Rich Getting Richer

By James Pynn

Jim is a money manager. Specifically, he manages the money of rich people who made their own fortunes through hard work, invention, or by inheritance. From what he tells me, there are more ultra-rich families in America that have inherited fortunes than there are people who created fortunes. He would know -- in order to become one of Jim's clients you must have a net value of at least $1 million. It's strange to think there is more old money circulating in this economy than there is venture capital.

So, the argument I like to bring up is: if it's old money that drives the market, where does the average working Joe fit into the picture? What about the middle class? When does the middle class get to ante up to the investment table? During the 1990s we saw more day traders buying and selling for the short term. That trend died off in the early 2000s and left many would-be millionaires coming up short.

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

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

Here is a fun fact: the richest people on the planet become even richer during economic downturns and depressions. How is this? Recessions and depressions have a tendency to destroy competition, therefore consolidating the wealth of the super rich. Competition is not in the best interests of the super-rich. Consequently, it is the corporate structure -- justifiably attacked for its lack of transparency -- that allows new wealth to be created and more people to participate in that wealth. Most corporations are started by venture capitalists and entrepreneurs -- and that entrepreneurial spirit is what has made the middle class and nouveau riche possible. - 23311

About the Author:

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