By Haddon Libby

Who made the most money in 2016? 

It looks like it will be Warren Buffett whose net worth increased by $9 billion to $71 billion due to his ownership in Berkshire Hathaway.  Casino magnate, Sheldon Adelson, was second on the list as his net worth grew by $8.9 billion to $32 billion.  Third was oil fracker Harold Hamm whose ownership in Continental Resources increased his net worth by $8.7 billion to $15.6 billion.  Bill Gates and Carlos Slim remain the wealthiest people in the world with net worths of more than $80 billion each.

Of the five hundred stocks making up the S&P 500 index, Nvidia saw its stock price go up the most, increasing by 160% for a market value nearly $50 billion on revenues of $6 billion.  Nvidia creates high-end computer graphics chips used for things like virtual reality.  Freeport-McMoRan saw its stock price increase by 106% for a market value of $23 billion despite a net loss that is projected to be $8.5 billion for 2016.  Besides losses, Freeport-McMoRan mines copper.  The only other stock to see its share price increase by more than 100% was OneOK which produces natural gas products.  Worth noting, the companies worth the most in the world are Apple at $607 billion, Google ($544 billion) and Microsoft ($482 billion).

A lot of companies bought a lot of other companies in 2016.  The largest announced deal was the AT&T acquisition of Time Warner for $108 billion in October.  This is the Time Warner that is the third largest media conglomerate in the world owning things like CNN, HBO and Warner Brothers.  President-elect Trump has expressed some concerns about this merger that is scheduled to close in about one year once all regulatory approvals are made.

The second largest acquisition occurred in May when Bayer announced their intent to purchase Monsanto.  Bayer is the German company best known for Bayer aspirin while Monsanto is best known for GMO crops with things like Agent Orange in it.  Will a Trump Administration approve this pending merger?  We will find out next year.

The third largest deal was British Tobacco buying Reynolds American for $58 billion in October.

While thinking of things that smoked, the Samsung Note 7 came out and was so hot that it would spontaneously combust like a drummer in pseudo-super-group Spinal Tap.

The hottest stock sector for 2016 was the previously beaten up Metals & Mining Industries which saw their stocks double in value.  Information Technology stocks continued to smoke, up 33%, while Trump’s triumph in the election caused bank stocks to rally by 33% as well. 

The bank stock rally was due to a few reasons.  First, the Trump administration has vowed to remove much of the regulations levied on the industry after the crash of 2008 due to rampant fraud.  Second, it is expected that Trump and the GOP will raise government debt levels by much more than Obama thus causing interest rates to increase.  Third, those increased debt levels should cause near-term economic prosperity at the cost of long-term financial health.  Lastly, Trump and the GOP are expected to cut taxes on corporations (like banks) meaning that their earnings are better and stocks worth more.

Finally, the Oxford Dictionary has recognized “post-truth” as the new word of the year.  Besides being a phase as opposed to a word, this hyphenate is an adjective that Oxford defines as “denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.”  Post-truth is practiced by many in politics and most, if not all, of our cable news networks.

Haddon Libby is a Financial Advisor and Managing Partner at Winslow Drake and can be reached at 760.449.6349 or HLibby@WinslowDrake.com.

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