Thanks for the brilliant insights, KF! Sample of one here, from the old-fart cohort:
Your assessment that the 30-55 age group is prime first-nice-watch territory is right on target for me: after a few years with a fairly nice Seiko chronograph, I finally reached the level where I could afford a Rolex as my first "serious" watch (early GMT Master II, "Fat Lady", for a wallet-crushing $1,350 brand new, Tiffany-branded on the dial. God knows what that would be worth now if I had kept it). That was somewhere in the mid-late '80s, and I was somewhere around 30.
And in my 50's I had a sequence of maybe 6-8 very good years, which enabled my current life: comfortably retired, not working and not needing to. But there's no money coming in other than whatever my not-huge portfolio brings in each year, and so my willingness to spend thousands of dollars on things that are far from necessary (as opposed to, say, a new HVAC when the old one breaks) is very, very, very low. And nice watches, while a blast to read about and think about and comment on, are definitely not necessary. So yeah, I'm in that EMILLI group, but I'm not one of its "elder siblings," and although there are vast numbers of people who would love to be where I am, it doesn't quite feel like really rich. Not when I can see people like Jeff Bezos renting the city of Venice for his wedding, or Taylor Swift renting out Madison Square Garden and cordoning off a few blocks around it on the July 4th weekend for hers. (To be clear, I'm not complaining--I have a good life, and I've been very lucky, and as I mentioned a few words ago, I know damn well that the vast majority of Americans, never mind everyone else in the world, would love to have what I do.)
So yeah, I'm not a person of interest to the makers of uber-expensive watches (never really have been, though for years I deluded myself to thinking I was), and I'm also far less willing to spring for a $5K-$10K watch, more or less on a whim, than I was 15 or more years ago. Will younger age groups come along to replace me? Probably, and the Swiss watch industry had better hope so.
A fairly dire picture of the next 12 months. The image of 4 out of 7 million $0.5E7aires being Americans with most of their wealth in the stock market is pretty vivid.
I do wonder about the durability of US wealth stats: they are driven by massive exposure to, quite frankly, frothy assets. Dollar remains very strong. Equities expensive. Private assets expensive. Real estate - very expensive in the areas where the wealthy live. We might be looking at something closer to peak.
I also believe this liquid wealth number includes retirement account values for countries like the US - which, while invested in liquid assets, are not truly liquid. It’s a nuance not fully captured by the UBS report.
Demographics don’t drive year-to-year changes, but I am interested in the impact over 10+ years. You have a very large, very wealthy cohort who are all starting to draw down their assets. Living expenses, but also end of life care. Assisted living costs will blow through the savings of all but the 0.1%.
For instance, there are many exceedingly wealthy towns in coastal California where the median age is 55-60+. Carmel-by-the-sea has a median age of 69. A lot of these assets will change hands in the next 10 years, and it’s not clear that the next generation really wants them. At least not at market prices.
Thanks for the brilliant insights, KF! Sample of one here, from the old-fart cohort:
Your assessment that the 30-55 age group is prime first-nice-watch territory is right on target for me: after a few years with a fairly nice Seiko chronograph, I finally reached the level where I could afford a Rolex as my first "serious" watch (early GMT Master II, "Fat Lady", for a wallet-crushing $1,350 brand new, Tiffany-branded on the dial. God knows what that would be worth now if I had kept it). That was somewhere in the mid-late '80s, and I was somewhere around 30.
And in my 50's I had a sequence of maybe 6-8 very good years, which enabled my current life: comfortably retired, not working and not needing to. But there's no money coming in other than whatever my not-huge portfolio brings in each year, and so my willingness to spend thousands of dollars on things that are far from necessary (as opposed to, say, a new HVAC when the old one breaks) is very, very, very low. And nice watches, while a blast to read about and think about and comment on, are definitely not necessary. So yeah, I'm in that EMILLI group, but I'm not one of its "elder siblings," and although there are vast numbers of people who would love to be where I am, it doesn't quite feel like really rich. Not when I can see people like Jeff Bezos renting the city of Venice for his wedding, or Taylor Swift renting out Madison Square Garden and cordoning off a few blocks around it on the July 4th weekend for hers. (To be clear, I'm not complaining--I have a good life, and I've been very lucky, and as I mentioned a few words ago, I know damn well that the vast majority of Americans, never mind everyone else in the world, would love to have what I do.)
So yeah, I'm not a person of interest to the makers of uber-expensive watches (never really have been, though for years I deluded myself to thinking I was), and I'm also far less willing to spring for a $5K-$10K watch, more or less on a whim, than I was 15 or more years ago. Will younger age groups come along to replace me? Probably, and the Swiss watch industry had better hope so.
A fairly dire picture of the next 12 months. The image of 4 out of 7 million $0.5E7aires being Americans with most of their wealth in the stock market is pretty vivid.
I do wonder about the durability of US wealth stats: they are driven by massive exposure to, quite frankly, frothy assets. Dollar remains very strong. Equities expensive. Private assets expensive. Real estate - very expensive in the areas where the wealthy live. We might be looking at something closer to peak.
I also believe this liquid wealth number includes retirement account values for countries like the US - which, while invested in liquid assets, are not truly liquid. It’s a nuance not fully captured by the UBS report.
Demographics don’t drive year-to-year changes, but I am interested in the impact over 10+ years. You have a very large, very wealthy cohort who are all starting to draw down their assets. Living expenses, but also end of life care. Assisted living costs will blow through the savings of all but the 0.1%.
For instance, there are many exceedingly wealthy towns in coastal California where the median age is 55-60+. Carmel-by-the-sea has a median age of 69. A lot of these assets will change hands in the next 10 years, and it’s not clear that the next generation really wants them. At least not at market prices.
Explains why I seem to be getting poorer by the day very well, thank you!