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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: pater tenebrarum who wrote (114808)	7/28/2001 1:52:00 PM
From: Lee Lichterman III	Read Replies (1) of 436258

I guy on our board asked a good macro question that has me thinking hard and was wondering what your view would be on. He asked, "When does an economic downturn (as we are in, and assuming it worsens considerably) affect the wealthiest people in society historically? My business relies on this segment of society, and in 25 years I have NEVER seen these people restict spending in my arena even slightly. " My view...>>I wouldn't know as there are too many variables. Many could be immune since they have enough to ride the storm out and may never feel it. I mean if you have enough cash to ride it out, do you really notice if your income drops a tiny bit? The wealthy also tend to have better financial sense and advisors thus are more market savvy. Many of them were probably in Hedge funds that were short during the drop unlike J6P mutual funds that mainly played long thus many of the wealthy probably have made money on this decline. I am sure many however lost tons and have already felt it. Great question as it could be a debate topic on it's own. It might even be separable into types of wealth. Nevue rich, old money, really rich ( i.e. Bill Gates, Buffet etc), kind of rich ( the dot com millionaires). My point being, if you have 15 Billion, do you care if you lost a million here or there, where as the guy that had exactly one million but it was mostly paper gains in stock options that are now gone, is feeling it already. The wealthy seem to care more about price comparison than economy from what I recall. Remember the Bush Luxury tax back in the late 80s that taxed yachts etc? The wealthy just bought from overseas to get around it and a bunch of boat makers went under in New England. The average Joe turned out to be the only one that paid the tax since they didn't know to buy elsewhere. I might ask this on the clown thread and let Heinz take a stab at it. Those guys are good at these more macro type questions.<< Do you see a point where the bigger money clamps down on spending? TIA and Good Luck, Lee

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