This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Where Wealth Thrives and Innovates

Stocks in this article: AAPL FDX WMT SBUX MCD

By Frank Holmes

NEW YORK ( TheStreet) -- A surprising wealth of information about the world's most prosperous people can be discovered in two new reports. The Chinese Millionaire Wealth Report 2012, put together by GroupM and the Hurun Report, found there are now a million millionaires in China.

On average, a Chinese millionaire is 39 years old, has an average of four luxury watches, vacations in France, and owns a business.

KPMG's The Wealth Report 2012 found there are 18,000 centa-millionaires (those with $100 million in disposable assets) in Southeast Asia, China and Japan, more than those in North America (17,000) and in western Europe (14,000). Most of the wealthy with $10 million or more are business owners.

Over the next five years, wealth is set to rise rapidly across the Asian continent: KPMG estimates that centa-millionaires may increase by 114% in India, 76% in Russia and 65% in Hong Kong. This compares to a slower rise in wealth in the U.S., at 23%.

We believe it's important to follow where wealth is being created and where these successful people reside, travel and do business. I believe these trends reveal subtle clues about how well money is treated around the world, especially from governments: Do countries pursue capitalist policies to encourage these wealthy people to stay, create businesses and grow jobs? Or do governments put in place socialistic policies that restrict innovation or push wealthy individuals to take their money elsewhere?

There are many reasons 50,000 Germans live in Silicon Valley, and 500 startups in the San Francisco Bay area have French founders, says The Economist. In the U.S., the land of meritocracy and opportunity, businesses not only have the "freedom to fail" and plenty of funding for entrepreneurs, they also don't have the level of bureaucracy as you see in France.

For example, "the cost of paying out large severance packages (six months of severance pay is typical even for very recent hires) can be a huge drain for a small company," says the magazine. European startups also find it difficult to offer stock options and free shares because of the "legal complexity of giving new hires free shares is prohibitive."

There are so many limits in countries across Europe that there's a "dearth of the sort of entrepreneurial successes which would serve to inspire others; very few people think that going to work for a loony in a garage offers a long-shot at millionairedom."

In other words, companies such as Apple (APPL), Fedex (FDX), Wal-Mart (WMT), Starbucks (SBUX) and McDonald's (MCD) aren't as likely to be created in Europe. The barriers to entry are too high.

Read The Economist article here.

In The Wealth Report, Buiter believes there will continue to be a greater leaning toward socialistic tendencies. He says, "Government may use more taxation instruments and globally there may be a further attack on tax havens. Recent governmental and intergovernmental activity in these areas is not a passing phase."

The latest example making headlines these days is the proposed 75% tax increase on the wealthiest people in France in order to "pay for one of Europe's most generous social welfare systems and a large government."

This tax increase is causing many individuals and businesses to consider relocating. The New York Times indicated that "many companies are studying contingency plans to move high-paid executives outside of France."

Start-ups -- those businesses that are especially sensitive to any added cost to business -- are also said to be delaying plans of investing in the country, says The Times.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,779.11 +0.96 0.01%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs