2020 was one of the toughest years ever.
For the past few decades, we have been building a world without borders, creating supply chains
across the globe to bring down prices and improve the quality of life everywhere.
However, the global pandemic put an end to our dreams and wishes of building a planet
without borders.
Overnight, everything crashed, and the world was on the brink of an economic catastrophe.
However, the absolute opposite has happened.
2020 was one of the best years ever.
Companies earned billions of dollars, the business thrived, and nearly 500 people became
billionaires during the pandemic.
The pandemic created more billionaires than anything else.
The wealth changed hands.
Industries that were seen as scams like crypto created some of the biggest billionaires ever.
Bitcoin skyrocketed 800% between mid-March 2020 and mid-March 2021, while Ripple's XRP
rose 200%—nine new members of the three-comma club have emerged.
The richest is 29-year-old Sam Bankman-Fried, who has amassed an $8.7 billion fortune as
the founder of two crypto firms.
The wealth constantly changes hands, even when a single stock is traded.
If you purchased a stock low and sold it high.
Remember that someone sold it to you when it was low and bought it from you when it
was high.
This is a small example of how wealth changes hands.
A big example is the pandemic when people panicked and sold billions of dollars worth
of stocks but ended up regretting it since everything boomed afterward.
Or when people got too excited and began to buy crypto, for example, back at the end of
2021 and beginning of 2022.
However, people who anticipated the crash closed their positions, made fortunes, and
let the rest bleed.
When we talk about wealth, most people think of either real estate or the stock market.
That's what we usually mean when we talk about investing.
These 2 markets are undoubtedly some of the biggest in the country, with a real estate
estimated at USD 3.69 trillion in 2021.
The New York Stock Exchange, which is one of our many stock exchanges, has an equity
market capitalization of just over 27.2 trillion U.S. dollars as of March 2022.
That's a lot of money.
No wonder why so many people are becoming wealthy through real estate or the stock market.
However, if you look at the numbers, private businesses make up over 44 percent of the
U.S. economy.
As of 2022, the size of the U.S. economy is 23 trillion dollars, with a T.
That means private businesses are worth over 10.12 trillion dollars.
You don't hear much about them because, unlike public companies, they are not obligated to
publish their financial statements every quarter, so no one except those who run the company
actually knows how big these companies are and how they are performing.
Koch Industries is one of the country's biggest companies that belong to the Koch brothers,
who are some of the wealthiest people in the world.
If we value Koch industries like we value Apple, for example, the world's largest company,
then it is worth 1.2 trillion dollars.
In 2020 apple made a staggering revenue of 274 billion dollars and was worth 3 trillion
dollars, while Koch industries made 115 billion dollars.
If we value the companies based on their revenue then Koch industries made 40 percent of what
Apple made.
But, that's not how we value companies.
At the end of the day, Apple is a tech company that focuses on innovation and theoretically
will make much more money in the future than Koch industries that focuses on traditional
business.
However, at the end of the day, if we take everything at face value, Koch industries
made almost half the revenue that Apple made.
It is just a small example of how much money is made by private companies that we don't
often hear about.
Take another example, Cargill, a food conglomerate.
From an outsider, it looks like a boring business, but the company made a staggering 134 billion
dollars which is almost what Microsoft made in 2021 ( $168.088B), a company that's worth
over 2 trillion dollars.
These are just 2 examples out of many private companies that are earning dozens of billions,
if not hundreds of billions of dollars annually.
And according to Forbes, some experts estimate that somewhere between $30 trillion to $68
trillion dollars will be shifted from baby boomers, people born between 1946 and 1964,
to Generation X (1965-1980) and millennials (1981-1996).
Which means we are on the brink of the largest wealth transition in human history.
Most of that wealth is about to change hands.
The problem is that it's really difficult to pass your wealth to someone when that wealth
exists because of your leadership and management.
Amazon is worth over a trillion dollars because Jeff Bezos surrounded himself with brilliant
people and led the company to dominate e-commerce.
Now, since he stepped down and some other top executives, it remains to be seen how
the company will perform in the coming future.
But if we are to look into the history, most companies stagnate when the charismatic leader
leaves the company for one reason or another, except for a few examples such as Apple.
Just take a look at the sp500 companies over the years.
40 years ago, at&t was the top Sp500 company, but today is worth just 150 billion dollars,
which is a small fraction of the largest sp500 company, Apple.
Or G.M., an American icon that was the largest automaker in the United States and was the
largest in the world for 77 years until losing the top spot to Toyota.
The company represents America's car industry by producing cars such as Chevrolet and Cadillac.
Until the 1980s, the company was on the list of the top 10 sp500 companies.
However, today, it's a shadow of its former glory, with a valuation of just 50 billion
dollars.
A fraction of Tesla's 750 billion dollar valuation.
These are the largest companies in the U.S. 10 or even 5 years from now.
This list is going to be different.
Some of these companies won't even be in the list of 100 largest companies because the
world is yet again in the brink of another change.
The pandemic has already shocked the world.
The war in Ukraine is creating supply chain problems, and the unpredictability of the
future is creating room for new companies to compete with giants of the industries.
I wouldn't be surprised if some crypto companies or more energy companies will join the list
but not Exxon, chevron or PB.
But rather those that are developing technologies to extract cleaner sources of energy.
Energy and money are the two industries that shape our society, and both of these industries
are in the middle of the greatest transformation.
Oil is witnessing its last golden decade.
The war in Ukraine has sent shock waves across the world that if we don't invest in alternative
energy sources, we are doomed!
So, there is definitely going to be huge investings in solar, nuclear and other sources of energy.
That's where the wealth is most likely going to transition to.
In fact, it has already started.
That's why Tesla alone is worth more than Exxon and chevron combined.
Another industry that is reshaping is the financial industry.
Once upon a time, the Mayer Amschel Rothschild sent his 5 sons to 5 capitals of the world
and built the largest financial institution in the world, which as a result, made the
Rothschild family the wealthiest family in the world.
But in the late 19th century and the beginning of the 20th century, companies like JP Morgan
and Goldman sacks broke that monopoly and replaced them as the leaders in banking and
finance.
But now, the status quo is challenged again by cryptos that are reshaping the industry
and making it possible to move millions of dollars in a pen drive from one country to
another without any government's knowledge.
Of course, the government is tightening its rules on crypto, but you either adapt to the
new reality or fall behind.
The world's biggest banks are trying to get into crypto, but they won't be able to stop
the newcomers.
Coinbase's peak valuation was around 75 billion, almost as much as Goldman sacks today.
It's difficult to predict which companies exactly will dominate the world, but they
are undoubtedly going to be in these 2 sectors.
That's it for this video.
Thanks for watching, and until next time.