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"Bales Of Cash On The Sidelines": The Average Billionaire Has A Record $600 Million In Cash

Tyler Durden's picture




 

While the saying "cash on the sidelines" is patently wrong as all cash represents is a form of risk, asset and/or liquidity preference (and yes, for every buyer of stock there is a seller: repeat as many times as necessary until it clicks), we are confident the fact that the world's record number of billionaires, 2,325 in 2014 up from 2,170 a year ago, holding a record $7,291 trillion in assets or a little under half of the US GDP and more than the market cap of the companies in the Dow Jones Industrial Average, have a record $600 million in cash on average, up from $540 million the year before.

According to Wealth-X:

Billionaires also tend to have high cash balances. The apparent safety of cash, reinforced by the painful psychological experience of the 2008-2009 global financial crisis and the subsequent troubles within the European Monetary Union, likely reinforces the tendency to favor this cautious allocation strategy.

And:

... billionaires hold 19% of their wealth in cash.... This amounts to US$600 million per individual – a sum that is higher than the GDP of Dominica and twenty times the threshold of US$30 million required to be considered an UHNW individual. This liquidity is vital as it enables them to invest in new business ventures that fall outside their current business holdings. Since last year, billionaires’ liquidity has increased by US$60 million per individual, on average. This increased liquidity signals that many billionaires are keeping  their money on the sidelines and waiting for the optimal moment to make further investments.

That, or perhaps it simply signals that the world's billionaires are confident the market has topped and have taken a substantial amount of profits. Because while the mean billionaire net worth rose by just $4.4 to $3.1 billion, the average billionaire liquidity rose by a far greater 11% from $540 to $600.

What is most surprising, however, is that while the bulk of their net worth, or 46.9%, is invested in private holdings, typically the assets they themselves have created, with a little under 29% in public equities, the allocationto cash is about 4 times greater than that to real estate which amounted to a paltry 5.1% of billionaire net worth.

Those curious about the distribution, there are currently 571 billionaires in the United States, up from 515 in the year before, even as eight of the top 20 now are in Asia.

Most billionaires do not reach the US$1 billion threshold until their late forties: 93% of the world’s billionaires are older than 45 years.

The majority, ot 56% of billionaires, are self-made, while 20% are where they are thanks to a trust fund:

 

When it comes to extrapolation, billionaires too are prone to the Birinyi effect: the number of super rich is expected to rise from 2325 in 2014 to 3,873 by 2020.

For their sake, let's hope the guillotines don't roll out before that date. Something tells us the French aristocracy was all about straight-line extrapolation of their own wealth during the dinner parties of late-1788 Paris.

Finally, for the time challenged (such as all the people noted above) here is a quick video summary of the above:

 

Wealth-X And UBS Billionaire Census 2014 from Wealth-X on Vimeo.

 

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Thu, 09/25/2014 - 15:28 | 5256958 Big Corked Boots
Big Corked Boots's picture

Once this money is put to productive use in the stock market, we'll get Dow 36,000, right?

Damn 1% hoarders!

/s

Thu, 09/25/2014 - 15:33 | 5256992 Aknownymouse
Aknownymouse's picture

Market upgrade. 3:30 buy panic factors

Thu, 09/25/2014 - 16:09 | 5257125 0b1knob
0b1knob's picture

One day we will ALL be billionaires.  Unfortunately bread will cost $100,000,000 by then.  And gas will be $500,000,000 per gallon.

Thu, 09/25/2014 - 16:41 | 5257283 Zirpedge
Zirpedge's picture

knob, likely the money changers will just round off zero's at that future time to facilitate transactions. Judging by the current culture and my experience watching cashiers do arithmetic, nobody will be able to do math in the future.

As for all this "Cash on the sidelines" I like the way the author pretends there are pallets of this stuff lying around in a warehouse somewhere. Less than 1% of "Dollars" are printed currency. Banks would look like huge commercial warehouses if hey actually had to keep this stuff lying around.

Make no mistake, this is not an endorsement of gold or silver, I prefer cold hard cash and piled high. It's a rare and beautiful thing. 

Thu, 09/25/2014 - 15:54 | 5257071 Renewable Life
Renewable Life's picture

Good thing, because when the margin calls start on this bullshit stock market, there going to need that cash, they all buy into panic right???

Isn't that what Warren tought them??

They better hope this current President loves them as much as the last President did, or their money might go puff???

But they all have unlimited faith in .gov at this point, so they'll get what they deserve:)

Thu, 09/25/2014 - 16:03 | 5257106 Antifaschistische
Antifaschistische's picture

The bad news is that when the dollar has a 3 for 1 reverse split they'll take a $400m haircut.

The worse news is that they'll still have $200 million.

Thu, 09/25/2014 - 17:31 | 5257470 Lionhearted
Lionhearted's picture

Nice to have $600,000,000 cash. But if it is in US dollars it would make me very nervous indeed. I am thinking I would buy my own Island Nation, build a vault and stack a bunch of gold, guns and ammo. I would be very nervous of that $600 million of fiat paper only being able to buy me a loaf of bread. Zimbabwe has a $100,000,000,000,000.00 That's right $100 Trillion Bill http://www.coincommunity.com/forum/uploaded/zeewool/2010521_1258.jpg

Thu, 09/25/2014 - 16:20 | 5257170 Kirk2NCC1701
Kirk2NCC1701's picture

Well, for one thing they don't suck at math, like you do:  They are not "The 1%."

 

In the case of the USSA, they are The 0.000,17% (571 out of 330M), or 1 in 580,000.

In the case of the World, they are The 0.000,03% (2325 out of 7.1B), or 1 in 3 Million.

Thu, 09/25/2014 - 17:53 | 5257550 Van Halen
Van Halen's picture

No one - NO ONE here should be mad at billionaires. They should be asking themselves, "How can I achieve that level of success?" Whether it's Soros or Gates or Koch or Winfrey or some sheik. Rage and resentment against the rich? What does that do for you? Nothing. It just makes you bitter and keeps you down. Class warfare is a tool used by politicians to keep us hating success and tell us that it's good to be miserable. Even if it's some of the people I listed above talking like that, you should focus on getting yourself into THAT lifestyle.

Set goals: Body/Mind/Spirit/Financial/Life
Write them down.
Develop a plan of action.

Decide who, what, where and how you need to achive them.

Put them in a timeframe.

Take an immediate step to start on your first one.

Don't look back. Shoot high. Don't quit. Check your progress often. You'll know you're winnng when the losers on some miserable internet financial board are complaining about you and your fantastic bank account and lifestyle all the time!
Go forth and prosper!

Thu, 09/25/2014 - 15:28 | 5256960 knukles
knukles's picture

I just got $600.  Needed to get cash for the wife and two kids as well as pay for some errands.

Thu, 09/25/2014 - 18:15 | 5257629 logicalman
logicalman's picture

You only got $600 for your wife & kids??

Should have put 'em on eBay, I'm sure you'd have got more! ;-)

sorry, couldn't resist.

Thu, 09/25/2014 - 15:27 | 5256961 starman
starman's picture

Is there an AP for the game "Monopoly"? Yet? 

Thu, 09/25/2014 - 15:27 | 5256963 LawsofPhysics
LawsofPhysics's picture

Well, one thing is for sure.  People without cash/money sure as hell are not going to stimulate the economy...

Thu, 09/25/2014 - 15:27 | 5256967 LawsofPhysics
LawsofPhysics's picture

That's a lot of PMs...

Thu, 09/25/2014 - 15:29 | 5256974 NoDebt
NoDebt's picture

Here's my allocation:  Half cash, half gold, half stocks, half bonds and half real estate.

Thu, 09/25/2014 - 17:59 | 5257571 Charming Anarchist
Charming Anarchist's picture

Tight. 

Why not split the difference and go all in?

Thu, 09/25/2014 - 15:32 | 5256988 The Phallic Crusader
The Phallic Crusader's picture

why the fuck wouldn't they buy pms or real estate? 

Well, I suppose RE is in a bubble, maybe - still probably worth buying outside big cities - land...etc. 

 

 

Thu, 09/25/2014 - 15:36 | 5257005 SocialismIsCancer
SocialismIsCancer's picture

We do - I already bought a winter home, a summer home, a special on-the-water fishing home (to supplement exisitng city home), a new BIG diesel motorhome, and pickup trucks & fishing boats for each home. Running out of stuff I want to buy, so just waiting for the inevitable crash.

Thu, 09/25/2014 - 15:33 | 5256990 SocialismIsCancer
SocialismIsCancer's picture

It's true, I don't want to be invested in ANY financial assets in current central bungler bizzarro world - I have run out of banks to stuff cash into !!! - just waiting for the inevitable BIG crash in financial markets.

Thu, 09/25/2014 - 17:03 | 5257373 jimmytorpedo
jimmytorpedo's picture

---> up votes himself

---> wants to get robbed by a ZH'er

Thu, 09/25/2014 - 15:34 | 5256993 The Phallic Crusader
The Phallic Crusader's picture

Shouldn't our liberal President propose a "not spending your money tax?"

I think Yellen proposed something similar - but mostly for the poors.

Thu, 09/25/2014 - 16:05 | 5257118 Big Corked Boots
Big Corked Boots's picture

"not spending your money tax?"

It's called NIRP.

Thu, 09/25/2014 - 18:29 | 5257676 logicalman
logicalman's picture

It's actually called inflation.

Thu, 09/25/2014 - 15:34 | 5256997 Jambo Mambo Bill
Jambo Mambo Bill's picture

I just need 1M

Mother fuckers...

Thu, 09/25/2014 - 15:37 | 5257018 Grande Tetons
Grande Tetons's picture

In lieu of money, I will take a pile of get the fuck out of my life.

Thu, 09/25/2014 - 15:35 | 5256998 venturen
venturen's picture

meanwhile in the real world....savers get zero percent interest...and with bankster fees....they lose money. The Obama effect...1% get richer...everyone else EBT if you vote for the next liberal scum!

Thu, 09/25/2014 - 15:55 | 5257083 The Phallic Crusader
The Phallic Crusader's picture

but he's black, and a democrat, so when he steals from the poor, he's not, and when Bush let poor people keep more of their own $, he stole from them, because he let rich people keep more, too  - get it?

~~~~~

Sure would be nice if the government printed the currency directly like, instead of paying private banks [really the NY Fed] for the privilege and paying a 6% vig off the top, then getting the cash to us through large banks that skim further....  adding debt/interest all the way... 

 

I've explained this to Dem family members, you know, in simply overview form [which is really my level of understanding really] and they don't give a shit.  They hated RP because he wanted to "starve old people and poor people."

 

They give no thought to where $ comes from, particularly money paid by 'the government' to beneficiaries of safety nets. 

 

Strange how Leftists think my money belongs more to people who didn't work for it than it does to me - why?  Because there's roads and a police and fire department?  Happy to pay for those - not like I have a choice - but how is it "selfish" to want to keep my own $, but noble for them to want to use government force to take it from me to give it to someone else.... all while they don't do any donating to chairty, etc. themselves.

 

I tell you what though - coming out as a Libertarian has to be, at least in certain New England circles, even more stressful than coming out as gay would have been.

 

You'd think I'd admitted to fucking the family dog...

Thu, 09/25/2014 - 15:34 | 5257004 q99x2
q99x2's picture

I've got not enough.

Thu, 09/25/2014 - 15:41 | 5257034 herohedge
herohedge's picture

We should move our tax system to tax net wealth and do away with other taxes. Why is it that property is taxed, which for the middle class is their main asset. Sales are taxed which disproptionately affect low income earners. Yet you can hold $600 million in cash and be paid interest (well... maybe not lately).

Thu, 09/25/2014 - 15:48 | 5257056 The Phallic Crusader
The Phallic Crusader's picture

I agree, but suspect you'll get a lot of junks on ZH!  I at very least would like to see a tax on financial transactions [over a certain amount].   Because....  fuck 'em.  Make payroll taxes progressive, too. 

 

But yeah - my dfad just paid off his house finally a couple years ago, and the idea that you have to pay the government [city] every year for the privilege of owning your own fucking property on which sits your primary residence - it's fucking absurd.

Sales taxes are absurd for the reason you cite but also the bare fact that you get to keep only around, say 66-69% of what you work for - then out of that they tax you for having the audacity to buy shit. 

 

Add to that taxes many places have on scales  - so the small deli o wine shop wieghing your olives - they have to pay a tax for the privilege of owning a scale [more precisely - a feww for annual inspection - same thing at gas tanks and other meters.]

 

 

ugh.

Thu, 09/25/2014 - 16:33 | 5257243 Tall Tom
Tall Tom's picture

I agree, but suspect you'll get a lot of junks on ZH!  I at very least would like to see a tax on financial transactions [over a certain amount].   Because....  fuck 'em.  Make payroll taxes progressive, too. 

 

 

You are correct. You need to get junked out of here. When we are all gazillionaires because of the massive hyperinflationary hell which approaches then everyone...INCLUDING YOU...will be taxed out of existence.

 

If you erroneously believe that the Government will allow for massive deflation you are sadly mistaken. Then they'd have to DEFAULT on the massive debts which they've accumulated. That would end the United States Government...PERIOD.

 

None of those assholes are going to vote themselves out of a job...out of the Gravy Train...fucking parasites. So default is not an option.

 

Thus they will inflate their way out of debt.

 

No worries...Obama*** is going to make all of us gazillionaires before this is over and done...if we shall live for another two years. (There is this Ebola ssp. threat after all.)

 

(***Yes I know that is was the additive bullshit from BOTH PARTIES that has led us into this predicament. But since that asshole is in office I just use his name for the total collective damage that has been suffered as a result of ALL OF THEM...Central Bankers and Branch Governors INCLUDED.)

Thu, 09/25/2014 - 16:46 | 5257311 crazybob369
crazybob369's picture

A fine sentiment, but also stupid, immoral, and self-defeating. If you take a close look at the numbers, you will notice that U.S. billionaire wealth totals a tad under $3trill. Therefore, if you were to tax everything away from them you would generate a tad under 3 trillion dollars in revenue. Given that the budget is somewhere north of that (approx. 3.5 trill), you would fund the U.S. government for less than a year. Then what? Can't tax them again next year, they don't have any money left. Plus, in order to pay their "tax bill", they would have to sell all their assets, including stocks. What do you think would happen to the price of Microsoft, for instance, if Bill had to dump all his holdings? What would happen to all the others who own Microsoft (individuals, pension funds, etc.)? Not only have you impoverished Bill Gates, but everyone else who happens to own Microsoft (or Facebook, or Oracle, or, well you get the gist). So, all you've done is impoverished millions, and deprived the government of future revenues.

Furthermore, you seem to be making the assumption that somehow the $600 million have not been taxed. Unless they were obtained by drug dealing, or other black market non-taxable operation, this money has already been subject to tax, probably 2 or more times, at the corporate level, at the salary level, and as dividends.

Lastly, an income tax is an immoral act. It is simply theft. It is money you and I earn that is forcibly taken. There are many other methods for governments to generate revenues that, while still immoral on a certain level, are less onerous. 

Thu, 09/25/2014 - 18:06 | 5257594 Charming Anarchist
Charming Anarchist's picture

<<Lastly, an income tax is an immoral act. It is simply theft. >>

Amen.    Enough said. 

Thu, 09/25/2014 - 20:33 | 5258084 herohedge
herohedge's picture

Unless they were obtained by drug dealing, or other black market non-taxable operation

... Or by a corporation with HQ in Ireland/Isle of Man/Bermuda/etc and then paid out via stock options taxed at 15%, probably realistically taxed only at 5-10% given various tax breaks. Compare that to the average slob taxed at 20% on income, $5k in property taxes, 7% in sales taxes, 7% in state taxes, 2% in city taxes.

Thu, 09/25/2014 - 15:49 | 5257051 Salsipuedes
Salsipuedes's picture

They'll use it to buy cyborgs to mangle anything that threatens what's left. They'll never know true love though...

Thu, 09/25/2014 - 15:54 | 5257057 ekm1
ekm1's picture

$600 million?

 

That is peanuts and it is NOT true.

There are TRILLIONS OFFSHORE unaccounted for

 

There are $60 trillion at minimum sloshing around.

 

Reserves do not self extinguish like debt.

When you use $1000 reserves to pay up $1000 debt, debt is extinguish but reserves remain.

Every bank creates reserves daily, but cannot extinguish them, they remain and move from account to account.............unless Fed or Gov extinguishes them (via pre-planned financial collapse)

Thu, 09/25/2014 - 15:52 | 5257064 cheeseburger901
cheeseburger901's picture

Mass Fraud should be a crime against humanity.

 

Please support this petition at whitehouse.gov.

 

https://petitions.whitehouse.gov/petition/mass-financial-fraud-should-be...

Thu, 09/25/2014 - 15:55 | 5257081 coast
coast's picture

My opinion on the stock market.  Yes, much money has been made because the feds are pouring printed money into it, no interest bank accounts, no trust in banks etc.  BUt I dont think the average person has made any money. Most of them use it for retirement and it wont be there. I did not invest for that reason.  If the average person picks the right time to get out, then they will charge them fees which lose all they have gained. If they wait, the feds will take it all.   Nah, stocks are for insiders only, and possibly savvy traders.  IMO, buy land outside the city, and prepare with growing food, make sure you have water, protection etc. You know the drill.  Soon there will be a global reset, so even the dollar will be worth much less because with all our debt, the U.S. dollar will go down in worth at least 30% when buying foreign goods.  Precious metals are another good asset to hold on to. 

Thu, 09/25/2014 - 16:19 | 5257166 LawsofPhysics
LawsofPhysics's picture

..words spoken by my father in 1971.  No doubt that it will happen, eventually...

get busy living or get busy dying but chance always favors the prepared.

Thu, 09/25/2014 - 22:34 | 5258414 Livermore Legend
Livermore Legend's picture

.

Thu, 09/25/2014 - 15:58 | 5257087 Spungo
Spungo's picture

Gotta hand it to the rich. They're generally not stupid. Holding large amounts of cash is one of those things Buffet always said to do. A common mistake of amateur investors is that they go all-in, holding as little cash as possible.

Thu, 09/25/2014 - 16:00 | 5257095 daedon
daedon's picture

GW, is that you ?

Thu, 09/25/2014 - 16:01 | 5257102 alexcojones
alexcojones's picture

Must be like Uncle Scrooge McDuck's vault.

But Scrooge had a LOT of silver coins, from what I recall of the comic book illustrations.

Thu, 09/25/2014 - 20:35 | 5258092 bluskyes
bluskyes's picture

Scrooge McDuck knew about the dangers of inflation, and money printing.

https://www.youtube.com/watch?v=t_LWQQrpSc4

Thu, 09/25/2014 - 16:02 | 5257105 p00k1e
p00k1e's picture

There is no 'sideline'.  Damn it....  Someone stop this sideline nonsense.

 

Thu, 09/25/2014 - 16:08 | 5257119 alexcojones
alexcojones's picture

Alexander the Great, probably the richest man in his empire, met the philosopher Diogenes one sunny day, the poorest man in his empire.

"Please be so kind as to step between me and the sun,"said the Dog Cynic, when the conqueror's shadow fell across his face.

"If I were not Alexander," replied Alexander, stepping aside according to legend, "I would want to be Diogenes."

My own attitude towards billionaires is the same as that of Diogenes. I would NOT want to be one - and Do Not cast your shadow upon my face.

Thu, 09/25/2014 - 16:46 | 5257306 Kirk2NCC1701
Kirk2NCC1701's picture

[sigh]  You seem a bit like Diogenes:  Smart, but lacking in vision or imagination.

I'm no longer a fan of Donald Trump, but there is ONE thing that that self-promoting narcissist is correct about, when he tells why so many bright, talented people he knows or has met, are not filthy rich:  "They ALL lack a Plan to convert their Vision & Ideas into an Actionable Biz Model, and they lack the Indomitable Will & Relentless Drive to turn the Biz Model into reality."  In effect, he called them "Clever Wankers*". 

I can definitely relate: Ten years ago I worked for a renowned tech company, where my colleagues and I had tons of great ideas for cool new products.  The sickening part is, we lacked the very things that Trump described -- as did our entire management hierarchy.  As as result, many of the great tech and gadgets that you now take for granted (3D, intelligent touch screens), have been brought to the market by other players and other companies.  We often think of what coulda, woulda, shoulda been -- were it not for us having been "too damn comfortable", and lacking in Relentless Ambition & Drive.  Oh we had ambition and drive alright, but just enough to keep us in the comfy, cozy hi-tech Merry-go-Round, instead of starting our own.  Kudos the the tech guys who did bring those things to the market.  They deserve to be rich.

Thinkers get great posthumous accolades (from other thinkers), but Doers get the wealth, toys and the chicks.

Thu, 09/25/2014 - 16:38 | 5257270 Fuku Ben
Fuku Ben's picture

One or two fraudulent asset forfeitures and many states would be in the black

Get the dogs ready

Thu, 09/25/2014 - 17:38 | 5257492 Lionhearted
Lionhearted's picture

I would buy my own country because you know some politician would be taxing your butt or "nationalizing" your assets.

Thu, 09/25/2014 - 19:25 | 5257870 Ratscam
Ratscam's picture

where are the trillionaires? aka rockefeller, morgan, rothschild, windsor family aka saxon gota, Vatican, etc?

Thu, 09/25/2014 - 21:09 | 5258185 logicalman
logicalman's picture

Funny how, when the list of the wealthy shows up on MSM none of the above are mentioned.

True power is required to pull that one off.

Fri, 09/26/2014 - 21:11 | 5259978 thebigunit
thebigunit's picture

Good point.

Some of the people on the list must be surrogates for Rocky, Morgie, Rothy, and the others.

Thu, 09/25/2014 - 22:06 | 5258352 thebigunit
thebigunit's picture

"Average billionaire".  Hmmmmm.

Sort of like an average black swan.

Spock will have to explain this.

Thu, 09/25/2014 - 22:35 | 5258416 AdvancingTime
AdvancingTime's picture

Money has become so cheap to borrow that many people are now arguing that you must take it even if you don't know what to do with it. It is hard to imagine how much this is distorting the economy, markets, and reality in general. A total disconnect between life on main street and the financial world is occurring and it is putting the economy in a very dangerous place.

It is often hard to determine what is true, but a report on Bloomberg that 32 Trillion dollars in funds were held in offshore accounts around the world made me shutter. How safe is this money, and what exactly is it doing? Can you say Cyprus? More on this subject in the article below.

http://brucewilds.blogspot.com/2013/05/cheap-money-more-and-more-and-mor...

Thu, 09/25/2014 - 22:40 | 5258424 AdvancingTime
AdvancingTime's picture

 The super wealthy in recent years have benefited greatly from the surging stock prices as much of their income has come from financial markets and gains in equities. Many people seem to think this is the hope of our future.

When you have more than you need or want to put money away for a rainy day where do you store it? If you rated people on a "wealth chart" by how many tangible assets they owned you might be shocked to find much of the wealth people own is in paper and this is full of risk. If this money were to suddenly shift into tangibles that would change everything. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/08/where-wealth-is-held.html

 

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