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Book Review (#2)

All The Money in the World, How the Forbes 400 Make And Spend Their Fortunes.

Written by Peter W. Bernstein and Annalyn Swan, this book examines members of the Forbes 400 list. The Forbes 400 list has been compiled every year since 1982 as a list of the 400 richest Americans. The list is published by the Forbes Magazine, and was the idea of Malcom Forbes, who was a firm believer in Wealth building. The list is based on the personal fortune of its members. The list has attracted attention since its inception, and some of those who have been named in the list have even sued Forbes, wanting to keep the extent of their wealth private. In 1982 you needed around 75 million dollars to make the list, in 2007 you will need to be a billionaire. The book is pretty well written and flows nicely. At times it can be a little dry, but all in all it was a pleasant read.

 As I was reading this a few things struck me. One of the things that really struck me was the impact that inherited money had on families. In my mind one of the most striking trends was the trend for family names to drop off the list in about 3 generations. There are plenty of examples given, the Vanderbilt’s, the Duponts, and the list goes on. One of the cited reasons for families dropping off the list is wealth dilution. A recent example is the Sam Walton Fortune. Upon his death Mr. Sam Walton’s Fortune was split amongst his family. As the generations continue, there is less and less to split among more and more people. The book made me feel like you were better off making the list on your own merits, rather than inheriting your position on the list. The book crunches a few numbers and shows that as time goes on the number of people on the list that have inherited their wealth drops, and in contrast the number who have made the wealth themselves continues to increase.

There is an entire chapter devoted to the subject of the potential evils of inherited wealth. What I found interesting was that several people cited inherited wealth as something that could be a really bad thing. Upon further explanation of their thoughts, they described how growing up in a excessively wealthy family could deprive you of the drive that it takes to acquire a vast fortune. In addition to the potential for a diminished drive, they also cited the potential for a very high amount of stress to succeed. There were some very encouraging stories as well. The book also focused on that fact that almost anyone can make it on to the Forbes 400 list if they have the right combination of luck, drive and perseverance. Some of the current Forbes 400 list that were interviewed clearly cite luck, and hard work as the key to their successes.  I feel that the book is a pretty thorough study of the Forbes 400, and as such is packed with interesting details. Here are a few of that I found interesting.

• In the 2006 list, the average net worth of those without a college degree was 5.96 Billion. Those with a college degree, 3.14 Billion.
• Since the lists inception in 1982, New York has been the city that claim it has the most members on the list.
• While New York has the most members, California has the highest percentage of the total wealth represented on the list with about 20%.
• In 1982 the biggest Wealth generator was Oil, accounting for around 23%. In 2006, the biggest wealth Generator was the Finance Industry (think hedge funds etc..) accounting for around 25%.

If you are interested in the mega rich, this is an interesting book to read. It reads pretty quick, and for me the take home message was that anyone who is willing to work hard enough and is in the right place at the right time, with a little bit of luck can make the Forbes 400 list.

Ian