich, Menlo Park, Mikhail Gorbachev, millennium bug, Mitch Kapor, Mother of all demos, move fast and break things, move fast and break things, mutually assured destruction, new economy, Norbert Wiener, old-boy network, pattern recognition, Paul Graham, Paul Terrell, paypal mafia, Peter Thiel, pets.com, pirate software, popular electronics, pre–internet, Ralph Nader, RAND corporation, Richard Florida, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Second Machine Age, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, skunkworks, Snapchat, social graph, software is eating the world, speech recognition, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, supercomputer in your pocket, technoutopianism, Ted Nelson, the market place, the new new thing, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas L Friedman, Tim Cook: Apple, transcontinental railway, Uber and Lyft, uber lyft, Unsafe at Any Speed, upwardly mobile, Vannevar Bush, War on Poverty, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, WikiLeaks, William Shockley: the traitorous eight, Y Combinator, Y2K

In addition to the public markets, technology companies now had a growing base of private-sector customers, new product niches, expanding overseas markets, new investment pools. The boom years turned out to be relatively brief, but they left a long shadow. THE GO-GO YEARS Wall Street’s tech boom started in the summer of 1966, when Digital held its first public offering. The mini maker’s 350,000 shares of common stock, offered at $22 a pop, sold out almost immediately. Ken Olsen instantly became a multimillionaire. High net worth didn’t markedly change the company’s low-key business culture, however. Olsen’s biggest splurge after the Digital IPO was to buy a second canoe .1 Another Boston-based pacesetter was Wang Laboratories, which had its IPO in the late summer of 1967, exactly a year after Digital’s debut. “I had a banker call me and ask for 100,000 shares,” said one broker. “He said he had no idea what the company did but he heard it was wonderful.”

He was just reflecting back what he had heard his entire life, from the halls of Homestead High School to the night shift at Atari and the show-and-tells of Homebrew. It was the latest iteration of the free-market narrative that had propelled the Valley from the start. The mythos had only intensified as the semiconductor generation matured, and the personal-computer industry gained market velocity. Now the independent zeitgeist was topped with a dollop of high-net-worth self-satisfaction. Reporters mingling among a trade-show crowd in 1979 remarked on the Valley’s “singular sense of frontierism, its self-awareness that says, ‘Hey, we’re the people making it all happen.’” Tech was the domain of rebels, of cowboys, of revolutionaries. It was business with an authentic soul. The trade press for the microcomputer industry became a critical amplifier of this message in the last years of the 1970s.


pages: 296 words: 82,501

Stuffocation by James Wallman

3D printing, Airbnb, back-to-the-land, Berlin Wall, big-box store, Black Swan, BRICs, carbon footprint, Cass Sunstein, clean water, collaborative consumption, commoditize, creative destruction, crowdsourcing, David Brooks, Fall of the Berlin Wall, happiness index / gross national happiness, hedonic treadmill, high net worth, income inequality, Intergovernmental Panel on Climate Change (IPCC), James Hargreaves, Joseph Schumpeter, Kitchen Debate, Martin Wolf, mass immigration, McMansion, means of production, Nate Silver, Occupy movement, Paul Samuelson, post-industrial society, post-materialism, Richard Florida, Richard Thaler, sharing economy, Silicon Valley, Simon Kuznets, Skype, spinning jenny, The Signal and the Noise by Nate Silver, Thorstein Veblen, Tyler Cowen: Great Stagnation, World Values Survey, Zipcar

Graham: the Minimalist Who Loves Stuff See Graham Hill’s work at www.treehugger.com, his new company LifeEdited at www.lifeedited.com, and see www.ted.com for his talks. Follow Colin Wright at www.exilelifestyle.com. For an example of how people are still shopping in a time of too much stuff, consider Emily Sheffield, “How We Shop Now”, British Vogue, February 2013. Sheffield writes that “a fashion consultant called Anita Borzsyzkowska says: ‘So I am actually spending more per item, but there are fewer buys.’“ And Sheffield quotes a report from high-net worth consumer specialist Ledbury Research, which points to “consumers adopting a ‘less is more’ mentality. So they are focusing more on quality and good experiences than ‘look at me’ purchases.” The New ‘n’ Improved Features and Benefits of the Experience Economy This section – and much of the chapters about the experience economy – is inspired and informed by B. Joseph Pine II and James H Gilmore, The Experience Economy (Boston: Harvard Business School Press, 1999) and B Joseph Pine II and James H Gilmore, The Experience Economy Updated Edition (Boston: Harvard Business School Press, 2011).


pages: 444 words: 84,486

Radicalized by Cory Doctorow

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Bernie Sanders, call centre, crowdsourcing, cryptocurrency, Edward Snowden, Flash crash, G4S, high net worth, information asymmetry, license plate recognition, obamacare, old-boy network, six sigma, TaskRabbit

He’d built a hidden vault into Fort Doom with some gold ingots, some encrypted thumb drives with BtC, some dollars, some sapphires, and a few neat packets of renminbi, which felt right. You never knew. He could afford it. He could afford all of it. Martin and the market understood each other. He was a star at the firm, personally managing a portfolio with $11 billion in it, which he had personally grown from $9 billion. There was talk of giving him his own fund, giving the most ultra-high-net-worth types the chance to subscribe directly, and giving him tons of freedom to do as he saw fit with it. When he thought about this, his brain kind of split into two different, mutually exclusive thought processes: the first one started adding up bonuses and commissions and new base pay; the second one wondered how much of that would arrive before The Event. Maybe The Event would never happen. He was a Bayesian reasoner, not a fortune-teller.


pages: 290 words: 83,248

The Greed Merchants: How the Investment Banks Exploited the System by Philip Augar

Andy Kessler, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, business cycle, buttonwood tree, buy and hold, capital asset pricing model, commoditize, corporate governance, corporate raider, crony capitalism, cross-subsidies, financial deregulation, financial innovation, fixed income, Gordon Gekko, high net worth, information retrieval, interest rate derivative, invisible hand, John Meriwether, Long Term Capital Management, Martin Wolf, new economy, Nick Leeson, offshore financial centre, pensions crisis, regulatory arbitrage, Sand Hill Road, shareholder value, short selling, Silicon Valley, South Sea Bubble, statistical model, Telecommunications Act of 1996, The Chicago School, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, tulip mania, value at risk, yield curve

The veteran Wall Street analyst Jim Hanbury explains how this worked: ‘In such an organization sales, research, trading, underwriting, advisory, asset management and brokerage are under one roof and the professionals work together smoothly. Some easy examples include analysts proposing candidates for M&A or financing; sales and trading informing bankers of client needs, bankers introducing clients to high net worth brokers and so on. In the great firms this generates a lot of revenues.’2 Following the global settlement of 2003, the link between research analysts and investment banking has been broken and more care is being taken to manage other conflicts of interest. But the integrated, diversified investment banks remain in an unbeatable position compared to other market users. Their superior market knowledge and power stack the odds in their favour.


pages: 280 words: 82,623

What Got You Here Won't Get You There: How Successful People Become Even More Successful by Marshall Goldsmith, Mark Reiter

business process, cognitive dissonance, financial independence, fixed income, Gordon Gekko, high net worth, knowledge worker, loss aversion, shareholder value, zero-sum game

She was developing people who shared her vision for the magazine. She was building a solid team that could operate seamlessly. Sharon thought she was encouraging the staff to grow and eventually emulate her success. The staffers outside her inner circle thought she was encouraging sucking up. Sharon is guilty of Habit #14: Playing favorites. Case 3. Martin is a financial consultant for a prominent New York City firm. He manages money for high-net-worth individuals. The minimum starting account is $5 million. Martin is very good at what he does. He takes home a seven-figure salary. That’s a lot less than most of his clients make in a year. But Martin doesn’t envy or resent his clients. He lives and breathes investments. And he loves providing a valued service for his well-heeled clients, many of them CEOs, some of them self-made entrepreneurs, some of them entertainment stars, and the rest of them beneficiaries of inherited wealth.


pages: 291 words: 90,771

Upscale: What It Takes to Scale a Startup. By the People Who've Done It. by James Silver

Airbnb, augmented reality, Ben Horowitz, blockchain, business process, call centre, credit crunch, crowdsourcing, DevOps, family office, future of work, Google Hangouts, high net worth, hiring and firing, Jeff Bezos, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, minimum viable product, Network effects, pattern recognition, ride hailing / ride sharing, Silicon Valley, Skype, Snapchat, software as a service, Uber and Lyft, uber lyft, women in the workforce, Y Combinator

‘Very often it’s an investor who has had a good experience with something that they see as being analogous in some respects to your startup. And that’s true through every single stage: if they can see something about a company that they’ve had success with in the past, then that founder is going to be pushing on an open door. ‘But, ultimately, it is very much network, and for seed stage it’s a mixture of [high net-worth] individuals and small funds.’ Having the right backers at seed stage is critically important, she emphasises. ‘These are the people who are going to be the most heavily invested - literally - in helping you build your next stage relationships.’ Doing this without ‘warm’ introductions is hard, because many investors prefer to back someone they’ve got to know. ‘Of course, if you’re a serial entrepreneur and you’ve done it before, it’s easy, but if you’re doing it for the first time, you can’t just walk in the door and/ or send in your pitch deck.


pages: 268 words: 81,811

Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History by Liam Vaughan

algorithmic trading, backtesting, bank run, barriers to entry, Bernie Madoff, Black Swan, Bob Geldof, centre right, collapse of Lehman Brothers, Donald Trump, Elliott wave, eurozone crisis, family office, Flash crash, high net worth, High speed trading, information asymmetry, Jeff Bezos, Kickstarter, margin call, market design, market microstructure, Nick Leeson, offshore financial centre, pattern recognition, Ponzi scheme, Ralph Nelson Elliott, Ronald Reagan, sovereign wealth fund, spectrum auction, Stephen Hawking, the market place, Tobin tax, tulip mania, yield curve, zero-sum game

Nav erected an impenetrable wall between his home life and his business affairs, and when Daljit, his mother, left the house each morning to work behind the till at a local chemist, or Nachhattar, his father, walked to the doctor’s office to pick up a prescription, they did so with no inkling that their son was a multimillionaire. Money for Nav was an abstraction, and the more of it that flooded in, the more he turned to MacKinnon and Dupont for guidance. By now the pair had taken to describing themselves as Nav’s “family office”—a kind of one-stop shop that handles every aspect of a high-net-worth individual’s financial and investment affairs—and not long after the wind deal was finalized, they introduced him to another opportunity, this one involving a mysterious young Mexican businessman named Jesus. Jesus Alejandro Garcia Alvarez was the owner and CEO of a Zurich-based company called IXE, an Aztec word apparently meaning “one who shows their face and keeps their word.” Dupont first encountered him in the summer of 2011 when he was in the audience of a presentation Garcia was giving to a roomful of financial advisers, solicitors, and accountants in Mayfair.


pages: 223 words: 10,010

The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

"Robert Solow", banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

This was in part because the super-rich demanded racier and racier returns. In the US and the UK, wealth management teams operating inside investment and specialist banks enjoyed booming business. Many of these companies started to handle only clients offering substantial sums. In the UK, for example, the wealth management firms Fleming Family and Partners, JO Hambro and Sarasin only handle a group known in the industry as ‘ultra high net worth’: those with assets to spare of at least £10 million. Some of the money supported proprietary trading desks in investment banks. Yet using the banks’ own capital in this way loaded additional risk and potential conflict. ‘Not only do they risk putting their own interests before those of their clients’, as the Economist magazine argued in 2007, ‘they are also increasingly exposing themselves to the dangers of an abrupt turn in the credit cycle.


pages: 312 words: 91,538

The Fear Index by Robert Harris

algorithmic trading, backtesting, banking crisis, dark matter, family office, Fellow of the Royal Society, fixed income, Flash crash, God and Mammon, high net worth, implied volatility, mutually assured destruction, Neil Kinnock, Renaissance Technologies, speech recognition

‘Should we take precautions on your behalf as well?’ Quarry laughed. ‘The only thing that keeps me awake at night is the thought of a paternity suit.’ ‘RIGHT,’ SAID QUARRY, when Genoud had gone, ‘let’s talk about this presentation – if you’re still sure you’re up for it?’ ‘I’m up for it.’ ‘Okay, thank God for that. Nine investors – all existing clients as agreed. Four institutions, three ultra-high net worths, two family offices, and a partridge in a pear tree.’ ‘A partridge?’ ‘Okay, not a partridge. There is no partridge, I concede that.’ Quarry was in great high spirits. If he was three parts gambler he was also one part salesman, and it was a while since that crucial part of him had been allowed its head. ‘Ground rules are: first, they have to sign a non-disclosure agreement regarding our proprietary software, and second, they’re each permitted to bring in one designated professional adviser.


pages: 265 words: 93,231

The Big Short: Inside the Doomsday Machine by Michael Lewis

Asperger Syndrome, asset-backed security, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, facts on the ground, financial innovation, fixed income, forensic accounting, Gordon Gekko, high net worth, housing crisis, illegal immigration, income inequality, index fund, interest rate swap, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, medical residency, money market fund, moral hazard, mortgage debt, pets.com, Ponzi scheme, Potemkin village, quantitative trading / quantitative finance, Robert Bork, short selling, Silicon Valley, the new new thing, too big to fail, value at risk, Vanguard fund, zero-sum game

They were the same agreements, dreamed up by the International Swaps and Derivatives Association, that Mike Burry secured before he bought his first credit default swaps. If you got your ISDA, you could in theory trade with the big Wall Street firms, if not as an equal then at least as a grown-up. The trouble was that, despite their success running money, they still didn't have much of it. Worse, what they had was their own. Inside Wall Street they were classified, at best, as "high net worth individuals." Rich people. Rich people received a better class of service from Wall Street than middle-class people, but they were still second-class citizens compared to institutional money managers. More to the point, rich people were typically not invited to buy and sell esoteric securities, such as credit default swaps, not traded on open exchanges. Securities that were, increasingly, the beating heart of Wall Street.


Driverless: Intelligent Cars and the Road Ahead by Hod Lipson, Melba Kurman

AI winter, Air France Flight 447, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, butterfly effect, carbon footprint, Chris Urmson, cloud computing, computer vision, connected car, creative destruction, crowdsourcing, DARPA: Urban Challenge, digital map, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Google Earth, Google X / Alphabet X, high net worth, hive mind, ImageNet competition, income inequality, industrial robot, intermodal, Internet of things, job automation, Joseph Schumpeter, lone genius, Lyft, megacity, Network effects, New Urbanism, Oculus Rift, pattern recognition, performance metric, precision agriculture, RFID, ride hailing / ride sharing, Second Machine Age, self-driving car, Silicon Valley, smart cities, speech recognition, statistical model, Steve Jobs, technoutopianism, Tesla Model S, Travis Kalanick, Uber and Lyft, uber lyft, Unsafe at Any Speed

Not all consumers of the future will want an efficient and generic transport pod. Some consumers will still want to buy their own car, an expensive specialty model that’s designed for a specific purpose, perhaps an office on wheels, or a mini, autonomous “home away from home,” boasting a bright and recognizable logo. Consumers who purchase these costly specialty models will be a desirable demographic: high-net-worth individuals, the same people who own a second home for vacations, or who prefer to charter a private jet to go on vacation rather than flying commercial. While a partnership with a software company will still be required, the focus of the sale will be on the quality of the entire car, both hardware and software. If the Apple paradigm prevails, automotive OEMs will remain in charge of at least a slice of the automotive industry of the future.


pages: 310 words: 91,151

Leaving Microsoft to Change the World: An Entrepreneur's Odyssey to Educate the World's Children by John Wood

airport security, British Empire, call centre, clean water, corporate social responsibility, Deng Xiaoping, Donald Trump, fear of failure, glass ceiling, high net worth, income per capita, Jeff Bezos, Johann Wolfgang von Goethe, Marc Andreessen, microcredit, Own Your Own Home, random walk, rolodex, shareholder value, Silicon Valley, Skype, Steve Ballmer

It started gradually, when Chicago raised $75,000 in an evening, and the New York chapter vowed to beat them. They did, upping the ante to $82,000. A few weeks later, in November of 2004, the San Francisco team planted their flag by generating over $90,000 at a “Reading Room” event with facsimiles of four libraries (from Nepal, Cambodia, Vietnam, and India), one in each corner of the room. Within weeks, the London chapter hosted a private dinner for high-net-worth individuals who collectively pledged over $100,000. It was all done in a spirit of friendly competition, and it was fun to watch the mails fly around the world as the bar continued to be raised. The Hong Kong chapter treated the British record as though it were made to be broken. Our chapter leaders jokingly told me, “The Brits take forever to make decisions. Here in Hong Kong, we move quickly.


pages: 297 words: 91,141

Market Sense and Nonsense by Jack D. Schwager

3Com Palm IPO, asset allocation, Bernie Madoff, Brownian motion, buy and hold, collateralized debt obligation, commodity trading advisor, computerized trading, conceptual framework, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, fixed income, high net worth, implied volatility, index arbitrage, index fund, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market fundamentalism, merger arbitrage, negative equity, pattern recognition, performance metric, pets.com, Ponzi scheme, quantitative trading / quantitative finance, random walk, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, short selling, statistical arbitrage, statistical model, survivorship bias, transaction costs, two-sided market, value at risk, yield curve

The risk alluded to is one that can arise because of a lack of diversification, rather than one that is intrinsic to the investment. The idiosyncratic risk in hedge funds, which raises the specter of a total or near-total loss, can easily be eliminated by confining hedge fund investments to diversified, professionally managed funds of funds, as opposed to single hedge fund investments. Investment Misconception 35: Hedge fund investment is appropriate only for high-net-worth, sophisticated investors. Reality: An analytical, rather than emotional, evaluation of portfolio alternatives would indicate that hedge funds are a desirable investment even for unsophisticated, lower-net-worth individuals—that is, via a fund of funds vehicle, which provides both professional management and diversification. In fact, it could be argued that these are the investors who most need to include a diversified hedge fund investment in their portfolios, as they can least afford the risk implicit in investing all their money in a typical traditional portfolio, which is inherently poorly diversified.


pages: 351 words: 93,982

Leading From the Emerging Future: From Ego-System to Eco-System Economies by Otto Scharmer, Katrin Kaufer

Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Asian financial crisis, Basel III, Berlin Wall, Branko Milanovic, cloud computing, collaborative consumption, collapse of Lehman Brothers, colonial rule, Community Supported Agriculture, creative destruction, crowdsourcing, dematerialisation, Deng Xiaoping, en.wikipedia.org, European colonialism, Fractional reserve banking, global supply chain, happiness index / gross national happiness, high net worth, housing crisis, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Johann Wolfgang von Goethe, Joseph Schumpeter, Kickstarter, market bubble, mass immigration, Mikhail Gorbachev, Mohammed Bouazizi, mutually assured destruction, Naomi Klein, new economy, offshore financial centre, peak oil, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, smart grid, Steve Jobs, technology bubble, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Washington Consensus, working poor, Zipcar

And in order to cultivate this inner silence, “we must have filters against excessive banality.” That will help us to “transform fear into love.” Later that morning, I met his business partner, Guilherme Leal, another co-founder of Natura. After merging his own company with Natura in 1979, Guilherme helped build Natura into the largest direct-sales cosmetics company in Brazil. What struck me most was seeing how these two men interacted with each other. Often very successful and high-net-worth people tend to go it alone. Instead these two men seemed to have a relationship that was delicate, respectful, caring, appreciative. None of these words really get to the essence. If I had to choose a single word, maybe it would be selfless. They seemed to genuinely enjoy their differences and to support each other in them. For all of the company’s success, today it faces a new set of opportunities and challenges.


Concentrated Investing by Allen C. Benello

activist fund / activist shareholder / activist investor, asset allocation, barriers to entry, beat the dealer, Benoit Mandelbrot, Bob Noyce, business cycle, buy and hold, carried interest, Claude Shannon: information theory, corporate governance, corporate raider, delta neutral, discounted cash flows, diversification, diversified portfolio, Edward Thorp, family office, fixed income, high net worth, index fund, John von Neumann, Louis Bachelier, margin call, merger arbitrage, Paul Samuelson, performance metric, random walk, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, shareholder value, Sharpe ratio, short selling, survivorship bias, technology bubble, transaction costs, zero-sum game

The younger brother contacted Greenberg and told him that he’d give him until year-end because it wasn’t fair to judge him after only a few months. After starting the year down, Chieftain’s first year turned out to be strong. (The younger brother who told Greenberg that he’d see out the year has been a client ever since, and “has a very large account.”33) Money started pouring into the firm as clients started telling their friends about the firm. Even so, for the first eight years, Chieftain only managed money for high net worth individuals. In 1990, Greenberg was invited along with other young alumni for a “back-to-class” weekend at Yale. David Swensen, who administered Yale’s endowment, gave a talk about the endowment’s investment strategy. Swensen had been in charge of the endowment for several years, and had placed a quarter of its capital in stock market index funds. Greenberg thought it was preposterous. He thought, “I could beat the market with my hands tied behind me.”34 Greenberg raised his hand and said,