Andrew Carnegie, one of the world’s first billionaires, encapsulated his acquired wisdom on making money with a simple phrase: “As I grow older, I pay less attention to what men say, I just watch what they do.”
Those words echoed in my mind a few months ago as I settled into one of the comfy armchairs at the Old Head Golf Club, keenly earwigging the hushed chat between a pair of obviously well-to-do Americans sitting nearby.
“So, where you gonna find 5% next year in a market that looks pretty jaded?” asked one.
“I’ll do what I always do — buy whatever Warren or Jeff is buying,” came the answer. Clearly meaning Mr Buffett and Bezos, worth $82bn and $130bn respectively, it was a response as brief as it was financially astute.
Billionaires don’t get to be billionaires by making poor decisions and are as good a fiscal barometer as any other market gauge.
Where it all matters most — on the bottom line — billionaire-controlled companies have returned almost twice the average market performance over the past 15 years, according to findings of the annual UBS and PwC Billionaires Insights report.
From 2003 to the end of 2018, billionaire-controlled companies listed on stock markets returned 17.8%, compared with just over 9% on world index.
America added another 33 billionaires, fuelled mainly by tech magnates who saw their wealth increase more than any other sector.
Despite slowing growth last year, billionaire wealth is still over a third higher than it was five years ago, with the number of female billionaires also rising since 2013.
“The billionaire boom of the past five years has now undergone a natural correction,” says Josef Stadler at UBS Global Wealth Management. “The stronger dollar, combined with greater uncertainty in equity markets amidst a tough geopolitical environment, has created the conditions for this dip.”
Nevertheless, billionaire businesses continue to thrive.
“Billionaires are creating and steering businesses that consistently outperform equity markets. This business acumen has also translated into their philanthropy, as billionaires seek new ways to engineer far-reaching environmental and social change. This ‘Billionaire Effect’ is alive and well across the world — and shows little sign of slowing,” according to the report.
Such an effect comes about due to personality traits shared by most billionaires, including calculated risk-taking, savvy business focus, and unwavering determination.
In an effort to help address the climate and social dilemmas facing the world, billionaires are moving on from traditional grant aiding to focus on strategic philanthropy.
Championing a variety of causes, they are increasingly collaborating with other billionaires, NGOs, charities and governments to invest for the long term.
The areas of education and healthcare tend to benefit most from their philanthropy, with increasing investment in sustainable finance, environmental projects, and climate change programmes.
“Billionaires have taken up their responsibilities and a growing number of them are active in tackling world epidemic issues,” says Marcel Tschanz at PwC Switzerland.
“The broad public is just catching up with our self-made entrepreneurs, who in the past years have transformed, innovated, and become more strategic in their ways of doing good.
It is up to all of us now to follow the leadership role billionaires have led, raise the power of technology and push for change,” he says.
He adds, however, that even of all the billionaires donated their wealth, they would not bridge the funding gap, estimated at $7 trillion, under the UN Sustainable Development Goals.
Given the growing shift in economic activity toward the East in recent years, it is little surprise that Chinese billionaires are now major players in the global rankings.
Growing to over 325, the billionaire effect is clearly thriving in China’s robust economy. During 2017 alone, the country produced two new billionaires every week.
In tandem with the growth of Asian economies, female billionaires are fast becoming another expanding sector, having recorded a 45% surge over the last five years and over half of the female billionaires are entrepreneurs in the Asia-Pacific region, bolstered significantly from China.
Trying to understand the mechanics of a billionaire’s mind can be like trying to catch the proverbial mercury, however. Sometimes these gifted masters of financial science reveal more with a throwaway phrase than can be found in a weighty biography.
Patience is clearly a virtue, according to the world’s most famous billionaire.
“No matter how great the talent or efforts, some things just take time,” said Mr Buffett. “You can’t produce a baby in one month by getting nine women pregnant.”
And indeed, the legendary ‘Sage of Omaha’ added another codicil: “Of the billionaires I have known, money just brings out the basic traits in them.
If they were jerks before they had money, they are simply jerks with a billion dollars.” An ability to ignore naysayers is another shared trait: “If you’re not stubborn, you will give up on experiments too soon,” said Amazon’s Mr Bezos.
“And if you’re not flexible, you will pound your head against the wall and you won’t see a different solution to a problem you’re trying to solve.”
In the end, all billionaires are persistent, an attribute Jack Ma, chairman of Alibaba, knows well: “Never give up. Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine.”