Post: #1

The High-Beta Rich by Robert Frank

This is a great continuation of Robert Frank's earlier book Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich where he explored the personal lives and lifestyles of the ultra-wealthy (minimum 10 million in investible assets) through contacts made while working at the Wall Street Journal. That book was written just before the 2008 financial collapse.

In The High Beta Rich, Frank basically goes back to most of the same families and explores how the crisis has affected them. Almost all of them are severely affected, with some going bankrupt from just a few years earlier being worth billions. Frank explores the phenomenon further and develops the term "High-Beta rich" to describe how wealth differs in modern time from old. Essentially in the past, one would spend the majority of their lives building up a company from scratch and become ultra wealthy by the time they had gray hair (Sam Walton, Walt Disney, Sam Templeton, Ted Turner etc.).

In recent decades though, due to the financialization of the entire economy (everything can be securitized and traded in the markets), you could essentially skip that entire process and thousands of millionares or billionares were minted in unbelievably short periods of time (everyone from the new economy, silicon valley etc.). The catch is that because all your wealth is the financial markets as stock rather than the real world, the value of what you hold swings wildly and goes down as easily as it goes up. Hence the term High-Beta rich. Beta is just stock market term that measures deviation from the mean. An index market fund has a beta of 1, companies that deal in staples like toilet paper will have a beta below 1, companies that deal in discretionary products (luxury goods for example) will have a beta higher than 1 (generally speaking). New money people generally have extremely high-beta type wealth vs old money because it varies so widely depending on the markets.

Other cool things that are touched on in the book are the hollowing out of some cities due to an influx of wealthy buyers purchasing as seasonal homes (Aspen, Davos). How new money people are actually extremely hard working despite the stereotype. The personal lives of the ultra wealthy and their outlook on others (no matter the actual wealth, no one feels wealthy because wealth scales so dramatically at the top). The large divide between the different "levels of Richistan" all within the 1%. How states, nationalities, borders mean less and less as you get richer. The upper east side charity social scene. Just all kinds of neat things.

I personally enjoyed the book because its written very causally and the families Frank interviewed were on record and fairly revealing due to the good working relationship he was able to conjure up from the previous book. I was surprised at how much personal or professional debt a lot of these people (Forbes 400) had in the closet. Also confirmed for me that the only way to become rich is by being an entrepreneur. All that "cutting a latte" or "diversify 401k" crap will not get you rich, just keep you safe. I'd definitely recommend both books.

Post: #2

I read richistan. Solid book, but remember it being a bit preachy.