THE 'OFFENSE' BUSINESS CONTINUES TO BOOM

The U.S. government is still spending... and "offense" contractors are still raking in billions.

A little over a year ago, we noted how the U.S. is involved in so many foreign wars that defense contractors should be called "offense" contractors. We also noted how many folks warned against investing in this industry... due to an expected reduction in government spending. But today's chart shows this hasn't been the case at all...

Our chart displays the performance of "offense" contractors Northrop Grumman (NOC) and Lockheed Martin (LMT) over the past two years. They produce things like jet fighters, missiles, radar systems, and unmanned aerial drones. They rely almost entirely on government spending.

And as you can see, the government is still spending plenty of money on offense. Shares of both Northrop and Lockheed are up about 100% over the past two years – and nearly 80% since our first note. Last week, both stocks hit new all-time highs. Despite claims to the contrary, no cutbacks are affecting these stocks.

Tom Brady Could’ve Been The Tom Brady Of Merrill Lynch

A Stubborn NYC Tenant Held Out For An Absolutely Insane Amount Of Money

There are many valid arguments for and against the concept of rent control. Generally speaking, if you live in a city that has rent control, there are strict rules to how much your rent can be raised every year. For someone looking to rent for a long time, rent control is the greatest thing ever. Your goal should be to lock in a lease at an apartment you absolutely love, then never leave. My neighbors are an elderly couple who have lived in their apartment for over 20 years. They currently pay $700 a month for an awesome apartment that would easily rent for $2500 if it was on Craigslist tomorrow. Their landlord is essentially losing $1800 every month. Another major downside for rent-controlled landlords is that it's basically impossible to kick tenants out. 

This can be a real problem for an owner who is interested in remodeling or demolishing the entire building. The building owner either has to be patient enough to wait for the current tenants to move on their own… or die. If time is of the essence, there's one other option to get tenants to leave: Pay them. And in a city like New York, where real estate is more precious than gold, paying off tenants can be an extremely expensive endeavor. Then there's the story of Herbert J. Sukenik. Herb Sukenik held out for an absolutely insane amount of money to finally vacate his dingy 350 square foot Central Park apartment. It's the most money ever paid to get a single tenant to leave an apartment in New York, possibly the world.

Stubborn NYC Tenant

Herbert Sukenik was born in the Bronx, New York in 1930. He attended Cornell University where he earned an undergraduate degree in physics. He then stayed at Cornell to earn both a masters in physics and a Ph.D. By all accounts, Herb was brilliant. He was also a bit of a social outcast. He worked for General Electric for a while then at Martin Company in their Space Systems division. In 1974, Herbert, who had become somewhat of a recluse, rented a tiny 350 square foot apartment in the Mayflower Hotel building. He never married and seemingly had no friends or family. He basically lived like a hermit for the next three decades.

The Mayflower Hotel building sat on what was arguably the most valuable and highly coveted real estate in the world. Located at 15 Central Park West, the building was situated perfectly for someone to build luxury condos that would fetch tens of millions of dollars apiece. Possibly more. Seeing the obvious potential this property presented, in 2004 the entire building was purchased by real estate tycoons Arthur and Will Zeckendorf for $401 million.


The Zeckendorf brothers quickly began the process of paying off each one of the current tenants to move. Many of the early tenants accepted the first offer: $650,000. That left just a few holdouts. Those early birds should have held out longer because the move-out offer was raised to a mind boggling $1 million. All the remaining holdouts accepted, except one: Herb Sukenik.

At first, Herb offered to vacate his unit if the Zeckendorfs bought him a 2200 square foot, two bedroom apartment in a building nearby, then rent it back to him for $1 a month, for the rest of his life. The Zeckendorfs agreed. But then Herb suddenly backed out. Herb probably realized he was the lone holdout and these developers had very deep pockets. He demanded money. Lots and lots of money. Flabbergasted and unwilling to be held hostage, the Zeckendorfs began demolishing the building anyway. They hoped to drive Herb out from all the construction hassle and noise. Herbert was undeterred.


After living in a construction zone for over a year, Herbert's stubbornness finally paid off in 2005. Admitting defeat, the Zeckendorfs caved and made an offer Herbert could not (and did not) refuse. In order to finally get Herbert to leave his decrepit 350 square foot apartment, they offered him a one time cash buyout of… get ready for it… $17 million. That is by far the most money ever paid to get a single tenant to leave a New York City apartment. It's probably the most money ever paid to get anyone to leave any apartment. But it gets better. Not only did the Zeckendorfs agree to give Herb Sukenik $17 million cash, they also agreed to let him live in a $2 million apartment on Central Park South where he will pay $1 a month in rent for the rest of his life.

$17 million plus a $2 million apartment basically free for life! This guy is my idol! With Herbert finally gone, the Zeckendorfs were finally clear to completely remodel the Mayflower Hotel pretty much from scratch. They sunk $1 billion into the building and turned it into what is now the most expensive and highly coveted address in all of New York City. Today, "15 CPW", as it is called, features a completely private driveway hidden from paparazzi, a cinema and 14,000 square foot gym that has a 75 foot pool. A one bedroom apartment averages $7 million. Two bedrooms $12 million. Three bedrooms $15-$30 million. Four bedrooms (only one available) $60 million. Five bedrooms, (only two available) $65 million and up. Current tenants include Goldman Sachs CEO Lloyd Blankfein, Sting, Jeff Gordon, Alex Rodriguez and Denzel Washington.

 By Brian Warner on March 7, 2014

The First Trillion-Dollar Startup

In 1957, eight entrepreneurs decided to do something that seemed crazy. They launched a new tech company called Fairchild Semiconductor in a small town south of San Francisco. The entrepreneurs had a difficult start, but Fairchild eventually became the first major computer chip company in the region. 

Although many people are familiar with Fairchild’s success, few know the full extent of its impact. During the last year, our team at Endeavor Insight has traced the story of Fairchild and gathered intriguing new data. We uncovered something that was quite surprising: if the value Fairchild created is measured in today’s dollars, we believe the firm would qualify as the first trillion dollar startup in the world.

Fairchild’s Launch and Early Success 

The achievements of Fairchild’s co-founders are even more impressive when you consider where they occurred. The San Francisco Bay Area is now a thriving tech hub, but it was a very different place in the mid-1950s. At that time, there were no venture capital investors in the region. Stanford University did not produce any of the major research on computer chip components and immigrants made up only a small percentage of the population.

As the chart below illustrates, the San Francisco area was far behind other U.S. cities in the development of the transistor companies that made up the early computer chip industry. No one expected the region to become a hub for these technology businesses.

Seven of the eight co-founders of Fairchild had recently moved to the San Francisco area from cities with more established transistor firms and investors. Three of these entrepreneurs – Jay Last, Bob Noyce, and Sheldon Roberts – had earned PhDs from MIT in Boston. Eugene Kleiner and Julius Blank were engineers in New York City, and Jean Hoerni and Gordon Moore had worked at Caltech near Los Angeles. (The final co-founder, Victor Grinich, was a former researcher and PhD student at Stanford.)

They leveraged their professional networks in these cities to find two key supporters who helped them raise capital and sign contracts with their first customer. These connections set them on the path to success. After just three years, Fairchild’s annual revenues were over $20 million. By the mid-1960s, the group had invented a new product, the integrated circuit, and was generating $90 million in annual sales. Yet, this was only the beginning of the co-founders’ accomplishments.

The Fairchild Valley 

As Fairchild started to grow, employees began to leave the firm to launch new spin-off businesses. Many of these firms also grew quickly, inspiring other employees still working at the company.

“You got these guys leaving and starting companies and the companies are running, working,” a former manager recalled. “You get a look around and look in the mirror and say, ‘Well, you know, how about you? What are you going to do?’”

The eight co-founders supported a number of these new businesses. Kleiner encouraged an employee to start a company that made the glass components Fairchild used in its manufacturing process. Noyce served on the board of Applied Materials, a local electronics equipment manufacturer, and mentored the company’s young founder.

It wasn’t long before the entrepreneurs at Fairchild began to create their own spin-off firms. “That experience of starting this company and watching it grow – I thought I’d like to do that again,” recalled Last. In 1961, he partnered with three of his Fairchild co-founders to create Amelco, a new business that produced specialized devices. Two other co-founders, Moore and Noyce, left Fairchild several years later to start the computer chip firm Intel.

The eight co-founders also reinvested their capital into a number of new local startups. In 1961, four of them helped to fund the Bay Area’s first venture capital firm. Another founder provided the financing that helped a former employee launch AMD. When Moore and Noyce launched Intel, the other six co-founders helped to fund the new business.

The growth of these new companies started to reshape the region. In just 12 years, the co-founders and former employees of Fairchild generated more than 30 spin-off companies and funded many more. By 1970, chip businesses in the San Francisco area employed a total of 12,000 people.

“That’s part of the legacy of Fairchild that maybe doesn’t get the attention it should,” Moore has said. “Every time we came up with a new idea, we spawned two or three companies trying to exploit it.”

The achievements of these companies eventually attracted attention. In 1971, a journalist named Don Hoefler wrote an article about the success of computer chip companies in the Bay Area. The firms he profiled all produced chips using silicon and were located in a large valley south of San Francisco. Hoefler put these two facts together to create a new name for the region: Silicon Valley.

Hoefler’s article and the name he coined have become quite famous, but there’s a critical part of his analysis that is often overlooked: Almost all of the silicon chip companies he profiled can be traced back to Fairchild and its co-founders.

Adding Up Fairchild’s Impact

Fairchild’s success continued to fuel the growth of companies in the Valley in the years after Hoefler’s article was published. When Steve Jobs was starting his career in the 1970s, he often rode his motorcycle to Noyce’s house and spent hours listening to the older entrepreneur’s advice. According to Noyce’s wife, Jobs also had a unique habit of calling their home around midnight. The first investor in Apple was also a former Fairchild employee.

The 92 public companies that can be traced back to Fairchild are now worth about $2.1 trillion, which is more than the annual GDP of Canada, India, or Spain.

In 1972, Kleiner co-founded the venture firm Kleiner Perkins, which has gone on to invest in hundreds of companies, including Google and Symantec. While Kleiner was starting Kleiner Perkins, a former Fairchild executive named Don Valentine was launching another venture firm called Sequoia Capital, which has also invested in several hundred companies, such as Cisco and LinkedIn.

Many of the companies funded by these two firms were led by entrepreneurs and executives who have gone on to become important investors. Companies like Sun Microsystems, Netscape, and PayPal spawned investment firms such as Khosla Ventures, Andreessen Horowitz, Founder Collective, and 500 Startups.

Our team at Endeavor Insight recently worked to quantify the impact of Fairchild Semiconductor and its co-founders. We identified over 130 Bay Area tech companies that were trading on the NASDAQ or the New York Stock Exchange. Our analysis indicates that about 70 percent of these firms can be traced directly back to the founders and employees of Fairchild.

The total impact of these businesses is staggering. The 92 public companies that can be traced back to Fairchild are now worth about $2.1 trillion, which is more than the annual GDP of Canada, India, or Spain. These companies also employ over 800,000 people.

If we look beyond the publicly traded businesses listed above, Fairchild’s impact is even greater. In total, we can trace over 2,000 companies back to the firm’s eight co-founders. This includes companies such as Instagram, Palantir, Pixar, Nest, WhatsApp, Yammer and YouTube.

The story of Fairchild illustrates how entrepreneurs can reshape their local communities. When successful founders generate new spin-off companies, mentor others and act as early-stage investors it increases the opportunities available to new generations of entrepreneurs. The intellectual, social, and financial capital that successful founders reinvest into new companies strengthens the local entrepreneurship community and enables successful hubs, like the original Silicon Valley, to develop.

Fairchild trades on the NASDAQ with a market capitalization of around $2 billion. However, the full value of the company can only be measured by tracing the way the firm’s success has been reinvested into new founders and companies. By this measure, Fairchild is the Valley’s first trillion-dollar startup. It might even be the most important entrepreneurial company of the last hundred years.

Posted Jul 26, 2014 by Rhett Morris

Editor’s note: Rhett Morris is the director of Endeavor Insight, the research arm of Endeavor, a nonprofit that supports more than 900 entrepreneurs in 20 countries.

China is reportedly thinking about building a bullet train that reaches America

China already has the world’s longest high-speed rail network. And the country aims to more than double the amount of high-speed railway by 2015 from the existing 10,000 km (6,000 miles) to 19,000 km—and eventually 25,000km by 2020. Officials want to build everything from an undersea railway tunnel from the Chinese shore to Taiwan—twice the length of the Channel Tunnel between France and Britain—to 1,776 km of high-speed rail through isolated deserts in the west of the country.

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In that context, it almost seems feasible that China would be considering a recently discussed project—13,000 km of high-speed railway that crosses from China to Russia and North America that includes a 200-km tunnel under the Bering strait. A railway expert at the Chinese Academy of Engineering told the Beijing Times that officials are having discussions about the project. 

A railway from China to the US might bring the two countries closer, at least geographically, but it would be an absurd project. China is already spending an estimated $32 billion on an underwater tunnel that measures just 123 km long. And officials estimate that 1,776 km of railway being built from Lanzhou in the western province of Gansu to Xinjiang will cost about $24 billion, which is cheap compared to China’s previous high-speed rail projects.

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If those costs are any comparison, the so-called “China-Russia-Canada-America” line could cost north of $200 billion—$52 billion to construct an undersea tunnel to cross the Bering strait and $172 billion for the rest of the railway across land. That would account for well over half of China’s already massive high-speed rail budget of $300 billion. China may be one of the best examples of countries that love mega-infrastructure projects, but even this may be too much.

50 Reasons We're Living Through the Greatest Period in World History

By Morgan Housel 

I recently talked to a doctor who retired after a 30-year career. I asked him how much medicine had changed during the three decades he practiced. "Oh, tremendously," he said. He listed off a dozen examples. Deaths from heart disease and stroke are way down. Cancer survival rates are way up. We're better at diagnosing, treating, preventing, and curing disease than ever before. Consider this: 

In 1900, 1% of American women giving birth died in labor. Today, the five-year mortality rate for localized breast cancer is 1.2%. Being pregnant 100 years ago was almost as dangerous as having breast cancer is today. The problem, the doctor said, is that these advances happen slowly over time, so you probably don't hear about them. If cancer survival rates improve, say, 1% per year, any given year's progress looks low, but over three decades, extraordinary progress is made. 

Compare health-care improvements with the stuff that gets talked about in the news -- NBC anchor Andrea Mitchell interrupted a Congresswoman last month to announce Justin Bieber's arrest -- and you can understand why Americans aren't optimistic about the country's direction. 

We ignore the really important news because it happens slowly, but we obsess over trivial news because it happens all day long. Expanding on my belief that everything is amazing and nobody is happy, here are 50 facts that show we're actually living through the greatest period in world history. 

1. U.S. life expectancy at birth was 39 years in 1800, 49 years in 1900, 68 years in 1950, and 79 years today. The average newborn today can expect to live an entire generation longer than his great-grandparents could. 

2. A flu pandemic in 1918 infected 500 million people and killed as many as 100 million. In his book The Great Influenza, John Barry describes the illness as if "someone were hammering a wedge into your skull just behind the eyes, and body aches so intense they felt like bones breaking." Today, you can go to Safeway and get a flu shot. It costs 15 bucks. You might feel a little poke. 

3. In 1950, 23 people per 100,000 Americans died each year in traffic accidents, according to the Census Bureau. That fell to 11 per 100,000 by 2009. If the traffic mortality rate had not declined, 37,800 more Americans would have died last year than actually did. In the time it will take you to read this article, one American is alive who would have died in a car accident 60 years ago. 

 4. In 1949, Popular Mechanics magazine made the bold prediction that someday a computer could weigh less than 1 ton. I wrote this sentence on an iPad that weighs 0.73 pounds. 

5. The average American now retires at age 62. One hundred years ago, the average American died at age 51. Enjoy your golden years -- your ancestors didn't get any of them. 

 6. In his 1770s book The Wealth of Nations, Adam Smith wrote: "It is not uncommon in the highlands of Scotland for a mother who has borne 20 children not to have 2 alive." Infant mortality in America has dropped from 58 per 1,000 births in 1933 to less than six per 1,000 births in 2010, according to the World Health Organization. There are about 11,000 births in America each day, so this improvement means more than 200,000 infants now survive each year who wouldn't have 80 years ago. That's like adding a city the size of Boise, Idaho, every year. 

7. America averaged 20,919 murders per year in the 1990s, and 16,211 per year in the 2000s, according to the FBI. If the murder rate had not fallen, 47,000 more Americans would have been killed in the last decade than actually were. That's more than the population of Biloxi, Miss. 

8. Despite a surge in airline travel, there were half as many fatal plane accidents in 2012 than there were in 1960, according to the Aviation Safety Network. 

 9. No one has died from a new nuclear weapon attack since 1945. If you went back to 1950 and asked the world's smartest political scientists, they would have told you the odds of seeing that happen would be close to 0%. You don't have to be very imaginative to think that the most important news story of the past 70 years is what didn't happen. Congratulations, world. 

 10. People worry that the U.S. economy will end up stagnant like Japan's. Next time you hear that, remember that unemployment in Japan hasn't been above 5.6% in the past 25 years, its government corruption ranking has consistently improved, incomes per capita adjusted for purchasing power have grown at a decent rate, and life expectancy has risen by nearly five years. I can think of worse scenarios. 

11. Two percent of American homes had electricity in 1900. J.P Morgan (the man) was one of the first to install electricity in his home, and it required a private power plant on his property. Even by 1950, close to 30% of American homes didn't have electricity. It wasn't until the 1970s that virtually all homes were powered. Adjusted for wage growth, electricity cost more than 10 times as much in 1900 as it does today, according to professor Julian Simon. 

12. According to the Federal Reserve, the number of lifetime years spent in leisure -- retirement plus time off during your working years -- rose from 11 years in 1870 to 35 years by 1990. Given the rise in life expectancy, it's probably close to 40 years today. Which is amazing: The average American spends nearly half his life in leisure. If you had told this to the average American 100 years ago, that person would have considered you wealthy beyond imagination. 

 13. We are having a national discussion about whether a $7.25-per-hour minimum wage is too low. But even adjusted for inflation, the minimum wage was less than $4 per hour as recently as the late 1940s. The top 1% have captured most of the wage growth over the past three decades, but nearly everyone has grown richer -- much richer -- during the past seven decades. 

 14. In 1952, 38,000 people contracted polio in America alone, according to the Centers for Disease Control. In 2012, there were fewer than 300 reported cases of polio in the entire world. 

15. From 1920 to 1949, an average of 433,000 people died each year globally from "extreme weather events." That figure has plunged to 27,500 per year, according to Indur Goklany of the International Policy Network, largely thanks to "increases in societies' collective adaptive capacities." 

16. Worldwide deaths from battle have plunged from 300 per 100,000 people during World War II, to the low teens during the 1970s, to less than 10 in the 1980s, to fewer than one in the 21st century, according to Harvard professor Steven Pinker. "War really is going out of style," he says. 

 17. Median household income adjusted for inflation was around $25,000 per year during the 1950s. It's nearly double that amount today. We have false nostalgia about the prosperity of the 1950s because our definition of what counts as "middle class" has been inflated -- see the 34% rise in the size of the median American home in just the past 25 years. If you dig into how the average "prosperous" American family lived in the 1950s, I think you'll find a standard of living we'd call "poverty" today. 

18. Reported rape per 100,000 Americans dropped from 42.3 in 1991 to 27.5 in 2010, according to the FBI. Robbery has dropped from 272 per 100,000 in 1991 to 119 in 2010. There were nearly 4 million fewer property crimes in 2010 than there were in 1991, which is amazing when you consider the U.S. population grew by 60 million during that period. 

19. According to the Census Bureau, only one in 10 American homes had air conditioning in 1960. That rose to 49% in 1973, and 89% today -- the 11% that don't are mostly in cold climates. Simple improvements like this have changed our lives in immeasurable ways. 

 20. Almost no homes had a refrigerator in 1900, according to Frederick Lewis Allan's The Big Change, let alone a car. Today they sell cars with refrigerators in them. 

21. Adjusted for overall inflation, the cost of an average round-trip airline ticket fell 50% from 1978 to 2011, according to Airlines for America. 

 22. According to the Census Bureau, the average new home now has more bathrooms than occupants. 

23. According to the Census Bureau, in 1900 there was one housing unit for every five Americans. Today, there's one for every three. In 1910 the average home had 1.13 occupants per room. By 1997 it was down to 0.42 occupants per room. 

 24. According to professor Julian Simon, the average American house or apartment is twice as large as the average house or apartment in Japan, and three times larger than the average home or apartment in Russia. 

 25. Relative to hourly wages, the cost of an average new car has fallen fourfold since 1915, according to professor Julian Simon. 

26. Google Maps is free. If you think about this for a few moments, it's really astounding. It's probably the single most useful piece of software ever invented, and it's free for anyone to use. 

27. High school graduation rates are at a 40-year high, according to Education Week. 

 28. The death rate from strokes has declined by 75% since the 1960s, according to the National Institutes of Health. Death from heart attacks has plunged, too: If the heart attack survival had had not declined since the 1960s, the number of Americans dying each year from heart disease would be more than 1 million higher than it currently is. 

29. In 1900, African Americans had an illiteracy rate of nearly 45%, according to the Census Bureau. Today, it's statistically close to zero. 

30. People talk about how expensive college is today, but a century ago fewer than one in 20 Americans ever stepped foot in a university. College wasn't an option at any price for some minorities because of segregation just six decades ago. 

31. The average American work week has declined from 66 hours in 1850, to 51 hours in 1909, to 34.8 today, according to the Federal Reserve. Enjoy your weekend. 

 32. Incomes have grown so much faster than food prices that the average American household now spends less than half as much of its income on food as it did in the 1950s. Relative to wages, the price of food has declined more than 90% since the 19th century, according to the Bureau of Labor Statistics. 

33. As of March 2013, there were 8.99 million millionaire households in the U.S., according to the Spectrum Group. Put them together and they would make the largest city in the country, and the 18th largest city in the world, just behind Tokyo. We talk a lot about wealth concentration in the United States, but it's not just the very top that has done well. 

34. More than 40% of adults smoked in 1965, according to the Centers for Disease Control. By 2011, 19% did. 

 35. In 1900, 44% of all American jobs were in farming. Today, around 2% are. We've become so efficient at the basic need of feeding ourselves that nearly half the population can now work on other stuff. 

36. One of the reasons Social Security and Medicare are underfunded is that the average American is living longer than ever before. I think this is literally the best problem to have. 

37. In 1940, less than 5% of the adult population held a bachelor's degree or higher. By 2012, more than 30% did, according to the Census Bureau. 

 38. U.S. oil production in September was the highest it's been since 1989, and growth shows no sign of slowing. We produced 57% more oil in America in September 2013 than we did in September 2007. The International Energy Agency projects that America will be the world's largest oil producer as soon as 2015. 

39. The average American car got 13 miles per gallon in 1975, and more than 26 miles per gallon in 2013, according to the Energy Protection Agency. This has an effect identical to cutting the cost of gasoline in half. 

 40. Annual inflation in the United States hasn't been above 10% since 1981 and has been below 5% in 77% of years over the past seven decades. When you consider all the hatred directed toward the Federal Reserve, this is astounding. 

 41. The percentage of Americans age 65 and older who live in poverty has dropped from nearly 30% in 1966 to less than 10% by 2010. For the elderly, the war on poverty has pretty much been won. 

 42. Adjusted for inflation, the average monthly Social Security benefit for retirees has increased from $378 in 1940 to $1,277 by 2010. What used to be a safety net is now a proper pension. 

43. If you think Americans aren't prepared for retirement today, you should have seen what it was like a century ago. In 1900, 65% of men over age 65 were still in the labor force. By 2010, that figure was down to 22%. The entire concept of retirement is unique to the past few decades. Half a century ago, most Americans worked until they died. 

44. From 1920 to 1980, an average of 395 people per 100,000 died from famine worldwide each decade. During the 2000s, that fell to three per 100,000, according to The Economist. 

45. The cost of solar panels has declined by 75% since 2008, according to the Department of Energy. Last I checked, the sun is offering its services for free. 

 46. As recently as 1950, nearly 40% of American homes didn't have a telephone. Today, there are 500 million Internet-connected devices in America, or enough for 5.7 per household. 

47. According to AT&T archives and the Dallas Fed, a three-minute phone call from New York to San Francisco cost $341 in 1915, and $12.66 in 1960, adjusted for inflation. Today, Republic Wireless offers unlimited talk, text, and data for $5 a month. 

48. In 1990, the American auto industry produced 7.15 vehicles per auto employee. In 2010 it produced 11.2 vehicles per employee. Manufacturing efficiency has improved dramatically. 

49. You need an annual income of $34,000 a year to be in the richest 1% of the world, according to World Bank economist Branko Milanovic's 2010 book The Haves and the Have-Nots. To be in the top half of the globe you need to earn just $1,225 a year. For the top 20%, it's $5,000 per year. Enter the top 10% with $12,000 a year. To be included in the top 0.1% requires an annual income of $70,000. America's poorest are some of the world's richest. 

50. Only 4% of humans get to live in America. Odds are you're one of them. We've got it made. Be thankful. 

source-www.motleyfool.com

Lessons from Machiavelli's The Prince

British philosopher and Nobel laureate Bertrand Russell once called The Prince a handbook for gangsters.

The book, a slender political treatise by the Italian Niccolo Machiavelli, was offered to Lorenzo de Medici as a sort of job application. Written in 1513, it was not widely published until 1532, five years after the author's death. Upon its publication, The Prince became well known as among the controversial of many advice books for rulers. Generally, these advice books framed their instruction around Christian virtue. The Prince did not.

A voracious reader, Machiavelli stripped out the ideals and drew examples from history. He believed that anyone who ignores reality in a misguided attempt to live up to an ideal will quickly destroy himself. He de-emphasized the importance of moral considerations, and focused instead on effectiveness. He believed that the ends justified the means.

Canadian scholar and politician Michael Ignatieff puts it this way: The Prince forces readers to confront, in the starkest terms possible, the most important questions about politics and morality. In the book, what would normally shock us become simple precepts. The book is wickedly simple.

Some of his most objectionable recommendations are put in ways that make them sound eminently reasonable. In order to get a secure hold on new territories, the book advises, "one need merely eliminate the surviving members of the family of their previous rulers." How innocent-sounding is that "merely." 

Yes, the book can be ruthless. But there are still many surprisingly apt lessons. Here's what I've learned from reading The Prince.

1. Be present
"... if one is on the spot, disorders are seen as they spring up, and one can quickly remedy them; but if one is not at hand, they are heard of only when they are great, and then one can no longer remedy them."

2. Be careful who you trust
"... he who is the cause of another becoming powerful is ruined; because that predominancy has been brought about by astuteness or else by force, and both are distrusted by him who has been raised to power."

3. Learn from the best
"A wise man ought always to follow the paths beaten by great men, and to imitate those who have been supreme, so that if his ability does not equal theirs, at least it will savour of it."

4. Be picky about who works for you
"The mercenary captains are either capable men or they are not; if they are, you cannot trust them, because they always aspire to their own greatness, either by oppressing you, who are their master, or others contrary to your intentions; but if the captain is not skillful, you are ruined the usual way."

5. Read
"... to exercise the intellect the prince should read histories, and study there the actions of illustrious men, to see how they have borne themselves in war, to examine the causes of their victories and defeat, so as to avoid the latter and imitate the former."

6. Prepare for the worst
"A wise prince ought to observe some such rules, and never in peaceful times stand idle, but increase his resources with industry in such a way that they may be available to him in adversity, so that if fortune changes it may find him prepared to resist her blows."

7. Don't be cruel
"... every prince ought to desire to be considered clement and not cruel."

8. Don't steal
"... above all things he must keep his hands off the property of others, because men more quickly forget the death of their father than the loss of their patrimony. ... he who has once begun to live by robbery will always find pretexts for seizing what belongs to others; but reasons for taking life, on the contrary, are more difficult to find and sooner lapse."

9. Appearances matter
"... men judge generally more by the eye than by the hand, because it belongs to everybody to see you, to few to come in touch with you. Every one sees what you appear to be, few really know what you are, and those few dare not oppose themselves to the opinion of the many, who have the majesty of the state to defend them; and in the actions of all men, and especially of princes, which it is not prudent to challenge, one judges by the result."

10. Sometimes your enemies are your friends
"I must not fail to warn a prince, who by means of secret favours has acquired a new state, that he must well consider the reasons which induced those to favour him who did so; and if it be not a natural affection towards him, but only discontent with their government, then he will only keep them friendly with great trouble and difficulty, for it will be impossible to satisfy them. And weighing well the reasons for this in those examples which can be taken from ancient and modern affairs, we shall find that it is easier for the prince to make friends of those men who were contented under the former government, and are therefore his enemies, than of those who, being discontented with it, were favourable to him and encouraged him to seize it."

11. Avoid flatterers
"It is that of flatterers, of whom courts are full, because men are so self-complacent in their own affairs, and in a way so deceived in them, that they are preserved with difficulty from this pest, and if they wish to defend themselves they run the danger of falling into contempt. Because there is no other way of guarding oneself from flatterers except letting men understand that to tell you the truth does not offend you; but when every one may tell you the truth, respect for you abates."

  By Shane Parrish www.theweek.com

BMW drivers really are jerks, studies find

Drivers of BMWs frequently come in for anecdotal criticism for habits on the road that are perceived as aggressive.

Now, a couple of studies, one in the U.S. and another from the U.K., appear to provide statistical evidence that BMW drivers are, to be polite about it, complete jerks.

In the older study, by researchers at the University of California, BMW drivers were far less likely to stop for a pedestrian who had just entered a crosswalk, the New York Times notes.

“In our crosswalk study, none of the cars in the beater-car category drove through the crosswalk. They always stopped for pedestrians," researcher Paul K. Piff told the paper. He added that not only were "fancy cars were less likely to stop," but also that "BMW drivers were the worst."

Drivers of BMWs and other high-status cars (including Prius hybrids) were also more likely to cheat at four-way-stop intersections, according to the research.

In the second study, in the U.K., motorists were asked to identify the make and color of the car from which they have most frequently suffered road-rage incidents, the Daily Mail reports.

The study of 2,837 motorists found men between the ages of 35 and 50 driving blue BMWs were most likely to be reported as having engaged in road-rage behaviors such as aggressive driving and swearing.

The 100 Best Finance Blogs: All The Internet’s a Stage

Best finance blogs at the top: According to popular search ranking site Alexa, there are over 6,000 dedicated news websites in existence today, and a crucial subset of this group is the top names in finance. Like any list-happy journalist, we're going to chronicle the 100 best finance blogs, beginning with No. 100. The rankings are based on a combination of factors, including: quality, value, originality, accuracy, and popularity. 

http://www.insidermonkey.com/blog/best-finance-blogs-199748/?singlepage=1

Never Mind Facebook; Winklevoss Twins Rule in Digital Money

The Winklevoss twins, Cameron and Tyler — Olympic rowers, nemeses of Mark Zuckerberg — are laying claim to a new title: bitcoin moguls. 

The Winklevii, as they are known, have amassed since last summer what appears to be one of the single largest portfolios of the digital money, whose wild gyrations have Silicon Valley and Wall Street talking. The twins, the first prominent figures in the largely anonymous bitcoin world to publicly disclose a big stake, say they own nearly $11 million worth.

Or at least $11 million as of Thursday morning — when trading was temporarily suspended after the latest and largest flash crash left a single bitcoin worth about $120 and the whole market worth $1.3 billion. At one point, the price had plummeted 60 percent.

To skeptics, the frenzy over the bitcoin network created by anonymous programmers in 2009 looks more like the mania for Dutch tulip bulbs in the 1600s than the beginnings of an actual currency.

“To say highly speculative would be the understatement of the century,” said Steve Hanke, a professor specializing in alternative currencies at Johns Hopkins University.

Whatever else it is, bitcoin has become the financial phenomenon of the moment.

In addition to the identical twins, Silicon Valley investment firms, while not holding bitcoins, are starting to show interest in the technology. On Thursday, a group of venture capitalists, including Andreessen Horowitz, announced that they were financing a bitcoin-related company, OpenCoin.

Sean Gallup/Getty ImagesA sticker on the window of a pub in Berlin signifies acceptance of bitcoin for payment. Few places accept the digital currency.

The New York Times

The Winklevosses say this week’s tumult is just growing pains for a digital currency that they believe will become a sort of gold for the technorati.

“People say it’s a Ponzi scheme, it’s a bubble,” said Cameron Winklevoss. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”

While little is known about the creator of bitcoin, or if it even was a single person, the work involved serious programming chops, building a system that could live on borrowed computer space around the world. It was determined that only a finite number of bitcoins could be created — the count is currently around 11 million. New coins are “mined” by programmers who solve mathematic riddles and can sell their coins on upstart exchanges.

For now, there are few places where bitcoins can be used. One marketplace is an online bazaar, Silk Road, where narcotics are reportedly the main wares for sale. But bitcoin believers imagine a future where the e-cash can be used at their local Starbucks. The Winklevosses have paid in bitcoin for the services of a Ukrainian computer programmer who has worked on their Web site.

“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.

This is not the brothers’ first gamble on an unproved technology. As students at Harvard, the twins founded a social networking site, ConnectU, and enlisted their schoolmate, Mark Zuckerberg, to help them build the company. After Mr. Zuckerberg went off to start Facebook, the brothers sued him, accusing him of stealing their idea — a story that was dramatized in the movie “The Social Network.” The case was settled with the brothers being given $20 million in cash and Facebook shares that are now worth more than $200 million.

They have parlayed that fortune into Winklevoss Capital. Their first two investments were in Hukkster, a start-up shopping Web site and SumZero, an online community for professional money managers.

The brothers began dabbling in bitcoin last summer when the dollar value of a single coin was still in the single digits. To keep their holdings secure from hackers, they have taken the complex codes that represent their holdings off networked computers and saved them on small flash drives, putting the drives, in turn, in safe deposit boxes at banks in three different cities.

It’s hard to verify how the Winklevoss holdings compare with other bitcoin players, given the anonymity of accounts, and the twins say they believe that some early users of the system probably have holdings that are at least as large.

A Maltese company, Exante, started a hedge fund that the company says has bought up about 82,000 bitcoins — or about $10 million as of Thursday — with money from wealthy investors. A founder of the fund, Anatoli Knyazev, said his main concern was hackers and government regulators, who have so far mostly left the currency alone.

These investments were all in an uncertain state on Thursday after the big price swings and the shutdown of trading on Mt. Gox, a Japanese-based company that claims to handle 80 percent of all bitcoin trades. Mt. Gox said in a statement that the problems were a result of the currency’s popularity, making it impossible to process all the incoming orders. It added that it was not the victim of hackers but “instead victim of our own success!”

The 6-foot-5 Winklevoss brothers were unfazed. The brothers said they took advantage of the low prices to buy more.

“It has been four years and it has yet to be discredited as a viable alternative to fiat currency,” Tyler Winklevoss said. “We could be totally wrong, but we are curious to see this play out a lot more.”

Bitcoin Reading List

• New York Magazine: The Bitcoin Apocalypse Is Nigh (April 10, 2013)
• Medium: The Bitcoin Bubble and the Future of Currency (April 3, 2013)
• FT Alphaville blog: When memory becomes money; the story of Bitcoin so far (April 3, 2013)
• The New Yorker: The Crypto Currency (Oct. 10, 2011)
• NPR’s Planet Money: What Is Bitcoin? (Aug. 24, 2011)
• The New York Times: Speed Bumps on the Road to Virtual Cash (July 3, 2011)

A version of this article appeared in print on 04/12/2013, on page A1 of the NY Times  By NATHANIEL POPPER and PETER LATTMAN

100 Startling Facts About the Economy

By Morgan Housel 

In no particular order...

1. As of January 2013, there are 16 people left in the world who were born in the 1800s, according to the Gerontology Research Group. With dividends reinvested, U.S. stocks have increased 28,000-fold during their lifetimes.

2. If you divide their net worths by their age, Carlos Slim and Bill Gates have each accumulated more than $100,000 in net worth for every hour they've been alive.

3. According to Forbes, if a Google (NASDAQ: GOOG  ) employee passes away, "their surviving spouse or domestic partner will receive a check for 50% of their salary every year for the next decade."

4. According to the Deutsche Bank Long-Term Asset Return Study, the last time interest rates were near current levels, in the 1950s, Treasury bonds lost 40% of their inflation-adjusted value over the following three decades.

5. According to a study by Harvard professor David Wise and two colleagues, 46.1% of Americans die with less than $10,000 in assets.

6. There are 3.8 million fewer Americans aged 30 to 44 today than there were a decade ago.

7. Related: The population of Americans aged 30 to 44 is about to start increasing for the first time since 2000.

8. Since 1928, the Dow Jones has increased more than 10% in a single day eight times, declined more than 10% in a single day four times, and gone either up or down more than 5% in a single day 136 times.

9. "U.S. oil production grew more in 2012 than in any year in the history of the domestic industry, which began in 1859," writes Tom Fowler of The Wall Street Journal.

10. "Last year, for the first time, spending by Apple (NASDAQ: AAPL  ) and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products," writes The New York Times.

11. Start with a dollar. Double it every day. In 48 days you'll own every financial asset that exists on the planet -- about $200 trillion.

12. There were fewer state and local education jobs in 2012 than there were in 2005, even though the number of 5- to 18-year-olds has increased by 600,000.

13. Adjusting for inflation, Warren Buffett was a millionaire by age 25.

14. Including dividends, the S&P 500 gained 135% from March 2009 through January 2013, during what people remember as the "Great Recession." It gained the exact same amount from 1996 to 2000, during what people remember as the "greatest bull market in history."

15. "97% of the world's population now lives in countries where the fertility rate is falling," writes author Jonathan Last.

16. The U.K. economy is 3.3% smaller than it was in 2008. The U.S. economy is 2.9% larger (both adjusted for inflation).

17. In 1980, there were 15,099 Americans aged 100 years or more. By 1990, there were 36,486, and by 2012 there were 88,510, according to the Census Bureau.

18. Dell (NASDAQ: DELL  ) "has spent more money on share repurchases than it earned throughout its life as a public company," writes Floyd Norris of The New York Times.

19. From 2006 to 2011, Hewlett-Packard (NYSE: HPQ  ) spent $51 billion on share repurchases at an average price of $40.80 per share. Shares currently trade at $16.50.

20. The International Labour Organization estimates a record 200 million people will be unemployed around the world in 2013. If you gave them their own country, it would be the fifth-largest in the world.

21. Despite the overall population doubling, more babies were born in the U.S. in 1956 than were born in 2009, 2010, or 2011.

22. According to The Telegraph, "Four in 10 girls born today is expected to live to 100. ... If trends continue, the majority of girls born in 2060 -- some 60 per cent -- will live to see 2160."

23. Apple's cash and investments are now equal to the GDP of Hungary and more than those of Vietnam and Iraq.

24. Netflix surged more than 50% on Jan. 24 from the previous day's low. $1,000 invested in short-term call options would have been worth $2 million in less than 24 hours. (Please don't try this at home.)

25. In December, a start-up called Contrail Systems was purchased for $176 million two days after it launched.

26. U.S. charitable giving was $298 billion in 2011, according to the Giving USA Foundation. That's more than the GDP of all but 33 countries in the world.

27. According to Bloomberg, "The 50 stocks in the S&P 500 with the lowest analyst ratings at the end of 2011 posted an average return of 23 percent [in 2012], outperforming the index by 7 percentage points."

28. "Globally, the production of a given quantity of crop requires 65% less land than it did in 1961," writes author Matt Ridley.

29. Thanks in large part to cellphone cameras, "Ten percent of all of the photographs made in the entire history of photography were made last year," according to Time.

30. Internal emails caught a team of Morgan Stanley employees sarcastically naming a subprime CDO in 2007. "Nuclear Holocaust," "Mike Tyson's Punchout," "Hitman," "Meltdown," and "S***bag" were all considered.

31. Since 2008, Americans have donated $19.1 million to the U.S. Treasury to help pay down the national debt.

32. Fortune magazine published an article titled "10 Stocks To Last the Decade" in August, 2000. By December 2012, the portfolio had lost 74.3% of its value, according to analyst Barry Ritholtz.

33. From 2005 to 2012, total student loans outstanding increased by $539 billion, according to the Federal Reserve.

34. According to a study by Environics Analytics WealthScapes, the average Canadian household is now richer than an average American household for the first time ever.

35. The 100 largest public pension funds alone have $1.2 trillion of unfunded liabilities, according to actuarial firm Milliman.

36. According to a study by four economists from Cornell, Carnegie Mellon, and Vanguard, "the number of investors who check their accounts drops by 8.7% following a market decline compared to a market increase."

37. The average new American home was 1,535 square feet in 1975 and 2,169 square feet in 2010, according to the Census Bureau.

38. Cambridge Associates estimates that 3% of venture capital firms generate 95% of the industry's returns. It adds that there is little change in the composition of those 3% of firms over time.

39. Growth in America's energy output since 2008 has surpassed that of any other country in the world, according to energy analyst Daniel Yergin.

40. Two news headlines published on the same day last September summed up the U.S. economy perfectly: "U.S. Median Income Lowest Since 1995, " and "Ferrari sales surge to record highs."

41. According to ConvergEx Group, "Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away. ... A full 30% have less than $1,000."

42. If you add up annual profits of the entire airline industry going back to 1948, you get -$32 billion.

43. Since 1928, the S&P 500 has closed at a new all-time high 1,024 times, or 4.8% of all trading days.

44. According to California Common Sense, "Over the last 30 years, the number of people California incarcerates grew more than eight times faster than the general population."

45. One in seven crimes committed in New York City now involves an Apple product being stolen, according to NYPD records cited by ABC News.

46. In the first quarter of 2012, the number of iPhones Apple sold per day surpassed the number of babies born per day worldwide (402,000 vs. 300,000), according to Mobile First.

47. On Dec. 5, 2012, Apple stock lost $34.9 billion in market cap. According to CNBC's Carl Quintanilla, 417 of the S&P 500's components had a total market cap of less than $35 billion that day.

48. According to economist Glen Weyl, "Of Harvard students graduating in early '90s and pursuing careers in finance, 1/3 were making over $1 million a year by 2005."

49. According to the Center for Economic and Policy Research, 44% of those working for minimum wage in 2010 had attended at least some college, up from 25% in 1979.

50. According to The Economist, "By 2030, 22% of people in the OECD club of rich countries will be 65 or older, nearly double the share in 1990."

51. According to a study by two Yale economists, if state and local governments acted like they had in the last five recessions, they would have added at least 1.4 million jobs since 2007. Instead, they cut more than 700,000.

52. The number of workers aged 55 and up is about to surpass the number of workers aged 24 to 34 for the first time ever.

53. In 2011, Asia had more millionaires than North America for the first time ever, according to RBC Wealth Management.

54. According to Enerdata, the U.S. consumed less total energy in 2011 than it did in 2000.

55. The IRS estimates that illegal tax-evasion reduced government tax revenue by $450 billion in 2006 (the most recent year calculated). That's roughly equal to what the government spends annually on Medicare.

56. According to The Wall Street Journal, "The average monthly mortgage payment on a median-price home in October, assuming a 10% down payment, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005."

57. According to a study by Edward Wolff published in the Bureau of Economic Research, the inflation-adjusted median net worth of American families in 2010 hit the lowest level since 1969.

58. "Household debt is now 163.4% of disposable income in Canada, close to the U.S. level at the height of the subprime crisis," writes The Wall Street Journal.

59. In 2012, the Greek stock market (ATHEX Index) outperformed the Chinese stock market (Shanghai Composite) by 48 percentage points.

60. The International Energy Agency predicts that the U.S. will become the world's largest oil-producer by 2020, overtaking Saudi Arabia.

61. According to CNBC wealth reporter Robert Frank, the population of millionaires in America is now at or above its 2007 high.

62. According to BetterInvesting, the number of investment clubs has declined by 90% since 1998 from 400,000 to 39,000.

63. Public filings show that Federal Reserve Chairman Ben Bernanke has owned stock in just one individual company over the last decade: Altria Group (which he sold in 2004).

64. Renaissance Technologies, a hedge fund run by James Simons, has allegedly produced average returns of 80% a year since 1988 (before fees), according to Bloomberg. That would turn $1,000 into $2.4 billion in 25 years.

65. The S&P 500 has returned about 9% a year over the long run, but few years see returns even close to that. Since 1871, the index has risen or fallen more than 20% in one out of every three years. Less than one out of every five years sees a gain of between 1% and 9%.

66. Since U.S. markets bottomed in March 2009, more than $8 trillion of lost wealth has been recouped.

67. During the Federal Reserve's June 2007 policy meeting, the word "recession" was used three times; the word "strong" was used 61 times. The economy entered recession six months later.

68. Franklin Templeton asked 1,000 investors whether the S&P 500 went up or down in 2009 and 2010 in the subsequent year. Sixty-six percent thought it went down in 2009, while 49% said it declined in 2010. In reality, the index gained 26.5% in 2009 and 15.1% in 2010.

69. The share of an average U.S. household budget going toward gas in 2012 was nearly 4%, tying for the highest level in almost three decades, according to Energy Information Administration figures cited by The Guardian.

70. "Of the Americans who earn over $150,000, 82 percent had a bachelor's degree. Just 6.5 percent had no more than a high school diploma," writes Catherine Rampell of The New York Times.

71. According to a survey by Paola Sapienza and Luigi Zingales, effectively all economists agreed that stock prices are hard to predict. Only 59% of average Americans felt the same way.

72. According to the IMF, if Japan's female labor-participation rate rose to levels of Northern Europe, its per-capita GDP could be permanently increased by 8%.

73. Credit card debt as a percentage of GDP is now at the lowest level in two decades.

74. The Energy Information Administration predicts that U.S. oil imports will fall to 6 million barrels a day next year -- their lowest level in 25 years.

75. According to economist Stephen Bronars, the new 39.6% federal tax bracket will only affect 0.7% of taxpayers but will hit 9.5% of aggregate personal income, as top earners earn a disproportionate share of the national income.

76. From 2001 to 2007, new-home construction outpaced household formation by more than 3 million homes.

77. According to Gallup, 51.3% of Americans consider themselves "thriving," 45.1% say they are "struggling," and 3.6% say they're "suffering."

78. An average couple will pay $155,000 in in 401(k) fees over their careers, according to Demos, reducing an average account balance from $510,000 to $355,000.

79. Related: 84% of actively managed U.S. stock funds underperformed the S&P 500 in 2011.

80. According to The Wall Street Journal, 49.1% of Americans live in a household "where at least one member received some type of government benefit in the first quarter of 2011."

81. According to New York Times writer Binyamin Appelbaum: "Average months between US recessions since 1854: 42. Months since last recession: 42."

82. With bond yields near all-time lows, Richard Barley of The Wall Street Journal writes, "For a one-percentage point rise in yields, 10-year U.S. Treasury holders now face a drop in price of nearly nine percentage points."

83. "By 2050, workers' median age in China and Japan will be about 50, a decade higher than in America," writes Robert Samuelson.

84. Of the 3.1 million students who graduated high school in 2010, 78.2% received their diplomas on time, according to the National Center for Education Statistics. That was the highest percentage since 1974.

85. The U.S. birthrate declined 8% from 2007 to 2010, according to Pew. At 63.2 per 1,000 women of childbearing age, the 2011 U.S. birthrate was the lowest since records began in 1920.

86. According to Wired magazine, "In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy. ... On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries."

87. According to David Wessel of The Wall Street Journal, Americans "spend about half of their food budgets at restaurants now, compared to a third in the 1970s."

88. We are used to hearing how much faster the earnings of the top 1% grow compared with everyone else's, but we often forget that it used to be the other way around. From 1943 to 1980, the annual incomes of the bottom 90% of Americans doubled in real terms, while the average income of the top 1% grew just 23%, according to Robert Frank.

89. According to Vanguard founder John Bogle, the average equity mutual fund gained 173% from 1997 to 2011, but the average equity mutual fund investor earned only 110%, thanks to the tendency to buy high and sell low.

90. According to David Leonhardt, median family incomes have fallen substantially over a decade for the first time since the Great Depression. "By [2011], family income was 8 percent lower than it had been 11 years earlier, at its peak in 2000."

91. The rise in domestic energy-production has already shaved $175 billion off our annual import bill compared with five years ago, according to energy analyst Daniel Yergin.

92. Federal nondefense discretionary spending -- all spending minus defense and entitlements -- is on track to hit its lowest level as a share of GDP in more than 50 years, according to data from the Congressional Budget Office.

93. Bonds have become so richly valued that UBS is reportedly reclassifying brokerage clients who are overweight bonds as "aggressive" investors -- most likely to avoid future lawsuits if and when bonds lose value.

94. According to The Economist, "Over the past ten years, hedge-fund managers have underperformed not just the stock market, but inflation as well."

95. According to Bloomberg, "Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.

96. In the 1960s, wages and salary income made up more than 50% of GDP. By 2011, it was less than 44%, as dividends, interest, and capital gains made up a growing share of the nation's income.

97. S&P 500 companies held $900 billion in cash at the end of June, according to Thomson Reuters. That was up 40% since 2008.

98. "More than 50 million Americans couldn't afford to buy food at some point in 2011," writes CNNMoney,
citing U.S. Department of Agriculture data. In June 2012,

46.7 million Americans received food stamps.

99. Japan's working-age population is on track to decline from 62.6% of its population in 2012 to just 49.1% by 2050.

100. The unemployment rate for those with a bachelor's degree is just 3.7% -- less than half the nationwide average.

Warren Buffett’s Annual Berkshire Letter: The Highlights

Warren Buffett’s Annual Berkshire Letter: The Highlights
Warren Buffett‘s annual letter is known for his folksy witticism and over-the-top compliments. WSJ Deal Journal has pulled out some of this year’s best. Let us know in the comments if you had other highlights from the letter.

Don’t you wish upon a star: “Your chairman has not been free of this sin. In Berkshire’s 1986 annual report, I described how twenty years of management effort and capital improvements in our original textile business were an exercise in futility. I wanted the business to succeed and wished my way into a series of bad decisions (I even bought another New England textile company.) But wishing makes dreams come true only in Disney movies; it’s poison in business.”

Buffett also made a series of warnings to those CEOs who didn’t do much because of “uncertainty” in the economic environment.

Uncertainty? Rubbish: “There was a lot of hand-wringing last year among CEOs who cried ‘uncertainty’ when faced with capital allocation decisions (despite many of their businesses having enjoyed record levels of both earnings and cash). At Berkshire, we didn’t share their fears, instead spending a record $9.8 billion on plant and equipment in 2012, about 88% of it in the United States.

That’s 19% more than we spent in 2011, our previous high. Charlie and I love investing large sums in worthwhile projects, whatever the pundits are saying. We instead heed the words from Gary Allan’s new country song, ‘Every Storm Runs Out of Rain.’”

Always be bullish on America: ”We will keep our foot to the floor and will almost certainly set still another record for capital expenditures in 2013. Opportunities abound in America.”

A history lesson: ”A thought for my fellow CEOs: Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful).”

Don’t risk missing out: “Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of “experts,” or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.”

Call me, maybe: ”If you are a CEO who has some large, profitable project you are shelving because of short-term worries, call Berkshire. Let us unburden you.”

And as always, he lauded his lieutenants:

His investing managers: “Todd Combs and Ted Weschler, our new investment managers, have proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit. We hit the jackpot with these two. In 2012 each outperformed the S&P 500 by double-digit margins. They left me in the dust as well.”

Ajit Jain, head of Berkshire Reinsurance: “If you meet Ajit at the annual meeting, bow deeply.”

Tony Nicely, head of Geico: “I rub my eyes when I look at what Tony has accomplished. Last year, it should be noted, his record was considerably better than is indicated by GEICO’s GAAP underwriting profit of $680 million.”
Railroad chiefs: “In Matt Rose, at BNSF, and Greg Abel, at MidAmerican, we have two outstanding CEOs. They are extraordinary managers who have developed businesses that serve both their customers and owners well. Each has my gratitude and each deserves yours.”
HomeServices: “Ron Peltier has done an outstanding job in managing HomeServices during a depressed period. Now, as the housing market continues to strengthen, we expect earnings to rise significantly.”

Newspaper editor 1: “Our confidence is buttressed by the availability of Terry Kroeger’s outstanding management group at the Omaha World-Herald, a team that has the ability to oversee a large group of papers.”

Newspaper editor 2: “Credit the editors of those papers – Margaret Sullivan at the News and Mike Reilly at the World-Herald — for delivering information that has made their publications indispensable to community-interested readers. (Margaret, I regret to say, recently left us to join The New York Times, whose job offers are tough to turn down. That paper made a great hire, and we wish her the best.)”. From WSJ Deal Journal.