I’m boarding a plane today back home to LA after a very successful trip to Australia. Last week I wrote a newsletter about six IPOs this year producing a potential $230 billion market windfall and creating about 6,000 millionaires. I always get a lot of responses to emails but I received an excellent email for Dain Blair from Grooveworx, a custom music house. I have reproduced it below. Thank you Dain, greatly appreciated.
Hope you are well. I see you’re still racking up tons of frequent flyer miles. Excellent article as usual. My only question would be in the number of millionaires being created.
According to numerous articles I have seen on the subject, the U.S. is averaging about 600,000 new millionaires every year dating back as far as the early 2000’s. The CNBC report states that there were 700,000 new millionaires in 2017. They also claim that the U.S. currently has 11 million millionaires. I have seen other statistics as high as 16 million when you include net worth, which economists prefer since wages can vary greatly from year to year. The increase in net worth has been helped by surging stock prices and housing values. This would mean almost 5% of the U.S. population are millionaires.
In 1980 the IRS reported 4,414 tax payers reported they had earned more than $1M. By 1990, even with a recession underway that figure was 63,642. Some of that was helped by inflation of course and the IRS figures don’t show accrued but unrealized capital gains on stock and real estate, which typically account for the lion’s share of a person’s wealth. There’s a perception in the media that the 1% is an enduring group of the mega rich that stay there year after year and the bottom 99% stay where they are. However, that obviously can’t be true given the number of new millionaires that enter the ranks each year. IRS data shows that of those in the 1% in 1996, 50% were no longer in the 1% in 2006. Also, 80% of those in the bottom 20% in 1996, were not in the bottom 20% in 2006, having moved up.
A recent study by Thomas Herschl of Cornell and Mark Rank of Washington University shows that 12% of Americans at one time or another in their lifetime will be in the 1%, albeit maybe for just a year or two. 39% will spend five years in the top 5%. 56% will find themselves in the top 10% and 73% will spend a year in the top 20%. However, only .06% will do so in 10 consecutive years. It would seem that despite the enduring myth that the rich are getting richer and the poor are getting poorer, social mobility is alive and well in the United States.
A woman can make any man a millionaire, providing he’s already a billionaire