New York’s Vanishing Millionaires–and Other Myths

High state taxes are chasing out the rich, according to the antitax crowd. We have it in Maryland, New Jersey, Rhode Island, and Connecticut.

Now comes some new research claiming that taxes are driving the rich out of New York. But like the other research, it contains some fundamental flaws.

The Partnership for New York City, comprised of business leaders, says the state’s “Millionaire’s Tax” has forced some of the state’s most valuable earners and tax-payers to other states. The tax, which applied to those earning $200,000 or more, expires at the end of 2011. But some Democrats want to keep it from expiring.

The Partnership says New York lost a net 1.7 million residents from 1999 through 2008, and the average net worth of people who left was $338,000, citing stats from the Center on Wealth and Philanthropy. (Note, this is before the “Millionaire’s Tax” was imposed).

The report says that from 2007 to 2009, when the Millionaire’s tax was imposed, New York saw a 9.4% decline in state taxpayers who earn $1 million or more. Citing stats from Phoenix Marketing, the Partnership says the number of $1 million earners fell to 345,892 in 2009 from 381,786 in 2007.

It sounds scary. But it isn’t entirely accurate. As the liberal Citizens for Tax Justice points out, the 9.4% decline was actually for people who have wealth of $1 million, not for those who earn $1 million or more. And during that time, the nation as a whole lost wealth and millionaires because of the stock-market swings.

But there is something else to note in the Partnership’s research. The number of millionaires in New York actually increased in 2010–while the tax was in place. New York had 381,197 millionaires in 2010, an increase of 35,000 millionaires from 2009. This again likely reflects wealth gained from the stock market and Wall Street, not from taxes.

Kathryn Wylde, the president and CEO of the Partnership, was kind enough to call me while she was out of the country to clarify. She said the population number is indeed for wealth not income. But when I pointed out that the numbers still failed to prove a link between tax changes and the population of rich people, she said that “anecdotally” she was hearing a lot about wealthy people leaving the state, to lower-tax New Jersey, Connecticut and Florida.

“It’s a very difficult thing to measure,” she said. “We get a lot of it anecdotally. Our evidence is from conversations with lots of high earners and there is an increasing tendency to gravitate to lower-tax places.”

She is absolutely right. Measuring the precise movements of the wealthy is difficult without data. It is even harder to measure the reasons for their movements. And that is why we should take all of these studies for what they are–political talking points with very little supporting data.

It is very possible rich people are leaving New York because of high taxes. But there is little or no supporting evidence.

Do you think the rich are leaving New York because of taxes?

Are the Rich Rushing Into Stocks?

Stocks may look richly priced to some, but not to the rich.

According to a new survey from Spectrem Group, 52% of U.S. households with a net worth of $5 million to $25 million (not including primary residence) say stocks are their favorite investment choice for the next 12 months.

Ranking second for the group was cash (35%), followed by international investments (33%) and fixed-income products (31%).

“After pulling away from equities during the recession, America’s wealthiest investors are looking to jump back into stock investing,” said George H. Walper Jr., President of Spectrem Group, a Chicago wealth-research firm.

If true, investments from the rich could add to the virtuous cycle of the current bull market. Each of these ultra-high-net worth households has an average of $659,000 sitting in cash, according to Spectrem. Taken together, their cash represents billions of dollars waiting on the sidelines.

On the other hand, the fact that cash still ranks above all other investments–including international–shows that the rich are still playing it safe. My hunch is that while some of the ultrawealthy will move into stocks, many more will continue to value preservation over returns.

As much as Wall Street would like to forget the global financial crisis, the lessons of wealth loss aren’t yet forgotten by the rich.

Do you think the rich will move from cash to stocks this year?

Why Do the Wealthy Shoplift?

Lindsay Lohan, Caroline Guiliani, Winona Ryder. Are well-heeled girls and women accused of shoplifting representative of the norm or are just the highly public exception?

According to Britain’s Home Office, the number of girls age 14 to 16 caught shoplifting has more than doubled since 1997, to 7,000. More interestingly, about two-thirds are believed to come from affluent or middle-class backgrounds. Most of what they take are high-price fashion items, with the average value of each pilfered good rising 50%, to $113.

“A typical shoplifter used to be a drug addict,” the founder of a British support group called Crisis Counselling for Alleged Shoplifters told the Daily Star. “Now it’s girls from well-off families doing it for kicks. Today’s youngsters think they can get away with anything.”

Now one child caught stealing often is called a cry for help. But 7,000 girls stealing? Is that society’s cry for help?

Experts say these girls shoplift out of a need to look like their favorite celebrities. Not surprising. But why can’t they get money from mom and dad? Or, heaven help them, use income from a part-time job? Is it simply a game for them?

I don’t have the answers. And it is unclear whether the stats are mirrored in the U.S. Still, I wonder whether this statistical increase points to a larger problem that many of today’s affluent children will face in the future. They want the lifestyle and accessories of wealth, but they many be ill-prepared or unwilling to do what it takes to make the required income.

Of course, this is over-generalizing. There are plenty of wealthy and affluent children who work hard, don’t steal and live simply. And stories of pampered children stealing have been boarding-school fodder for decades. Yet the twin rise in the number of affluent children and the spread of luxury culture may have made it more of a mass problem. So it is an open question whether luxury entitlement is becoming increasingly common among today’s affluent children.

Why do you think the affluent shoplift?

The Future of Our Plutonomy: Deficits, More Booms and Busts

It has been more than five years since equity strategist Ajay Kapur introduced the idea of a “plutonomy“–an economy dominated by the spending and consumption of the wealthy.

Since then, plutonomy has become a popular economic catchphrase, a political slogan and left-leaning conspiracy theory.

Yet with all the noise, we haven’t heard from Mr. Kapur on the actual state of the plutonomy and where it is headed. I called Mr. Kapur, now Deutsche Bank’s head of Asian equity strategy, for the latest.

Among the surprises: The plutonomy is stronger than ever and likely to produce chronic budget deficits, political tensions and more economic volatility for the rich and nonrich alike. But there are still ways to profit from the trend. (The term “plutonomist” used below refers to rich people).

Wealth Report: What is the state of the plutonomy after the global financial crisis?
Ajay Kapur: One of the risks to the plutonomy that I highlighted in that earlier research was a financial crisis. I wasn’t expecting a financial crisis, but it was one of the things I noted that could lead to the plutonomy being challenged. Well, the financial crisis came and went, and the plutonomy has survived in tact and probably even gotten stronger. That fascinates me given the serious threats that it faced.

WR: Why did it fare so well?
Mr. Kapur: I think the plutonomy has built upon itself and it has deep roots now. One of the main reasons you get a plutonomy is you have capital-friendly governments and I think that is still in place. Across the political spectrum is it very tough to destabilize or reverse the nexus of the plutonomists and politicians and policy makers. Normally, there is a very tight correlation between deregulation and a plutonomy. You had periods of deregulation in the 1920s and in the 1980s and those created plutonomies. We’ve now had financial reform, but I don’t think it’s enough to reverse the course of such a financialized economy.

WR: What stocks should people buy to profit from the plutonomy? Should investors be buying Plutonomy stocks in Asia instead of the U.S.?
Mr. Kapur: My global plutonomy basket has almost tripled off its lows. In Asia, there are some luxury hotels and luxury-car retailers and distributors and watch retailers, but those stocks have already done very well, they’re up more than four times from their lows. I would focus on the more well-known global brands.

WR But aren’t luxury stocks and plutonomy stocks far more volatile than the broader stock market?
Mr. Kapur: Yes, of course. That’s because the volatility of the earnings stream for these companies is much higher than the average retailer or average Dow Jones Average company. Most people need to buy toothpaste or broccoli or daily needs, while plutonomists may get a lower bonus one year and decide not to buy a plutonomy item. Plutonomist consumption is almost 10 times as volatile that of the average consumer.

WR: If the spending of the wealthy is 10 times more volatile than the average, and our economy is dominated by spending of the rich, aren’t we headed for more booms and busts caused by the plutonomy?
Mr. Kapur: Yes, by definition. If plutonomists dominate consumption and incomes, the rest of the economy will become more volatile.

WR: What are the political implications of a rising Plutonomy today?
Mr. Kapur: We have an economy today where a large fraction of the population doesn’t pay federal income taxes and, because of demand for entitlements, we have a system of massive representation without taxation. On the other hand, you have plutonomists who protect their turf and the taxation amounts are not enough to pay for everyone’s demand. So I’ve come to the conclusion that budget deficits are biased toward getting bigger and bigger. Budget deficits are going to become a manifestation of a plutonomy.

WR: Are there any other political implications?
Mr. Kapur: Well, with plutonomists in emerging markets…you have these huge economic developments, and there are certain folks who are risk-takers or entrepreneurs, who are in the midst of all this complexity and change, who will benefit quite substantially from that growth. I don’t know how anyone can reverse that. I don’t know whether you would want to reverse this process since the prospects of becoming a plutonomist drives the risk-taking.

Rich Investors Trust Bankers More than the Press

After the mauling they experienced in the past few years, the rich might be forgiven for losing trust in their bankers and wealth advisers. But apparently, there is one group they trust even less: the press.

A survey from SEI, which, which polled investors with $5 million or more in investible assets, asked respondents where they they get the most trusted investing information. The overwhelming majority (87%) said they consider industry professionals (bankers, wealth advisers) to be the most trusted source of investing information. Only 17% said the press was the most trusted source. None of the respondents chose the third category, which was peers.

We should take these results with a boulder-size grain of salt, of course. The company that conducted the poll, SEI, is a wealth-management and asset-management firm that is in the business of trying to win more rich clients. Its obviously in their interest to say that the wealthy trust companies like theirs.

Still, I am surprised that after so many Wall Street conflicts have been exposed–Goldman Sachs Group’s Abacus deal, the Merrill Lynch prop-trading settlement, the State Street settlement–wealthy investors still trust information from their bankers more than the press.

Of course, as a member of the press, I am not exactly objective either. And the press can always be faulted for not uncovering some of these conflicts earlier or giving them enough attention.

Who do you trust more for investment information? Bankers? The press? Your peers?

Are High Taxes Driving the Rich Out of Connecticut?

Beware the angry Golden Goose.

From California to New York to New Jersey and Washington state, state governments considering higher taxes on the wealthy are all being warned against pushing their rich residents too far. If the so-called Golden Geese leave, some argue, the states will face dire financial consequences.

The claims are supported by a string of independently produced research reports. We have heard reports on Maryland, New Jersey and most recently, Rhode Island, all saying that if the tax bill for the rich is too high, they will move to lower-tax states. Since these Golden Geese pay the bulk of income taxes, the theory goes, states risk losing one of their main sources of revenue and jobs.

The latest report on the subject comes from Connecticut. The Connecticut Policy Institute, a think-tank founded by Tom Foley, the Republican former candidate for governor, just released a report called “Don’t Kill the Golden Goose,” that says the state’s income tax rate of 6.5% is chasing out high earners and much-needed tax dollars.

The report states that the 9,506 Connecticut taxpayers who earned more than $1 million in 2008 paid more than a quarter of the state’s income taxes ($1.28 billion of $4.79 billion). It argued that more than 6,000 taxpayers (of all incomes) have left the state every year since 2003, when the income-tax rate climbed to 5%.

“As rates go up, we know the size of the golden goose goes down,” the report stated, adding that “Connecticut needs its high earners to support its ailing economy and pay its debts.”

All of which sounds reasonable. But the report fails to answer some fundamental questions about the migration patterns of Connecticut’s Golden Geese. Among them:

1–How many rich people are actually moving out? It isn’t until deep into the report that we find out how many high-earners are really leaving. As it turns out, very few. In fact, their numbers have actually increased as the state’s income tax has gone up. “In 2005, Connecticut had 8,793 taxpayers with incomes over $1 million. In 2008 there were 9,506,” the report states.

What gives? The report argues that if you inflation-adjust for 2005 dollars, the number of high earners would drop by about 200 a year or about 2%. Still, not exactly an exodus.

2–Are taxes the reason? Even if we use the inflation-adjustment to take down the 2008 number, how do we know why or even if high-earners moved out? It is possible that some previously high earners simply fell below the $1 million-dollar-a-year mark because their incomes fluctuated. In the land of hedge funds, this seems to be just as likely as people moving to Florida.

It also is unclear whether the population of high-earners in Connecticut is aging and simply moved to warmer, more golf-friendly climes.

3–Where do they go? The report doesn’t break down the destinations. Still, it says many go to Florida and New York. Florida, of course, has no state income tax. But New York state has a top tax rate of 8.97% and New York City’s top rate is 3.876%. Combined that is nearly twice as high as Connecticut’s tax. If the rich decide where to live based on taxes, why would they be moving to a higher-tax city? Perhaps because the quality of their life matters as much or more than the quantity of their taxes–-up to a point, of course.

Do you think the Golden Geese are fleeing Connecticut? If so, are taxes the reason?

Raising Taxes on the Rich. Cuz the Bible Tells Us So?

Politicians who want to raise taxes on the wealthy tend to use the same fundamental arguments. They talk about fair share. Or rising inequality. Or the excesses and rigged economics of the rich.
Minnesota’s governor is resurrecting an much older argument: the bible.

In his state of the union speech, Minnesota Gov. Mark Dayton called for higher taxes on the wealthy. The plan was cornerstone of his election campaign and even though such calls have been beaten back in Washington, they still ring out in the more-populist heartland.

In his speech, Mr. Dayton didn’t demonize the wealthy or talk about fair share or excess. He seemed to address them directly and he have them high praise.

“Some will criticize me for proposing next week to ask those successful businessmen and women and other wealthy Minnesotans to pay higher taxes,” Dayton said. “I ask them for their forbearance during this fiscal crisis, which I did not create, but inherited, and now, with you in the Legislature, must solve. I ask Minnesota’s business leaders and other most successful citizens to give us two years to turn this Ship of State around.”

Then, he invoked scripture.

“My father’s favorite quote was from the Bible. ‘To whomsoever much has been given, of him shall much be required.’ You have achieved so much. I ask you, please, to help your state, your children and grandchildren, your friends and neighbors, to regain what you and I have enjoyed so much and benefited from so greatly during our lives here in Minnesota. Please—help us restore Minnesota to greatness.”

Bringing the bible into wealth arguments is nothing new of course. Those on the left have long invoked the image of the Camel and the eye of a needle. John D. Rockefeller often said he was simply fulfilling God’s wishes by gaining huge wealth.

And it remains to be seen whether his plea will be squashed by lobbyists, voters or the wealthy. As the Minnesota House Speaker Kurt Zellers of the GOP said: “When you take away all the fancy words…it’s tax and spend. It’s more government spending by raising taxes.…That’s not where we are at.”

Yet Mr. Dayton’s religious take on taxing the wealthy is a clever piece of rhetoric in a highly religious state. Whether it works or not, he gets credit for coming up with something a little different in the increasingly predictable debate over taxing the wealthy.

Do you think the bible offers a case for taxing the rich? Are there any examples in the bible that could be used to oppose it?

More Super-Rich Investors Get U.S. Citizenship

Britain is entangled in a new debate over allowing rich people to “buy” citizenship. Its Home Office, according to the Financial Times, is about to make it easier for the wealthy to become citizens based on their investments.

Specifically, the moves would shrink the wait times needed for residency to two years from five years for those investing £10 million ($16.1 million). (Those investing £1 million still have to wait five years.)

Britain’s move highlights the global race to lure the rich. Some countries, such as Singapore, use tax incentives as bait. Others, such as Dubai, are doing it with man-made islands and apartments on the 140th floor.

The U.S., of course, already has a program allowing rich investors to “buy” residency. And our price is lower than Britain’s. According to the Department of Homeland Security, foreign investors have to invest only $500,000 to get residency, provided they meet other restrictions. They have to invest in a rural or underdeveloped community and they have to create at least 10 jobs, either directly or indirectly. They have to invest $1 million or more if they aren’t investing in rural or underdeveloped areas. (They are eligible for permanent residency after two years and citizenship after another five years if they meet criteria.)

What is interesting is how many rich people have applied and succeeded in getting investor residency. According to data provided by the DHS, the number of “Alien Entrepreneur” or I-526 approvals have more than tripled since 2007. They have gone up every year since 2004. Click here to see an interactive chart of the DHS data.)

What does this tell us? First, it tells us that for all the hue and cry over rich people wanting to leave the U.S. because of higher taxes and regulations, there is an increasing number of rich people who want to move in. This doesn’t mean their numbers are equal. It just means that for many nearly 2,000 wealthy foreigners in 2010, the U.S. was their most desired residence.

Second, it tells us that perhaps the U.S. could make the program even more successful–and profitable–if they followed Britain and shortened the wait times. Maybe the U.S. could offer six-month residency for those investing $5 million. And for those investing $10 million, maybe they could offer instant citizenship and throw in one of those “new neighbor” coupon books for discounts on Rolls Royces and Trinity yachts.

Do you think the U.S. should expand is “Alien Entrepreneur” program or is it just another unfair loophole for the wealthy?

The Lamborghini Yacht

In the world of luxury mash-ups, we have seen the Porsche Kitchen, the Hermes Helicopter and the Versace private jet.

Now comes the Lamborghini yacht.

Fenice Milano, the auto aftermarket specialists, and Mauro Lecchie, the Italian designer known for producing cars, have teamed up to create a prototype of a yacht inspired by Lamborghini. As you can see from the pictures, the wedge-shaped hull has all the sinister-looking details we have come to expect from Lambos–the sloping nose, the angled vents, the roaring engines.

With giant twin engines and body made of wood and Kevlar, the Lambo boat “combines high performance and low power consumption,” according to its makers. The company hasn’t given out the exact engine specs or speed.

Driving a Lambo boat is likely to be far more comfy than squeezing behind the wheel of its namesake. The cockpit has two outside stern decks, a double sofa bed, a bar and entertainment center with large windows. The interior also has a bathroom and separate shower, in addition to a guest bedroom with bathroom on the bow. (Unlike another new yacht, which will spray champagne from its showers, the Lambo shower appears to be limited to water).

There is no information yet on the boat’s price or availability. But it is likely that the buyers will similar to the Lambo demographic–young, male and loaded.

What do you think of the Lambo yacht?

Super Bowl Breaks Record for Private-Jet Traffic

The teams may have billed themselves as blue-collar icons, but Super Bowl XLV was one of the poshest yet.

According to a report on Dallas TV, Sunday’s Super Bowl likely set a record for private-jet traffic. The report said that right after the game, 400 private planes left DFW International Airport, 191 took off from Dallas Love Field and about 20 took off from Denton Municipal.

The total of more than 600 easily tops the private-jet swarm over Phoenix in 2008. That game hosted about 400 private jets and set a record for Super Bowls, according to private jet companies.

One fixed-based operator in Dallas quipped that this year’s planes were all for Green Bay fans.

Joking aside, the private-jet tally is yet another reminder that life is largely back to normal for the super-rich Super Bowl fans.

J.P. Morgan estimates that demand for private aircraft lags the corporate-earnings cycle by about two years. That suggests that corporate buyers will begin to re-enter the market as buyers of private jets in the next year to 18 months, according to the Private Jet Company, an industry research firm and broker.

That isn’t to say prices for jets are back to pre-crisis levels. Gulfstreams are still selling at 50% of their peak. Inventories of unsold planes continue to rise, though they are increasing more slowly than in 2009.

But Sunday’s private-jet confab suggests that private jets are climbing again, at least for big events.

Would You Invest in a Ferrari Fund?

In 2009, it looked like all those investment funds based on collectibles–art, wine, mansions–were little more than fee generators.

Castlestone Management’s Collection of Modern Art Fund fell more than 20%. The Vintage Wine Fund fell 33%. As for high-end real-estate funds, well, there’s no need to tell you.

Of course, most markets fell, and some collectible markets may have fallen less than stocks. Yet measuring the market for collectibles is a highly subjective. One art index may show an increase in the art market of nearly 20%, while another may show a decline of 5%, depending on the paintings selected. That’s not to mention the hidden auction fees, taxes and other fees buried in these funds.

Yet somehow, magically, collectibles funds are back. With auction prices setting records again, fund managers are cashing in by creating all manner of new funds. The pitches are all the same: collectibles are irreplaceable and rare, so prices can only go up. (This reminds me of the Florida mansion developer in Vero Beach who told me “They’re not making any more beachfront”–just before he went bankrupt.)

The latest entrant is the Classic Car Fund, managed by the Count of Custoza Family Office Ltd Zurich/Switzerland. The website is filled with drool-inducing photos of vintage Ferraris and Bugattis and praise for the eternal value of old, finely-crafted autos. Its board includes several European car collectors, auctioneers and a historian.

The fund’s prospectus is in German, so good luck trying to read it. But a fact sheet on the company’s web shows that old Ferraris won’t be its only investments. The site says “the fund will, under normal circumstances, invest between 20% and 100% of the total assets in Classic cars,” and that the “Investment Manager has the possibility to reduce the weight to zero.”

The fund also will invest in auto stocks “and closely related industries” as well as commodities. The fund also may invest in “derivatives and futures, which may be designed for hedging purposes.”

Given the fact that the market for vintage cars is far less liquid than the stock market, it is understandable that the fund would seek other kinds of investments for returns and hedging. But I’m not sure that auto stocks, commodities and derivatives are what most people think of when they think of buying vintage cars.

And if you can’t drive it, what’s the fun?

Would you invest in a collectible car fund?

Do Rich People Make Good Ambassadors?

Four years ago, I was at a cocktail party and met a newly appointed ambassador to a Latin American country. “Ever been there?” he asked. I said I hadn’t.

“Me neither,” he said. “I hope the food’s decent.”

It goes without saying that his primary qualification for the Ambassadorship wasn’t his detailed knowledge of the local political landscape. The fact that he was one of the largest donors to the re-election campaign George W. Bush just might have been a little more relevant.

The appointment of rich people to ambassadorships has a long history, dating to Gouverneur Morris’s appointment as ambassador to France, replacing the equally aristocratic Thomas Jefferson. It is one of the rare presidential traditions that stretches across both parties and practically all presidents.

Presumably, the wealthy do a fine job in their overseas posts. Sometimes, however, the skills of the rich can collide with the daily demands and realities of foreign diplomacy. Consider Cynthia Stroum.

Ms. Stroum, according to news reports, was one of President Obama’s top 25 fund-raisers and bundlers. Her father was a reknowned Seattle entrepreneur and venture capitalist, and Ms. Stroum describes herself as an angel investor and philanthropist.

In 2009, she was named ambassador to Luxembourg. How much harm could she do in the embassy of Luxembourg: population less than 500,000? Well, plenty, according to a report from the State Department’s Inspector General’s office.

(Ms. Stroum, who resigned, couldn’t be reached for comment. In a statement quoted in news reports, she said she that “As the U.S. Ambassador, I have served my President and his Administration with great honor as I’ve traveled through the Grand Dutchy of Luxembourg,” she said, adding that “. . . I am extremely proud of the relationships that have been built both professionally and personally.”)

The Inspector General’s report said Stroum’s “confrontational management style, chronic gaps in senior and other staffing caused by curtailments, and the absence of a sense of direction….”
Senior staff members even volunteered for duty in Afghanistan and Iraq just to get away.

My favorite parts of the report relate to her spending and its distraction from her duties.

Shortly after taking the post, Ms. Stroum bought a new queen-size bed and box spring, since she was “not pleased with the condition of the (residence’s) mattress, and preferred a queen bed to the king-sized bed already provided,” the report stated. She was turned down twice for reimbursement, but eventually got approved for the money.

An employee at the U.S. Embassy spent six weeks looking for a temporary home for the ambassador while the main residence was being renovated. More than 200 residences were screened and then narrowed to four. But she deemed all four “unsuitable.” Eventually she found one. But she spent a lot of time overseeing the renovation.

“The Ambassador is keenly interested in the remodeling of the bathrooms at the (house) and has stated her desire to approve the materials used in these rooms,” the IG wrote.

What do you think the practice of appointing the wealthy as Ambassadors?

How to Invest Like the World’s Richest Man

No, this isn’t an article about Bill Gates or Warren Buffet. It is about Carlos Slim, who has been pulling far ahead of his two closest competitors in the race for world’s richest man.

Bloomberg reports that Carlos’ publicly disclosed holdings soared 37 % to $70 billion in 2010. Meantime, Warren Buffett’s returns were a more modest 22%, while Bill Gates’ shares in Microsoft fell.

Bloomberg, which is challenging Forbes to become the world’s wealth tracker, says Gates’ publicly disclosed holdings were only about $26 billion at the end of 2010, down 8% from 2009. Forbes, by contrast, pegged Gates’ wealth at $54 billion in its latest list of richest Americans. Bloomberg says it doesn’t include money that Messrs. Gates and Buffett have donated to charity.

Bloomberg also reports BOTH that Gates’ investment vehicle, Cascade, has disclosed only $5.8 billion in holdings on the stock market and that Cascade accounts for more than $37 billion of his fortune.

So how did Slim do it?

Mainly by keeping his money at home in Mexico and selling into the gold rush.

Telefonos de Mexico, the state-owned monopoly he acquired, was a dud last year, but his stake in American Movil soared 15%. Shares of his holding company, Grupo Carso, doubled with a mining spinoff, Bloomberg says. Shares in the spinoff have jumped 80% since the debut last month.

His biggest loser was his stake in the New York Times, down 21%. His best-performing foreign holding was department-store chain Saks, up 64%, according to Bloomberg.

Of course, it helps to have Slim’s overwhelming power and market share in Mexico, which is hard to replicate in many other countries.

Yet his investing gains in 2010 may hold a lesson for the U.S. rich: that they really need to increase their investment exposure to markets abroad.

The Rage Against Billionaires

Rancho Mirage seems an unlikely hotbed of political activism. The resort community just outside Palm Springs, Calif., is laced with golf courses, mansions and homes of old Hollywood stars. When I ate dinner at Roy’s there last year, there were three Rolls-Royce Phantoms valet-parked out front.

But this weekend, Rancho Mirage was host to a new brand of political activism: an antibillionaire rally. Roughly 800 to 1,000 people gathered to protest the fact that the billionaire Koch brothers were meeting at the town’s Rancho Las Palmas Resort & Spa to chat with politicians, strategists and other members of the right-leaning rich and powerful.

The left-leaning activists were there to protest what they say is the Koch’s undue influence on government. They see Charles and David as the evil duo behind a vast right-wing conspiracy to ruin the environment, worker rights and government. Their placards read: “Medicare for All,” “Troops Home Now” and “Tea Party Founded and Funded by the Kochs.”

The police came out in force, according to local news reports. They sent out 60 deputies in riot gear and a helicopter to kept the crowd in line. A few officers were perched with guns on the resort roof. About 25 people were arrested.

“I felt like I was in Egypt,” said protester and Palm Springs Councilwoman Ginny Foat.

Rancho Mirage isn’t Egypt, of course. And raging against two mid-Western energy tycoons gathering with their GOP pals over gin and tonics at a golf club is hardly akin to the rebirth of democracy the world’s most volatile region.

Still, the Koch protest is a small watershed of sorts. It is the first time I can remember that political protesters gathered specifically to attack billionaires.

As the L.A. Times points out in an editorial, rich political activists exist on both sides of the aisle. Will we see protests against the left-leaning salons held by George Soros or Warren Buffett? If Glenn Beck has his way, we might.

Billionaires have political views (often strong ones) and they aren’t afraid to use their money to support them. There are activist billionaires on all points of the political spectrum, and their influence often is kept in check by each other. In the end, it is unclear what impact they really have on the country beyond funding a vast industry of think tanks, panel discussions, vanity publications and golf retreats for legislative aids.

And as the Times editorial points out, “If you’re going to raise a fuss about political spending, it would be more honest to cast a spotlight on it even when the money comes from people you agree with.”

Do you think we will see more billionaire backlash protests?

Top 10 ‘Bad Ideas’ for Taxing the Rich

In this humor piece for The Wall Street Journal on taxing the wealthy, Scott Adams–the “Dilbert” cartoonist, management guru and political philosopher–proposed some admittedly “bad ideas” on how to get the rich to pay more.

He talked about giving more votes for those who paid more taxes. He proposed thank-you cards for those who receive tax dollars to those who provide them. He proposed that the rich could use car-pool lanes or handicapped parking lots if they paid above a certain amount.

Adams wrote: “If you think that solving the nation’s fiscal problems is the job of elected officials, you have to ask yourself how that’s working so far. The solution, if it exists, won’t be anything that looks like normal business. The rich have the money, and they aren’t going to give it up for nothing. I know because I am one, and yes, we do hold meetings.”

More than 350 readers responded to Mr. Adams’ call for more bad ideas on getting the rich to pay more. Most of them call for more government cuts, which clearly isn’t happening in Washington. I have sifted through all the suggestions and compiled a Top 10 favorite reader ideas for taxing the rich differently. Here it is:

1–Naming Rights. Depending on your tax bill, you get naming rights for federal property such as highways, bridges, etc.

2–Frequent Flier Points. One reader wrote: “High income taxpayers would accumulate points based on their tax percentile, which could then be redeemed for the ultimate status symbols: merchandise frankly (yet discreetly) proclaiming the bearer’s high income bracket. Imagine, for example, a metallic Coach tote with a sterling ’1%’ charm on the zipper, proclaiming that the woman carrying it is in the top 1% of US taxpayers. And what businessperson wouldn’t want the Montblanc half percent pen, with a simple ‘.5%’ engraved in the snowy tip of the pen? Those in the know would recognize and respect these symbols of achievement.”

3–A Parade. On April 15, rich people who paid more than $500,000 in taxes could march down Constitution Avenue and shake hands with the President and members of Congress at the end.

4–Tax the Foreign Rich. We should provide “expedited citizenship” to immigrants who will buy a home for a value of at least $300K-$400K. This will reduce our excess housing stock, bring capital into the country and probably bring in productive taxpayers.

5–Access Passes. The rich would get preferred access to public parks/national museums.

6–Exemption from jury duty.

7–The “Fat Tax.” Impose tax incentives tied to a person’s overall Body Mass Index (BMI), as well as a % change in BMI versus the prior tax year.

8–A telethon. A 24-hour live TV auction offering one-on-one experiences with 1,000 “A-List” Stars of entertainment, sports, business and politics with 100% of proceeds earmarked to help fund a specific U.S. Government program. Experiences might include lunch with the President, a concert with Lady Gaga and helicopter skiing with Will Smith. All proceeds would go to taxes and the stars would revel in the patriotism of helping the government.

9–Rent out paintings and other artifacts from the Smithsonian. “The Smithsonian provides 1,000 treasures that are each available for one-year (or more) rentals at $50+ million (plus shipping) annually to the highest (sealed) bidder,” one reader suggested.

10–Shame. Anyone who agrees to pay a higher tax rate will be exempt from having their names published in the local newspaper. Rich people, after all, hate adverse publicity.

Which of the 10 “bad ideas” above could actually work?