THE Super Ultra Wealthy Man can see the future, he sees horror ahead
- Thread starter Ucan'tEatBonds
- Start date
Actually, it's more fair then you think. Let me elaborate. Both CEO's and actors are long call options (many CEO's literally). AND most CEO's, like actors do not get most of their income directly. With actors their income might come predominantly from the night shift at Denny's, and with CEO's it comes from stock compensation and return on overall wealth. Just as Tiger Woods has made a majority of his income OUTSIDE of Golf (endorsements).
My overall point is the old "CEO's make too much argument is erroneous" Most CEO's in this country are actually small business owners. And most earn little to no income. But we don't berate them. They are the losers. No, we go after the outliers, it's more fun. The secondary point, there are certain fields that have convexity embedded in them. Such as professional sports, acting, business ownership and dare I say.....derivatives trader? The downside to this of course is high degree of failure and in many cases, bankruptcy.
Yet these outliers are what many people strive for in their life. Others trade in the dream for stability. I've often said teachers have one of the highest career sharpe ratios in the market. They have almost zero variance, great job stability, good benefits, rewarding career and most retire with a million dollar pension in future benefits.
There is always going to be inequality somewhere in some form. Even among the outliers. Is the world going to come to an end because of it? Well, actually, the world will end in the pretty distant future when our sun will die out and the Earth will be no more along with our solar system. But we have about 3 to 5 billion good years left. So we have that going for us...
I surely hope the world will end a lot earlier, in fact I am glad I do live now and not in 100 years. (though one of the most annoying things still up till now is the incredible time wasted on travel).
And YOU have top clearance and this is why you know there are underground cities built across the US? Or do you read/listen to conspiracy theory websites/radio to get your credible information?
Nope, what is erroneous is lumping all CEOs together, small business owners and hired managers running AIGs and GEs of the world (just as it's wrong to lump institutional traders with retail-sized ones). The value added as a function of personal risk for a hired manager is pretty low - there have been numerous studies about it.
In the US, inequality is mitigated by transfer payments ... social security, medicare, food stamps, and other social assistance mechanisms. And in countries where inequality and poverty is even greater, we don't see millions of pitchforks.
http://en.wikipedia.org/wiki/List_o...aviewer/File:World_Income_Gini_Map_(2013).svg
http://en.wikipedia.org/wiki/Inequality_in_post-apartheid_South_Africa
Value added does not equal economic results. Also demonstrated time and again are value traps in business models that benefit the consumer, but not the business. Certain smart people, like Warren Buffett, are able to extract value while providing little in return. While others provided tremendous value, but gained relatively little, such as Tim Berners-Lee. http://money.uk.msn.com/news/rich-lists/photos.aspx?cp-documentid=154575427&page=1
The original argument is that most senior corporate managers are somewhat overpaid. I have to agree at least partially (and I am one of them, too). The main argument was about inequality - at the limit, it does lead to a police state or social unrest, though I doubt the US is anywhere near that limit.
I thought the argument was about income equality. Arguing about senior corporate managers, especially the ones talked about in the media, I mean how many people are in that data set. They are not about Larry who is pulling down 800k at TI. They are talking about the Jack Welch's of the world pulling down tens of millions of dollars. And I ask again, in a country of 330 million people, how many Jack Welch's are there figuratively speaking? Maybe 100, 200? And how many people are in the data set of the so called poor working man, 100 million, 150 million? Sle, you can't take a data set of 50 or 100 people and compare the mean to that of 150 million people. Not saying "you" are doing that, but that is my argument against the article and those like it. If we are going to talk about the winners of long options, then let's include all those played and failed and all those who played and make no more then the avg working man. You can't leave those people out of your data set. This is not about whether Charles, your managing director is a value add to your firm. It's pointless to debate at the granular level. My point again is that these so called "winners" in the CEO game are few and far between. There are more highly paid professional athletes then CEO's.
That much is abundantly clear, let me assure you...