In the movie Wall Street, Bud Fox asks Gordon Gekko a simple pair of questions: “How many yachts can you water-ski behind? How much is enough, huh?”
I got to wondering the same thing when I came across a pair of Bloomberg stories this morning.
The first one talks about some of the astonishing pursuits of a handful of ex-Goldman Sachs bankers.
Take Jay Dweck, a 58-year-old who used to head Goldman’s equities strategies unit. He’s the proud owner of a $1 million pool that’s shaped like a Stradivarius violin. It comes equipped with 5,600 fiber optic lights shaped like the instrument’s strings.
But what he’d really like is a system that would coordinate the lighting with violin music, to make it look like the strings were being played underwater with every note. Yes, that would be simply smashing dah-ling!
Then there’s Paul Scialla, a 40-year-old former interest rate exec at Goldman. His Delos Living LLC company is trying to sell a $50 million penthouse in New York that comes complete with purified air, antimicrobial coatings, and other features to appeal to the 1 percent. On tap in other projects? Vitamin C-infused showers! (No word on whether it smells like you’re bathing in Minute Maid, though.)
“When I read stories like these, I can’t help but think the 1-percent crowd has it pretty good.”
The other story chronicles how the most expensive downtown Manhattan condo in history just hit the market. Clocking in at a cool $110 million, the penthouse apartment in the 58-story Woolworth Building is just one of 34 luxury units that’ll be offered in the renovated property. For that price, you get almost 9,000 square feet, four bedrooms, a private elevator, wine cellar, library, and all the other “necessities” you need to survive.
I don’t know about you. But when I read stories like these, I can’t help but think the 1-percent crowd has it pretty good. That was the conclusion of a just-released study by the Associated Press and Equilar, too.
It found that S&P 500 CEOs earned a median pay package of $10.5 million in 2013. That was up almost 9 percent from 2012. CEOs now earn about 333 times what an average worker earns.
Now as Americans, we all strive to earn better lives for ourselves. It’s ingrained in our collective DNA to want to make our way up the ladder, through hard work, entrepreneurship and more. The question at hand, though, is whether that system is running off the rails … whether too much wealth is being concentrated in too few hands, leaving everyone else to fight for a few scraps.
Certainly, that’s the argument being made by controversial French economist Thomas Piketty in his bestselling book “Capital in the Twenty-First Century.” Some have seized on his arguments as justification for redistributionist policies — policies that would level the playing field between rich and poor.
So where do you stand? Just how many yachts can the 1 percent water-ski behind? Should we care, or is it a case of “to each his own”? Is there an increasing split between the haves and the have nots — and does it have any investing implications?
Do we, for example, sell discount retailers and buy shares of luxury goods makers? Hop on over to the blog and let me know what you think!
|OUR READERS SPEAK|
There’s been some good back and forth on housing and borrowing against home equity on the blog. For instance, Reader Will W. notes that you can use a home equity loan or line of credit wisely if you put the money to good use. His comments:
“My wife and I took a second mortgage on our house, used the money to purchase another house for ourselves and rented the first one for enough to cover both mortgages, the taxes, insurance and had some positive cash flow each month. Both houses are now paid for in full and have been for several years. We now have the cash flow from that house (and 6 others) on which to live.
“I do recognize that most people don’t use the money they take on a line of credit or second mortgage for anything other than instant gratification, but that doesn’t mean all LOC are bad.”
Duly noted, Will! Meanwhile, Reader Fred chimed in on the lack of real earnings and revenue growth from Corporate America. His comments:
“I backed out share buybacks from earnings of companies who just beat the analysts last quarter and they were pretty dismal. Where’s the demand? This euphoria over great margins but no demand spells real trouble ahead. The rich get richer and have everything so they need not spend, the poor don’t have the resources, and the middle class’ earnings have deteriorated. That’s what happens when the government doesn’t let capitalism work.”
So are you optimistic that America’s biggest companies can turn things around? Or is it all going to be cost-cutting, cost-cutting, cost-cutting driving results? Let me know!
|OTHER DEVELOPMENTS OF THE DAY|
President Obama is swinging through Europe this week as part of a solidarity trip in the face of recent aggressive steps by Russian President Vladimir Putin. He announced plans to seek $1 billion to support exercises, training, and deployment of troops and ships to the European theatre.
The debate is heating up over the Obama administration’s decision to trade five Guantanamo Bay captives to the Taliban in exchange for the release of Army POW Sgt. Bowe Bergdahl. We’ll have to see how history judges the president and Bergdahl, and whether there will prove to be any adverse consequences for other U.S. soldiers.
Considering Southwest Airlines just got fined $200,000 by the Department of Transportation for violations related to advertising of low fares, I found this USA Today story about its latest sale hilarious. Click through and read it and you find that it’s a three-day sale … that excludes Friday and Sunday flights in most cases … that has lots of flights blacked out to places like Florida and Nevada … and that only involves a limited number of seats.
Me? I’ve found it next to impossible to actually get the discounted fares you see in advertisements — unless you fly between 11:50 p.m. and midnight on Wednesday evening, and only if you agree to connect through Tajikistan on your way from Los Angeles to Las Vegas. How about you?
Reminder: If you have any thoughts to share on these market events, all you have to do is hop on over to the blog and leave your comments.
Until next time,