Wealth Inequality = Investment Opportunities

The Occupy Wall Street movement shined a light on growing inequality between the middle class and the top 1%. The wealth inequality is real and getting more pronounced.

I recently saw an article in the Los Angeles Business Journal ranking the wealthiest Los Angelenos. Number 48 on the list was a billionaire…and that is just in Los Angeles! So, just think how many people have $20 million or more, which is the number that puts you in the top 1/10th of 1%.

Roughly $100 million puts you in the top 1/100th of 1%. This group’s wealth has been surging and now makes up a larger share of total wealth than any time in U.S. history, recently surpassing the concentration of wealth that we saw in the Roaring ’20s.

Globally, The wealthy are also getting wealthier. The number of millionaire households worldwide grew by 19% in 2013.

Is this a problem?

Wealth inequality may be a problem from a societal perspective, but it also creates investment opportunities.

What asset classes are going to benefit in the future from growing wealth at the top? Beachfront real estate, NY City / San Francisco real estate, exotic cars, art and collectibles are all surging in value along with the wealth of those who buy such assets.

What stocks can you buy that benefit from growing affluence? Louis Vuitton (LVMUY), Richemont (CFRUY), and Nordstom (JWN) are a few of our favorite investable luxury brands. To a lesser degree, Apple, Disney, and Hain also tie in well with this investment theme.

Don’t feel bad if you do not have $100 million. I realize that most unhappiness is caused by comparison (or maybe by just being too young). A study once concluded that peak happiness is when you are doing just a bit better than your neighbor. I am not sure how much your neighbor has, but global median income is less than $10,000 a year and 70% of the world’s population has less than $10,000 in assets. So, if you are reading this newsletter, I am pretty sure you are rich by most definitions.

So, congratulations on being rich, even if it doesn’t always feel like it.