Have you ever met the billionaire day-trader? Us neither.
The annual world's billionaires list from Forbes came out last week. You can read all about it here, including how the world's richest person is a Mexican you've probably never heard of.
But forgetting the names, the list gives you a nice snapshot of how billionaires fared in 2009 versus us mere mortals.
And to put it mildly, they gave us an absolute spanking.
Big year for big money
The combined net worth of the world's billionaires rose to $3.6 trillion, up from $2.4 trillion the year before -- a 50% surge. By way of comparison, the average US total household net worth rose to $54.2 trillion, up from $51.5 trillion the year before. That's a whopping gain of just 5.4%.
Now, this comparison isn't perfect. For one, there were more billionaires this year than last. So someone worth $950 million in 2009 and then $1 billion in 2010 wasn't counted in last year's Forbes report, but gets all $1 billion thrown into this year's calculation.
Second, let's be fair: Scads of the world's billionaires are financiers that would have been shirtless bums had it not been for bailouts of the financial system. Money seems to buy these people a lot of luck.
Even so, most billionaires legitimately ran circles around us commoners. Why? Give a big thank you to global stock markets, which surged 60% or more since early 2009. Run down the list of billionaires, and you'll be hard-pressed to find one whose net worth isn't largely (if not entirely) tied up in a company's equity.
From Bill Gates with Microsoft to Warren Buffett with Berkshire Hathaway to Sergey Brin with Google, the wealth of most billionaires is married to the stock market in one way or another. The top 50 billionaires include those overwhelmingly linked to the performance of Wal-Mart, Dell, and Amazon shares, to name a few.
Most of these people rarely sell shares in meaningful amounts -- they're permanent owners. That's how they got rich in the first place. And since they were heavily invested last year, they got even richer when share prices rebounded.
That was hardly the case with us average folks. Late 2008 and early 2009 was a time of dumping shares and diving headlong into bonds, gilts and cash. When shares went skydiving in 2008, money was yanked out of funds that invest in the stock market. So even as shares surged last year, plenty of small investors didn't notice. They were long gone. Their timing couldn't have been worse.
Well, DUH!
It's not terribly enlightening to tell you that those who owned the best-performing asset class outperformed those who didn't. And you could also note that most of us have way more of our net worth tied up in housing than billionaires, and property didn't move far last year. Oh, and how about the fact that the share market-loving billionaires got slaughtered in 2008 when markets imploded? Can't argue there.
But there's a deeper point here. The billionaires who keep their emotions grounded and stick with great companies end up crushing those who faint when they hear doomsters talk and manically jump into whatever investment feels best at the moment.
We've looked; there isn't a single billionaire whose fortune is attributed to "dumping shares when everyone else was and buying bond funds yielding 0%." But that's what so many of us have done.
And maybe that's why they're billionaires, and we aren't.
More on the economy and the markets:
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> This article was originally written by Morgan Housel, and published on Fool.com. It has been updated by Bruce Jackson who is not a billionaire, but does have an interest in Berkshire Hathaway.
