What does a list of the 400 richest Americans have to do with investing? The two things might look unrelated at first, but you can glean some very interesting facts about the state of the world if you really take a good look at some of the more intimate data points.
The latest edition of the Forbes 400 could have just as easily been named the Billionaires' Club. For the very first time, one needed to have a net worth of more than $1 billion just to crack the list. And remember, we are only talking about Americans here. Take the world's richest, and a billion dollars probably doesn't even get you in the top 500 anymore.
The general consensus is that Mexican tycoon Carlos Slim, now worth more than $59 billion from businesses including America Movil
As one might imagine, hedge fund managers and real estate developers did really well on the list. Of the 400, I counted 38 billionaires hailing from the world of hedge funds and leveraged buyouts, while the real estate boom over the past four years produced some 40 billionaires. While regular members such as Eddie Lampert of ESL Investments, Donald Trump, and Sam Zell continued to grace the list, the majority of new hedge-fund and real-estate billionaires have just breached the $1 billion mark. The energy boom of recent years also produced 28 members of the billionaires' club.
Old Faithful
Since Forbes began compiling this list in 1982, several names have appeared each and every year. Members of the 25-year club include Warren Buffett (No. 2 on the list); Phil Knight, founder of Nike
As Warren Buffett once told business students, "Don't worry about mistakes. You'll make mistakes. Get over it. At the same time, it's important to learn from someone else's mistakes. You don't want to make too many mistakes."
The 204th richest American
Sometimes the way to wealth is simply making the right decision and staying the course. In investing, that is usually the case. For a great example of how well it pays to have a really long-term investment horizon, allow me to introduce to you Franklin Otis Booth, Jr., the 204th richest American, with an estimated net worth of $2.2 billion.
Booth is the great-grandson of Times Mirror founder Harrison Gray Otis. After entering Caltech to study engineering at age 16, Booth went on to Stanford, where he got his MBA and proceeded to work in the family business at the Los Angeles Times. While in California, Booth joined a fellow named Charles Munger in a real estate deal. Shortly thereafter, in 1963, he met a 33-year-old investor from Omaha named Warren Buffett. Booth subsequently ended up investing $1 million in a company that Buffett had taken control of named Berkshire Hathaway
It will be interesting to compare the next year's members to the current members. With the recent meltdown of some hedge funds and the bursting of the housing bubble, some of our new billionaires might find themselves poor old hundred-millionaires once again.
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