Separating The "Haves" From The "Have Yachts" On Wall Street

Timothy Spangler
January 20, 2014
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Come see Timothy Spangler speak at a Discovery Institute luncheon on Jan. 30th.  


Just like there is a 99% and a 1%, the 1% has its own 99% and 1%.

Although people who work on Wall Street earn high salaries, with big bonus checks often arriving at the end of the year, it is surprisingly not a significant source of the ultra-wealthy. For example, few billionaires can trace their overflowing coffers to time spent working day-to-day on Wall Street. The richest individuals in the world almost invariably have built their fortunes after having started a new, highly successful business, like Facebook or WalMart. Those in private equity and hedge funds who have crossed the billionaire threshold typically have done so by building a larger firm – like Blackstone or Soros Capital – that magnifies the efforts and legacy of a single person.

One fringe benefit of the decision in recent years of so many of the leading private equity firms to go public is that now all sorts of interesting tidbits about these businesses and their senior executives are now available to the public courtesy of their regular filings with the Securities and Exchange Commission (SEC). Stories now regularly appear in the mainstream press about “10-digit paychecks” that a handful of top fund managers have earned in a given year. Clearly, $1 billion is a lot of money on any remuneration scale, but when you generate $5 billion in profits off a $20 billion portfolio of securities, the 20% performance fee adds up so very quickly.

Why are people so keen to start-up, or work for, private equity and hedge funds? Because of the money!

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The author’s book, “ONE STEP AHEAD – Private Equity and Hedge Funds After the Global Financial Crisis,” is published by Oneworld and is available in bookstores across the United States and Britain.