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Forum Post: What do mega-rich people do with their money?

Posted 12 years ago on Jan. 7, 2012, 10:35 a.m. EST by JoeTheFarmer (2654)
This content is user submitted and not an official statement

Do they sit in a room with gold coins counting them like Scrooge or something else?

74 Comments

74 Comments


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[-] 2 points by zymergy (236) 12 years ago

I am not super rich, and have no super rich acquaintances, so my comments are purely hear-say: the super rich invest in hedge funds that are managed by professionals - these hedge funds perform pretty well compared to ordinary speculators, although results vary (see http://www.hennesseegroup.com/indices/returns/hhfiannual.html ), recently the hedge funds have been losing money; and of course, relative to their income, the expenses of the super rich are quite small, so they have a lot of surplus to reinvest. At some point in their lives, usually at the end, the super rich give much of it away.

[-] 1 points by 1169 (204) 12 years ago

they keep u and me far away from them and it.

[Removed]

[-] 1 points by hchc (3297) from Tampa, FL 12 years ago

Who cares. Worry about you.

[-] 1 points by nickhowdy (1104) 12 years ago

"Do they sit in a room with gold coins counting them like Scrooge or something else?"

No they don't sit around ...They travel in their Yachts snorting cocaine and screwing prostitutes..All necessary in the charitable act of job creation...

[-] 1 points by JoeTheFarmer (2654) 12 years ago

I have a hard time picturing the mega-rich living like that. In fact most of them are workaholics.

Bill Gates, Larry Ellison, Warren Buffett, Charles Koch, George Soros, Mark Zuckerberg, Michael Dell, Jeff Bezos, Paul Allen, Sergy Brin, Larry Page...

All these folks have a history of working while the people around them partied.

[-] 1 points by nickhowdy (1104) 12 years ago

Sounds like you know already..Why bother asking the question?

[-] 1 points by JoeTheFarmer (2654) 12 years ago

To see the 74 comments.

[-] 1 points by TheTrollSlayer (347) from Kingsport, TN 12 years ago

Compete with other fatcats and try to get richer.

[-] 1 points by ithink (761) from York, PA 12 years ago

They have very serious problems, the mega-rich. I would not want their problems. They never have enough money. So they spend all of the their time on this earth using their money to make more money. I imagine this is a very sad existence, to be a slave to money. No matter how much money they make, they cannot buy their freedom.

[-] 1 points by Samcitt (136) 12 years ago

Many sit there and watch it increase, they do nothing but carefully watch it increase towards infinity. They do so because to them it embodies order and a movement in a single direction they can control. They only spend begrudgingly in the view that it is a single defeat which will give way to a hundred victories. If it goes down against their will they freak out as it directly affects their subconscious which sees the money as a safety barrier.

[-] 0 points by JoeTheFarmer (2654) 12 years ago

How does it increase? Don't they have to invest the money for that to happen? If they invest it are they not putting money into the economy?

If they keep is as cash it loses value.

[-] 1 points by nickhowdy (1104) 12 years ago

Depends...

[-] 1 points by Samcitt (136) 12 years ago

Yes, I covered that under "spending begrudgingly" they spend only when they have to in order to keep it increasing.

[-] 1 points by FriendlyObserverA (610) 12 years ago

an investment is not intended to put money into the economy , it's to "take money out of the economy".

[-] 0 points by smartcapitalist (143) 12 years ago

ROFL.. seriously... where do you get such wisdom from?

[-] 1 points by FriendlyObserverA (610) 12 years ago

what ? if you put more in than you took out you would eventually go broke ... but if you take more out than you put in you become rich .. it's not rocket science .. is it ?

[-] -1 points by smartcapitalist (143) 12 years ago

I dont even know how to answer something that stupid. I mean I met clueless grads during my bschools days and then during some of the recruitment drives, but this one trumps it all. Hats off to you. Will share this over lunch with my co-workers. Thanks dude.

[-] 1 points by JesseHeffran (3903) 12 years ago

If ALL BUSINESSES are different, what type of idiot would major in business?

[-] 0 points by smartcapitalist (143) 12 years ago

Only someone as intelligent as you could figure that out. Let's occupy all business schools and shut them down. What say?

[-] 1 points by JesseHeffran (3903) 12 years ago

Yo, I wasn't going to that conclusion; I'm just saying business school did not seem like a wise idea when I went to college, especially since I LEARNED the simple truths about opportunity cost early in life. isn't that the main lesson? managing your overhead...

[-] 0 points by smartcapitalist (143) 12 years ago

Managing overhead and opportunity costs are two very different things. A MBA is certainly not necessary to be successful in business but it does teach you enough to ensure you dont make too many mistakes. And there is much more to business than opportunity costs or minimizing overheads.

[-] 1 points by JesseHeffran (3903) 12 years ago

The two, OC & OH, are as different as streams and oceans. one feeds into the other and the rest of it, Business school, well, seems like street smarts would cover the rest. From the hostile take over to the belief in mergers and acquisitions, they are all first year street school curricula.

[-] 0 points by smartcapitalist (143) 12 years ago

Hostile takeover rarely happen. I spent two years in M&A and I have neither seen nor heard of anyone in the firm working on a hostile takeover deal.

[-] 1 points by JesseHeffran (3903) 12 years ago

what about the fact that your industry makes most of its money from short sales right before the IPO? that seems a little hostile to me. Or is "the House of Cards" writer,William Cohan, blowing smoke up my ass. It seems like there should not be a short sale coup when the money goes to buying yachts and trips to Tahiti. That money should go to the firms that are being introduced to the stock market.

[-] 1 points by smartcapitalist (143) 12 years ago

No the trading arm does not necessarily do any of that. Any information about an M&A deal is kept completely secret. Whenever any news is made public it is made public to all. The trading arm does not get any extra insider information. That would be a breach of the chinese wall and the SEC would impose severe sanctions.

[-] 1 points by JesseHeffran (3903) 12 years ago

well, I guess I'll leave this conversation with having lost to your better knowledge. But you do make a good point as to why regulations are important, and why reformulation of those regulations after a bust is wise too.

[-] 0 points by smartcapitalist (143) 12 years ago

If you are talking about M&A, then in an IPO our job is to underwrite the whole (or part of in collaboration with other banks) IPO. In short a bank assumes the full risk of the IPO. The trading arm is free to take any position on the offering and the M&A arm is forbidden to communicate with the trading arm (the chinese wall).

[-] 1 points by JesseHeffran (3903) 12 years ago

but doesn't the trading arm always under sells the two firms during a M&A and during an IPO, knowing the Firm, in both cases, is stronger than their short selling would leave the investor to believe. Seem a Little Robin' De Hoodish.

[-] 0 points by JoeTheFarmer (2654) 12 years ago

An investment cannot take money out of the economy. That makes no sense.

[-] 2 points by flip (7101) 12 years ago

we just watched it you idiot - remember the financial crisis and bank bailout - who made the money in the years running up to 2007 - and what did they do with it - they took it out and bought houses in aspen and right here in deal next to me! summer homes occupied for one or two months - and your last nomination for president - he didn't know how many houses he owned - keep at it man - you may find a good line one day - even a blind squirrel........

[-] 1 points by JoeTheFarmer (2654) 12 years ago

Obama does not know how many houses he owns?

You do know that TARP was a loan program and the banks paid the money back right?

The financial crisis was all about people defaulting on their mortgages. If people did not over extend themselves and kept paying their mortgages there would not have been a crisis.

[-] 1 points by flip (7101) 12 years ago

keep trying - how many does obama own?? i know do you?? too much glen beck - how about aig - paid goldman 10 billion with taxpayer money then through the back door another 5 - has aig paid it back yet - 15 trillion in secret loans. you follow the news don't you? have they paid that back yet? as to mortgages you are off base as usual but the question remains - what happened to the money the bankers made on fees for those loans and then fees for selling them out the back door - and where did it go. i can help you - in their pockets - then where summer homes and ski homes?? investment you ass - yachts and gold etfs

[-] 1 points by JoeTheFarmer (2654) 12 years ago

Why did you say that Obama does not know how many houses he owns? You said it not me.

I think the Illuminati took the money with help from the Free Masons and gave it to the banks. I think maybe you do watch too much Glenn Beck.

[-] 1 points by flip (7101) 12 years ago

[-] JoeTheFarmer (1068) 0 points 1 hour ago

Obama does not know how many houses he owns? - did i miss something here - is that your response to my comment - wow you are really weak! so what is it - do they pay you because if they do tell them i can do a much better job of arguing your side of the story - you are weak - why do you stay here. are you that stupid and bored that you can't think of anything better to do - very sad - and they used to cal farmers the salt of the earth - you are the shit in too many ways - can't even muster a good case for your capitalist masters!

[-] 1 points by JoeTheFarmer (2654) 12 years ago

Who are "they"?

Why would someone pay me to post on a forum with about 30 users posting most of the time. That would certainly an inefficient use of funds.

[-] 1 points by flip (7101) 12 years ago

nobody said they were smart - didn't you read taleb - "fooled by randomness" - if you're so rich why aren't you so smart?

[-] 1 points by JoeTheFarmer (2654) 12 years ago

I never said I was rich or smart.

[Removed]

[-] 1 points by April (3196) 12 years ago

He is a fake and a phony.

April (1738) 0 points 17 hours ago You must be sexually deprived. You posted pornography here. You also told me I should get down on my knees and perform a sex act on you. Yes, I saw that before you deleted it. You are sexually deprived. Who does that?? What is wrong with you??

↥like↧dislikereplyeditdeletepermalink [-]FriendlyObserverA (959) 1 points 17 hours ago April , your taking that out of context. you were jerking me around ..so I made the statment of getting on your knees and teasing me with your mouth .. so I made a statement which I retracted.. I wasn't comfortable with.

http://occupywallst.org/forum/raise-taxes-to-support-social-programs-great-idea/#comment-570140

http://occupywallst.org/forum/lets-develop-a-perfect-world/#comment-570157

[-] 0 points by FriendlyObserverA (610) 12 years ago

Warning: April and Thrasymaque are setting up entrapment .. do not click on their links..

[-] 0 points by FriendlyObserverA (610) 12 years ago

what is profit than? and why would anyone invest if not to make profit.. I spend ten dollars to buy a rug from china and I sell it to you for nine hundred dollars .. I invested ten sure but took out $890, minus a few expenses. than I bought a few more items and sold them at a profit .. and again and again .. to the point where I own half the worlds goods and am planning on selling that at a profit to .. except no one has any money left to buy from me.. ? So what should I do ? lower my profits a little ..see what happens .. I don't really need any more money .. I have tons of money ... should I sell at cost ? what would be the point ? what should I do ?

[-] 1 points by technoviking (484) 12 years ago

your $890 is used to buy stuff, yes?

if so, that $890 just went back into the economy.

unless of course you used it to roll your joints.

[-] 0 points by JoeTheFarmer (2654) 12 years ago

Do you really think you can buy a rug from China for $10 and sell it for $890? If that were the case why are you not doing it? Or at least tell me how I can do that.

You a simplifying things. You but the rug from China (More likely India or Pakistan) then a lot of people make money. The thread makers, die makers, spinners, packers, shippers. Then you have to pay someone to load it on a ship and unload it over here. Then you pay the truck driver to drive it to the distribution center where it is unloaded are reloaded to go to the store carried by another truck drover. It is then unloaded by workers at the store, put in the shelves entered into the inventory system that was created by IT professionals. When someone buys it the cashier rings them up and someone helps load it on you car.

All that work and you charge !14.96 for the rug. http://www.walmart.com/ip/Hometrends-Pendula-Accent-Rug/17492813

[-] 0 points by Thrasymaque (-2138) 12 years ago

Interestingly, the biggest profit margin I ever heard of was for nutmeg. 350 years ago, the Portuguese would buy it in the Maluku islands of Indonesia and sell it back in Europe for a profit of 60,000 to 1. They would risk their lives to get it. They had to sail across the world and brave pirate ship after pirate ship. Can you imagine such a profit. You buy for $1 and resell at 60,000$!

[-] 1 points by JoeTheFarmer (2654) 12 years ago

Well you ought to make that kind of markup if you are risking you life to get it and people are willing to pay for it.

[-] 0 points by Thrasymaque (-2138) 12 years ago

It also helped that the Indonesians had no clue as to what the selling price was in Europe, and that the Portuguese and no competition for a few decades.

[-] 1 points by JoeTheFarmer (2654) 12 years ago

The Indonesians were not risking their lives either.

[-] 0 points by FriendlyObserverA (610) 12 years ago

cha ching ! mr scrooge fills his money bin cha ching cha ching cha ching

[-] 1 points by JoeTheFarmer (2654) 12 years ago

If I were a rich man, Daidle deedle daidle Daidle daidle deedle daidle dum

All day long I'd biddy-biddy-bum If I were a wealthy man.

I wouldn't have to work hard, Daidle deedle daidle Daidle daidle deedle daidle dum If I were a biddy-biddy rich, Daidle deedle daidle daidle man.

[-] 1 points by altCountryGuy (5) 12 years ago

If I buy 100 shares of stock from you then later sell it for a profit to Bob how does that effect the economy?

[-] 1 points by JoeTheFarmer (2654) 12 years ago

You are talking about day traders. Most mega rich are not day trades and most day traders are not mega rich. In fact most lose money.

[-] 1 points by altCountryGuy (5) 12 years ago

I agree about day traders. But even if I hold it for years and sell it for a profit it really doesn't effect the economy. and "it" could be just about anything, land, stock, gold, etc.

[-] 1 points by JoeTheFarmer (2654) 12 years ago

If we are not talking about IPOs, buying and selling stock is a zero sum gain. If someone makes money then someone else loses money.

In the end it is actually a less than zero sum gain because the IRS takes a cut. So every transaction takes money from the market and gives it to the government.

[-] 1 points by altCountryGuy (5) 12 years ago

yeah, not talking about IPOs. (Even in an IPO the money goes to initial investors and business creators not into the company treasury. Although, sometimes the company owns a certain percentage and that goes into the company for expansion) I don't think it is a zero sum game. Demand creates an upward pressure on stock price. You could have sold the stock to me for a profit and I later sell it to Bob for a profit. No one had to lose. Just more money being put into the system causes stock prices to go up.But my real point was that some very rich just speculate and contribute little to the economy and may actually hurt it by creating artificial scarcity through speculation and drive prices up.

[-] 1 points by bensdad (8977) 12 years ago

If I had 100,000,000 & earned 5,000,000 a year, I would not buy a fourth mansion or a third boat or hire a second butler, I'd invest it in the stock market. Love the cap gains tax rate.

or maybe I'd invest in tulips - http://en.wikipedia.org/wiki/Tulip_mania
or soap bubbles

[-] 1 points by nucleus (3291) 12 years ago

Use leveraged investments (financial "instruments") and various other schemes with minimal cost and expense to multiply it, and hide it offshore in tax havens.

Everybody knows that the one with the most when they die, wins.

[-] -1 points by JoeTheFarmer (2654) 12 years ago

What is an offshore tax haven and why would you have to hide it there?

[-] 1 points by nucleus (3291) 12 years ago

Swiss Banks Said Ready to Pay Billions, Disclose Customer Names

Since some of those accounts belong to some very powerful people, including politicians, this will never happen, at least to the extent that their names are revealed.

[-] 0 points by JoeTheFarmer (2654) 12 years ago

Why would you have to keep your money there?

[-] 1 points by nucleus (3291) 12 years ago

Are you a troll or just too stupid to read the link?

[-] 0 points by JoeTheFarmer (2654) 12 years ago

That was not my point, Those that hide their money there are not the mega rich, those are mobsters, drug traffickers and the like.

I was talking about the mega rich... Bill Gates, Warren Buffett, Larry Ellison, Charles Koch, Christy Walton, George Soros, Sheldon Adelson, Mark Zukerberg, Michael Dell...

[-] 1 points by nucleus (3291) 12 years ago

How would you know who has what and where?

Behind every fortune is a crime.

[-] 0 points by JoeTheFarmer (2654) 12 years ago

I suppose they are all part of the Illuminati.

[-] 0 points by karenpoore (902) 12 years ago

Ha, recent news regarding x wife of that golf player >>> They tear down 12 million dollar new mansions to build one they like better.

[-] 0 points by shoozTroll (17632) 12 years ago

They buy politicians, judges, even attempt to buy whole States of the Union.

I thought you were paying attention?

Guess not.

OccupyWallStreet!!!

[-] 0 points by FriendlyObserverA (610) 12 years ago

The rich count their money everyday.. I hear it on the news all the time .. " let's do the numbers ."

[-] 1 points by JoeTheFarmer (2654) 12 years ago

If all they do is count it, it will lose value every day. Not a wise thing to do and you do not become or stay mega rich sitting around counting your money..

[-] 0 points by FriendlyObserverA (610) 12 years ago

I didn't say thats all they do ..but they certainly have no shame about it while so many are hungry and losing their homes .. we here about the wealthy making profits everyday .. boldly spoken hourly news .. it's all about the markets and wealth .. nothing else ..

[-] 0 points by smartcapitalist (143) 12 years ago

What they do with that money is entirely their business. Mind you own business

[-] 1 points by JoeTheFarmer (2654) 12 years ago

I think you missed the point. They obviously don't sit there counting it.

The smartest of them invest their money by putting it into promising start ups, expanding their businesses, and looking for new businesses.

[-] 0 points by smartcapitalist (143) 12 years ago

Yeah exactly.

[-] -1 points by capella (199) 12 years ago

They spend it, they invest it, they give to charities, they put money back into the economy.

[-] 0 points by DiogenesTruth (108) 12 years ago

this is the correct answer. 100% grade on this short pop quiz.

[-] 0 points by FriendlyObserverA (610) 12 years ago

they always take more out than they put in .. thats how they become mega-rich" ..and soon they have it all.

[+] -6 points by GirlFriday (17435) 12 years ago

Isolate themselves, for the most part, from the rest of society with a firm belief in the necessity for aristocracy and use wealth to purchase political power to further invest in legislation or contracts to create more wealth often with the exploitation of workers or resources or both.

However, we cannot compare someone like Paris Hilton to Bill Gates. So, we have to be careful here.

If they are not using their money for further exploitation of people or resources or purchasing political power through legislation etc.-I don't care what they do. The cap can be lifted on SSC and they can pay PreReagan taxes. .