Wealth concentration. Pay attention. This will become the new metric.
Kapur told clients in 2005 that the United States and a handful of other economies were developing into “plutonomies” where the wealthy few powered economic growth and consumed much of its bounty, while the “multitudinous many” shared the leftovers.
Plutonomies come around only once or twice a century, he argued — 16th century Spain, 17th century Holland, the Gilded Age. The last time it happened in the United States was during the “Roaring 1920s”.
There was money to be made by buying shares of luxury companies that made toys for the rich, he told clients, suggesting a basket of stocks that included upscale retailer Burberry and luxury home builder Toll Brothers.
“When I presented this to clients, they said, ‘Okay, this is interesting because you’re telling me what happened in the 1920s is happening right now, and you obviously know what happened after 1929, right?’,” Kapur said in an interview.
His response? That can’t happen again because we know better now.
“To be perfectly honest…. I certainly didn’t think it would all melt down in 2007. I’d be lying if I said that.”
Dispatches From The Front 