Global Billionaires: How they made their Money in 2015

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The global community held a record number of 2,473 billionaires in 2015. All told, they’ve accumulated more than $7.7 trillion, or more than the combined GDP of Germany and Japan. About 806 of them call Europe home. Another 628 live in the United States. Another 645 are spread throughout Asian communities.

The world’s richest held about a quarter of their wealth in cash or other convertible assets like stocks and bonds last year – an indication that some of the world’s wealthiest are trying to shield themselves from incessant global volatility, moving away from risky bets and protecting themselves from economic downturns.

The biggest common denominator among most billionaires was entrepreneurship. About 87 percent of them made their money on their own, up from 81 percent in 2014.

Forbes for example added two new U.S. based billionaires in 2015. Both were involved with real estate, as values continued to accelerate. Jay Paul, for example, is worth $1.5 billion. Sanford Diller is now worth $1.3 billion. Both benefited from the Bay Area’s property value boom.

Other billionaires made their money in safe havens, such as gold and silver, and overseas investments, as some begin to sound the alarm on overvalued markets.

  • Stanley Druckenmiller told us to “get out the stock market, own gold,” expressing skepticism about the current market environment and a slowing Chinese economy.
  • Jeffrey Gundlach, CEO of DoubleLine Capital said, “Sell everything. Nothing looks good here. The stock markets should be down massively but investors seem to be hypnotized that nothing can go wrong.”
  • Carl Icahn warned that, “I don’t think you can have (near) zero interest rates for much longer without having these bubbles explode on you.”
  • Bill Gross recently said that he “doesn’t like bonds. I don’t like most stocks. I don’t like private equity.”

This is nothing new, though.

We’ve been stressing for some time over-valuation concerns. The only reason markets are at the levels they are is because of overly accommodative global central banks.

But what has the billionaires upset?

For one, they’re worried about escalating, destabilizing global events like terrorism, UK exit type situations and the fact that $13 trillion of global sovereign debt has a negative yield. We must also contend with slowing growth in the U.S. where Q2 2016 GDP grew at an annual rate of just 1.2% -- well below expectations of 2.6% -- thanks to continued weakness in business investment. Businesses are not spending as robustly as they once did.

Job growth isn’t as hot as you’d think either.  In the U.S., theaddition of 255,000 jobs in July 2016, added to the 287,000 jobs that were added in June, leaving the unemployment rate unchanged at 4.9%.

The latest report easily beat analyst expectations for an addition of 180,000. Meanwhile, wages only grew 0.3% for the month and 2.6% for the year.  And, if we look a little deeper into the jobs numbers, the U6 tells us unemployment is closer to 9.7%. There’s no doubt that an addition of 255,000 jobs is good news.

However, it’s the quality of the jobs that’s concerning.

That number is made up of mostly temporary jobs, as well as jobs in the leisure and hospitality industy (waiters and bartenders, for example). The number of temporary workers jumped by 17,000 in July. The year-over-year growth rate for temp jobs has now risen to 1.9% for July to 2.93 million – its highest level since December 2015.

Given such realities, it’s no wonder that some billionaires made their money overseas and in safe havens.