It comes as no surprise to me that Silicon Valley billionaires are, as Vanity Fair reports, “mostly living life as they did before coronavirus.”

In that same August 13 article, the writer says:

“I’ve heard about parties from Palm Springs to Palo Alto, business meetings on the slopes in Colorado after a mountain-biking sesh, electric surfing in Hawaii, and billionaires traveling the world on their private jets, hopping from state to state, country to country, intentionally following the lowest COVID rates of the previous week.”

Earlier this year, before COVID-19, I brought a film crew with me to Atherton, California, deep in the heart of Silicon Valley, to record a special presentation on America’s wealth gap.

It’s not as well-known as Palm Beach or Beverly Hills, but Atherton repeatedly ranks as the most expensive ZIP code in all of the United States.

While there, we spotted plenty of modestly-sized houses selling for $10 million at a minimum… and this small town is just the tip of the iceberg for this part of the country.

The third most expensive ZIP code in America is located less than five miles from Atherton. So is the fourth most expensive ZIP code. In fact, seven of the 12 most expensive ZIP codes in all of America are all within a 20-mile radius of Atherton.

But here’s what else we found. A short 13-minute drive from this wealthy enclave is Costaño Elementary School. A news report from not long ago indicates that 63% of the roughly 500 kids that go to school here are homeless.

Many of its students don’t go home to multimillion-dollar homes… or any house at all. Instead, they live in trucks and campers along abandoned industrial roads.

There are few places in America where the wealth gap is as dramatic as this: $40 million homes not far from $1,000 trailers, parked on rugged industrial streets.

So today, let’s look at what the wealth gap looks like in Silicon Valley…

At why it’s wider there than just about anywhere else in America…

And at how we can turn that gap to our profitable advantage…

The Valley’s “Historic High” Wealth Gap

Income inequality in Silicon Valley is now at a “historic high,” according to the Silicon Valley Index, an annual overview of the region’s economic and demographic indicators.

According to that report from Joint Venture Silicon Valley, 13% of the households holding more than 75% of the region’s wealth. Furthermore, while 13% of the region’s households have more than $1 million in net assets, 37% have less than $25,000 in savings.

Moreover, while the San Francisco Bay Area has added 821,000 jobs since the recession of 2008, the region built just 173,000 housing units during the same stretch. Hence, one of the nation’s worst housing crunches — and those $10 million+ homes in Atherton.

I could share numbers like this all day. But what things look like on the ground is much more interesting — and illuminating — than statistics. So for that, let’s turn back to that Vanity Fair article:

“A report last week found that the superrich are paying as much as $2.6 million for international citizenships, then zipping out to said country on their private jets,” or a rental, VF reports.

I’ve seen some of that myself. Just yesterday, in fact, I asked a friend of mine who lives there about the availability of flights into Nicaragua, because I had read that all U.S. airlines had suspended flights.

He answered: “There are no current flights in. Only private charters.”

Now you might wonder, why would anyone charter a flight to Nicaragua?

The answer is that this individual lives on Playa Colorado, the best surfing beach in the country. And there is a small airport that handles private jets inside the gated community where this surf break sits.

That means Silicon Valley surfing bros can literally charter a jet from Houston and be in the water surfing four hours later! Literally. It’s happening right now.

Meanwhile, for those stuck at home:

Some public-school teachers are being enticed away to teach a single child in more affluent areas… Others who can’t afford a single teacher are creating pods. As a doctor recently told me, “Coronavirus is a poor person’s virus. We’re seeing it spread in poor neighborhoods, to poor families who have to go to work and live in close proximity to each other, and poor kids are the ones who will not get a proper education.”

Folks on the left think this gap between the haves and have-nots is the result of capitalism’s failures. They argue for socialist solutions like higher minimum wage, universal basic income (UBI), increased taxes and free healthcare for all.

Many folks on the right are equally confused. They say the economy fails to produce widespread prosperity because the government is more obsessed with redistributing wealth than nurturing it, pointing to excessive regulation, misguided subsidies and punitive taxes.

Both of these explanations are completely wrong. Let me explain.

More Wealth in Fewer Hands — The Technochasm

Silicon Valley is so rich and so divided — even more so than Manhattan or Beverly Hills — because of its business… technology. And from there stems the greater U.S. wealth gap.

Thanks to recent advances in computing power, companies that develop and employ cutting-edge technology are growing to huge sizes, grabbing market share and changing the world faster than ever.

This is creating huge winners and huge losers at a pace we’ve never seen before.

Moreover, that exponential technological progress allows companies to operate with just a fraction of the number of employees that businesses used to require.

In other words, wealth is being concentrated into fewer and fewer hands.

The result? Let’s return to Vanity Fair:

“[Mark] Zuckerberg is now the fourth-richest person on the planet, worth $100 billion. Jeff Bezos has reached another vertiginous high; he’s now worth around $190 billion, depending on the time of day, and he set a record last month when his net worth jumped by $13 billion in a single day. Elon Musk… has seen his net worth skyrocket; last month it reached $70 billion, helped along by a $6.1 billion bump in a single day, edging him past Warren Buffett on the list of the world’s richest people.”

The best new companies of today simply don’t need many people compared to companies from a decade or two ago — so the number of great jobs is decreasing while the pay for the employees who do get jobs is radically soaring!

This is why the wealth gap gets wider and wider every single year.

Get ting jealous or angry about it won’t do you any good. However, you can make sure your money is positioned properly.

That’s why I visited Atherton earlier this year… to film a special presentation all about this phenomenon — and to show you the moves you need to make now in a series of brand-new special reports.

Just go here to check it out.

Regards,

Eric Fry

Editor’s Note: For two decades, CEOs and Wall Street billionaires paid Eric Fry millions for trade research and ideas. Over 20 years, the peak highs from his top recommendations averaged out to 93% a year. But Eric has left all of that behind – and invited a small group to follow his work. For that small group, in just 10 months, he uncovered total gains of 987% (including the losers!). Today, Eric is inviting a few more people to join him. Go here to find out more.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.