Skip to main content

Rich kids - bad?


"Take dead aim on the rich boys." - Herman Blume, in a speech made to the students of Rushmore Academy, 1998.

Time to take a little time out from the endless coverage of the recent credit market debacle and focus a bit on personal wealth. Roll 'em...

In a recent WSJ Wealth Report post, writer Robert Frank wonders if rich kids really do have it all.

After profiling the attitudes of the nouveaux riches' young heirs at a Financial Skills Retreat camp, Frank is left with the impression that few of the youth surveyed will go on to grow their wealth or join the ranks of the next generation's business and investment moguls.

Overall, he is left unimpressed by their knowledge and skills (which he finds lacking), and finds their "bubble of privilege" lifestyle a likely drag on their future competitiveness.

From Robert Franks' "Wealth Report" post, "Why Rich Kids Don't Stay Rich".

My conclusion is that despite all their supposed advantages, today’s rich kids have grown up in such bubbles of privilege that they’re not prepared for today’s increasingly competitive job market. They don’t make good investors, they don’t compete well for the top jobs, and they’re not hungry for success like kids who grow up in middle-class homes can be.


Eventually, I argue, their money will run out. And much of the inherited wealth in America will flow back to people who actually earn it — as it has throughout history. This is what makes wealth in America dynamic, rather than dynastic.

There are a few interesting comments sprinkled throughout in the reactions to Frank's post. I think the one line that it sums up (in a "what did you expect?" sort of way) is, "shirtsleeves to shirtsleeves in three generations".

If family money and social position are to be smoothly handed down to the next generation, it seems that they must be accompanied by a simultaneous and successful transmission of core values; among them, modesty and discretion.

This is easier said than done. After all, the Paris Hiltons of the world are far more visible (and influential?) than the more low-key and unostentatious young heirs.

There are very few families as long-lived as the Medicis and the Pamphilis. Most will probably break up or squander their wealth within a few generations, long-lived family foundations aside. Taking the great sweep of history, this seems part of the natural order.

In the meantime, "take dead aim on the rich boys".

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…