Who Are The Wealthiest People In The World?

This discussion comes up a lot between aspiring entrepreneurs, that of "Who are the wealthiest people in the world?" I often find myself overly curious about this as well. After doing a little bit of research, I'm gonna present my findings here. But first, let me start by saying.....

Contrary to what many people believe, Bill Gates, Warren Buffet, and Carlos Slim Helu, are not the wealthiest people on the planet. There is a point where your assets can hardly be measured in currency. When some of the royals and financiers legal wealth is calculated, its towers over the net worth's of people like Bill Gates and Buffet. One example is the Queen of England:

Who Owns the World » Largest Landowner:
http://www.whoownstheworld.com/about-the-book/largest-landowner/

There are also powerful families that go way beyond some mis-info published Illuminati theory, the Illuminati was started by a group of ancient European Black-a-Moors with roots in Spain, Portugal, and France, the group was originally called Alumbrado (this name is still used in Royal Congo circles in system like Palo Judia [and Mayombe]).

They were later expelled and their estates and allodial titles were taken over by the Vatican, Saudi Royals, Dutch Princes, other Royals (Like the King of Thailand), and old Roman families like the Farnes, Maximus, Aldobradini, and Breakspears. These people have no legal obligation make public their financial records or any information regarding their holdings.

Even lower level financiers and bankers have more money than people you see on the Forbes’ list. It was noted that the Rothschild's family wealth was estimated at over $6 billion US in 1850. This is documented in the book, "House of Rothschild". Compound that amount in U.S. dollars, and current time (2013), and you get a staggering figure. I don't have the data at the moment, but it wouldn't be farfetched to say that in today's money (inflation-adjusted), you'd get a figure in the trillions.

If one wants to know what companies are ruling the world, simply research holding companies, and learn which holding companies own the largest corporations around the world. As an investor in the stock market, I've seen most of the larger companies are bought out or cornered by the same very large holding companies and sovereign wealth funds. You should already know the world is ruled by a few, those with the money have the power, and the power distrubution is the same as it was during any other time in history.

Yet, its been like this forever, its called the 80/20 principle or Pareto's Law, no matter what you do, or how equal the society claims to be, the wealth will always fall in the hands of a few. The mass are simply not responsible enough to handle being free or sovereign, and accumulating true wealth.


Thanks for reading!

Sean Tudor Carter

“We live in deeds, not years. In thoughts not breaths, in feelings, not in figures on a dial.”

Sean Tudor Carter is an experienced investor, entrepreneur, research and writer for the Young & Opulent Group, a company formed to serve the needs of up and coming entrepreneurs, investors, and scholars who wish to reach opulent goals and stay consciously afloat in these fast changing times.

Finally, A Simple Explanation of Derivatives

The foregoing article was originally written in November of 2012:

Since the bursting of the housing bubble in 2008, derivatives have become a hot topic OUTSIDE of the financial community. Following the '08 crash, lots of people tuned in as the financial media talked endlessly about derivatives being to blame for the entire mess the economy was in (which is only a half-truth). The endless drivel prompted the public to become curious about financial derivatives, but the public has come up short because hardly anyone seems able to explain what derivatives are and their function in a simplistic manner. I'm gonna attempt to do just that.

In recent years, you've heard terms like CDOs (Collateralized Debt Obligation), CDS (Credit Default Swaps), MBS (Mortgage Backed Securities), Futures, Options, and on and on. Those are all derivatives with different functions. But in this article, we're only gonna be explaining Futures, Options and MBS. But first, let's define and explain a derivative.

A derivative is a contract whose value is derived from an underlying asset. Let's take a futures contract for example. A future is a contract in which a buyer and a seller agree on a price of an item (a commodity, currency, fixed income security, interest rates, etc) that is set to be delivered at a future date. Let's use a commodity, crude oil, as an example. By locking in a price, buyer and seller are both protecting themselves against price swings (hedging) in the oil market. Until delivery is made, the value of that futures contract can either rise or fall. But since buyer and seller have already locked in a price, neither will pay any more or sell for any less. How does the value rise or fall? That depends on whether crude oil itself appreciates or depreciates in value. It is now obvious that the value of the contract is derived from the physical Crude Oil. By the way, given that explanation of a futures contract, you should also understand that a lot of companies use futures contracts to hedge against price swings in the raw materials which they use for the manufacturing of their products. Some also use futures contracts to hedge against the rise or decline of a country's currency, but that's beyond the scope of this article.

Another form of derivatives are options. To make it simple, I'll explain options this way: options are a contract to that gives a buyer the OPTION (but not the right) to buy an item by a certain expiration date. Vice versa with selling an option. For example, Apple is currently trading at 596.54. You think that Apple is going to $625 within the next month. You buy an out of the money call option on 100 Apple shares with a strike price of $600. If Apple reaches $600 and above, your option is now in the money...making it profitable. To buy those shares outright would cost you $59,654.00 plus commissions. But with a call option, you'd be controlling 100 shares for a premium of around $400. That's nearly 150:1 leverage. The value in that option derives from the price of the Apple shares.

Now we're gonna discuss the derivative instrument that's usually on the forefront of those discussing the '08 meltdown --- Mortgage-Backed Securities (MBS). A MBS is a security in which an underwriter packages a bunch of mortgages into a sellable security. When an investor buys a MBS, the interest income the investor receives is derived from the mortgages of the homeowners who's mortgages have been packaged into the security he owns.

So, how did derivatives play a role in the 2008 meltdown? When homeowners began to default on their mortgages, that sent the mortgage-backed securities market in a tailspin. The value of MBS' plummeted damn near overnight. Because investors (or should I say speculators) were losing so much money and so fast, it was also hard to get out of those toxic investments; no buyers! Many investors had no choice but to watch their net worth melt away. In the derivatives market, if an investor isn't able to close their position, they stand to not only lose their entire investment, but they can also end up owing heavily. That's what ended up happening. Because so many investors were highly leveraged to purchase MBS, they ended up losing more than they invested; which is how a few bulge bracket banks ended up going under --- Lehman Brothers, Bear Stearns, Merrill Lynch, etc.

Losing money in a derivative position is not like losing money in stocks. If you own 100 shares of stock at $25 a share, you paid $2,500 worth if you bought those shares at $25. If the stock's value declines to $23, you've lost $200. But with derivatives, its not that simple. Back to our Crude Oil future as an example. One crude oil future allows the trader to control 1,000 barrels of crude with only a small margin payment of around 5%. If crude is trading at $86, that would mean that a futures contract on crude is worth $86,000. But, you can buy one contract and control that deal for $4,300. That's 20:1 leverage.

If you have a position of one Crude Oil future, each whole dollar Crude Oil moves up is worth $1,000. So, if Crude Oil goes up or down a dollar, you've made or lost $1000. If you've paid a margin of $4,300, imagine oil moving $5 against your position, you're not only lost your margin investment, but you now owe $700. Imagine someone with a position of 10 Crude Oil contracts! That would be $10,000 lost or made for every dollar crude oil moves. If the trade goes against the trader, he could end up owing tens of thousands of dollars (a smart player would cut his losses short anyways). Keep in mind that the numbers could change depending on how much leverage you're using. The higher the leverage, the bigger the numbers. That is why a lot of investors are deathly afraid of derivatives and won't touch them with a 10 ft. pole. But on the flip side, a lot of people have gotten really rich trading derivatives.

Derivatives are attractive to many because of the amount of leverage they offer and the huge profit potential if the trade is successful. A trader (or investor) can control a very expensive deal with only a small amount of money (as explained above). Not only that, derivatives are also a great tool for hedging (as also explained above). But if a person is looking to profit from the price moves of derivatives, that person is a speculator.

Don't get the impress that derivatives are a new instrument. Derivatives have been around since the days that the Dutch ruled the East-West trade, which was during the 1600s. Actually, derivatives were around before then. But we can actually trace them to that time period.

Since derivatives are a contract who's value is derived from an underlying asset and are usually highly volatile, that's why is you often hear people refer to today's wealthy as being rich only on paper. I can't endorse that point of view in its entirety, but I do understand why they would say that...mainly because a portfolio with derivatives can earn a person a net worth millions, but a with a violent price swing, those millions could vanish even faster than they came. But, in closing, the point is this: Despite the bad rap some market participants try to give derivatives, they're here to stay. A lot of money can be made or loss trading derivatives, that's why it pays to know what you're doing.

Secret Investments of the Fortune 500

Within the last century or two, finance, risk, and financial markets have taken on a new precedence. Mathematicians, street merchants, and trend makers have introduced new financial instruments that are comparable to the discovery of nuclear physics. Names like currency options, stock options, commodity options, and derivatives have yet to be comprehended fully by the average person. Ironically, these misunderstood financial abstracts are responsible for the real wealth in the world not oil, gold, vehicles, or anything related to the gross domestic product.

Now, imagine opening the paper and you read, “Allied-Lyons loses $270 million”, “Air Product & Chemicals loses $113 million”, and “Metallgesellschaft suffered loses over $1.34 billion”. When asked to elaborate (as these are not operational based losses), all of these companies refuse, and maintain silence. What happened?

One of the best kept secrets of corporate America: some of the biggest name companies are trading with advanced financial instruments. Big names like Ford, Procter & Gamble, and Air Products & Chemicals have been found trading not only for profit, but for financial insurance. According to the paper “Use of Foreign Exchange and Interest Rate Risk Management in Large Firms” by Professor Walter Dolde, 85.2% of Fortune 500 companies use derivative securities. Yes, you heard it right, around 85% of large firms are trading in derivatives. Some sources say General Motors, used currency options to pay the principal on the bond/loans they were granted. I mean, this is going on all around the corporate world. Derivatives and other trading are now as important or more important than marketing, production, and Research and Development segments.

This is not old, but it is definitely not anything new. Corporate entities have always had trading rooms, and financial teams that dealt with the markets. Shareholders have no idea what is going on in due part to the lack of financial accounting laws, and regulations. Usually shareholders are kept in the dark until they learn the business has lost millions (sometimes billions) of dollars in some type of complicated financial trade. On the flip side, companies are also generating millions and billions of unaccounted profit via financial markets. It goes both ways.

Why are these companies doing this? They are doing this to minimize risk and capture economic advantages. Its called hedging, which in my eyes, is not your “typical” hard-nosed investing.
Derivatives (remember 85% of large firms are involved in derivatives), like the mathematical function, are none other than financial packages that protect against potential risk.

Lets look at an example: A baking company need to buy wheat in order to produce some of its goods. The company knows that wheat prices fluctuate based on season and other factors. Being financially savvy, a representative from the banking company buys something called a “wheat future”, which allows them to lock in a steady price NO MATTER how the price of wheat fluctuates. It’s that simple!

Do you now see why companies are interested in derivatives like options, futures, and mortgage backed securities? It potentially protects companies from loss, in minimizes risk and costs. Don’t be fooled though, there are obvious downsizes to this, as evidenced by the reported losses.
Is this information important to know? Of course. The world is changing. No longer are “investors” and “traders” using simple financial instruments to boost profits and stay ahead. They are using complex instruments to make profit. The companies are trading for profit! These are billion dollars deals, many of these people are taking home millions of dollars in bonuses. Don’t you think you should understand what’s going on here?

Essentially, if you are an entrepreneur and you are going to be opening up any type of company that deals with commodities, goods, or products, then you can benefit from having someone on the team who can deal with derivatives.

On the flip side, every citizen needs to be aware of what is going on in their perspective country. Its called awareness. If top companies are trading derivatives, if most of the world’s wealth is held in this abstract market, then obviously, one should understand what is going on. There is all kinds of politics behind this phenomena, and some even call it toxic finance, a type of finance that could end the civilized world as we know it, if done incorrectly.

For more information, go to your local library and ask for the section on derivatives, options, and foreign exchange trading. I recommend the book “The Vandals’ Crown: How Rebel Currency Traders Overthrew The World’s Central Banks.”

Remember, we cannot cover a complex subject like derivatives, and its connection to Fortune 500 companies in a single blog post! My research on the topic is enough to fill a book.

Sean Tudor Carter is an experienced investor, entrepreneur, research and writer for the Young & Opulent Group, a company formed to serve the needs of up and coming entrepreneurs, investors, and scholars who wish to reach opulent goals and stay consciously afloat in these fast changing times.

Gold Standard vs. Debt-Free Fiat Currency

Recently, I've been listening to advocates from both the gold-money crowd and the debt-free fiat money crowd. Personally, I've always thought that the gold-standard was the best policy under which to issue money, but I've heard fiat-money supporters make a compelling argument in favor of a debt-free fiat money. In this article, I'm gonna discuss what I think are the pros and the cons of both. First we're gonna discuss two major problems which plagues our money system today which would support the argument in favor of fiat money.

Fiat money supporters believe that the solution to monetary reform would be to grant government the power to issue a paper currency and for government to also control the quantity of that currency. Their belief is that if government were to control the issuance of money, there wouldn't be any debt owed to pay to a central bank. As it currently stands, all money in circulation has to be borrowed into existence through The Federal Reserve (our nation's central bank) with interest attached, which puts government in a debt that it could never repay. That is why I laugh when politicians discuss their plans to pay off the national debt. Their commentary may impress those that don't understand how money works, but I know better. Paying off the national debt would be impossible without taking ALL of the nation's money out of circulation. And if that were to happen, we're looking at a global economic collapse.

This very same crowd also believes that banks should operate under the full reserve lending system. Currently, we operate under what it known as Fractional Reserve Banking (FRB). FRB allows a bank to lend far more than they have in actual reserves. For instance, if a bank holds $100 in actual deposits or reserves, they can lend out $900. When they approve you for a $100k mortgage with a small down payment, they just type the remainder in the computer and the money is there. Essentially creating money out of thin air. The majority of the money in circulation (or that we think is in circulation) was created in this manner. This allows a bank to collect interest on money that they don't even have. A bank can collect interest on $100k while only holding reserves of $1k for that $100k. This scheme works just as long as depositors never withdraw their money in large amounts at once....a run on the bank.

Now that we have those two issues out of the way, let's talk about the gold standard. First, there was the gold standard, in which each paper dollar (note) represented a fixed amount of gold. These notes were convertible into actual gold coins. Then came the Bretton Woods agreement, which worked like this:

Under the Bretton Woods Agreement (BWA), the U.S. Dollar was redeemable in gold (except domestically). The fixed price of gold was $35 an ounce (today gold is $1252.20 an ounce as I type this), and one U.S. dollar was the equivalent of 1/35th of an ounce of gold. During this time, The Federal Reserve could print only enough money to match the country's gold reserves. For example, if they had one ounce of gold in storage, they could only print $35. As you can see, the gold standard provided stability to our currency. Now comes the BWA. Under this agreement, it was determined that the U.S. Dollar would become the world's reserve currency due to it being linked to gold. In a sense, that would link all the other country's currency to gold as well. The U.S. til this day is still the world's reserve currency, despite the abolition of the gold standard.

We've outlined the basics, which should give you a full understanding of each point being discussed, now let's get into which system would make the better monetary system. The argument from the fiat-money crowd is that since gold is controlled by the world's central banks, issuing money backed by gold would still put control of our money supply into the hands of a small group of bankers. I can't argue with that. However, gold does have a proven track record of providing economic stability. But...the economy was still subject to manipulation (systematic crashes) even under the gold standard by simply contracting the nation's money supply --- this is exactly what caused the great depression. But an economy that uses fiat money is even easier to manipulate. There have been historical accounts of countries simply flooding a rival country with counterfeit money, thereby causing massive inflation.

Now we have the issue of inflation. Gold money has had a history of keeping inflation in-check, whereas, economies with fiat money would experience periods of hyperinflation. This goes back to fiat money being very prone to manipulation. Since fiat-money can be printed without limit (due to the fact that it isn't tied to anything with intrinsic value), governments will print money and use inflation as a hidden tax on the public. Under the gold standard, government didn't have that luxury. The money that government printed had to match their gold reserves. For instance, if the U.S. had 1 million ounces of gold at $35 an ounce, they could print only $35 million dollars.


Under the current system which the U.S. operates, the government DOES print money relentlessly, but that money has debt attached to it. Because of that, we've experienced rampant inflation over the years...since we dropped the gold standard in 1971. Inflation, by the way, typically occurs when there are too many dollars chasing too few goods. The obvious solution to stabilize an economy with a large money supply would be to ramp up production. But as anyone can see for themselves, production and manufacturing has actually declined significantly in America. Most jobs that are being created are being created in the service sector. While at the same time, we import the goods that we consume instead of manufacturing them at home, and with a weak currency, that leads to a higher cost of living.

Let me ask you this --- do you think it's possible for a blue collar worker to raise 8 kids and support a wife in today's time? You might have answered "Hell No! Not unless you're wealthy." Well, prior to 1971, this was entirely possible because the cost of living remained stable due to a reasonable money supply and there were plenty of domestically made products to go around. I'm sure that anyone who grew up during the mid 1900's could validate what I've stated. 

In the end, it comes down to this:
I'm in favor of a money system in which the money is tied to a commodity of intrinsic value. It doesn't have to be gold. Just as long as it is a commodity that is in high demand. That way, the money actually represents an in-demand commodity that is redeemable. When you understand that, you will see that the money which you receive for your product or service isn't paper but a note representative of a commodity which you could actually use. With fiat money, it doesn't work that way. If there were ever a time where the government declared a fiat currency worthless, it would lose all of its value. It would be lights out!