The seaside playground of Wall Street's billionaires
- 31 August 2011
- From the section Business
In the Hamptons, the seaside playground for Wall Street's finest, a simple chicken sandwich will set you back $12 (£7.40).
The streets are lined with swanky Fifth Avenue stores, and real estate agents playfully call a $5m house a "cottage".
It is an Alice in Wonderland world where the real America of high joblessness and housing despair is all but invisible.
The economic story of the last decade has only served to make the divide between these worlds more stark.
And yet the success of those who holiday in the Hamptons on New York's Long Island is just the logical result of a shared American passion for self-betterment. They have been the winners in what some might call a lost decade.
On one of the most exclusive roads in East Hampton, a long driveway takes me to the discreetly luxurious home of billionaire Ron Baron.
He is an investment guru, the chairman and chief executive of the mutual funds company Baron Capital, which invests in shares for the long-term, unlike most hedge funds.
Mr Baron spent $100m to buy the 52-acre plot, which was the largest ever US property deal at the time.
The house, the grounds, the pool and the basketball court all overlook the surging Atlantic Ocean, which only this week flooded large parts of the northeastern US in the wake of Tropical Storm Irene.
It may be only 50 miles from the working class town of Asbury Park, New Jersey where he started life, but it is a world away in financial terms.
Ron Baron is a small energetic man who drily tells me the last decade has been "acceptable" in financial terms.
In fact, the company more than doubled the money invested in its funds. It now has $19bn under management.
But the last 10 years were not as the good as the previous 20 years, when the money was being doubled every four or five years. Shares are now incredibly cheap, he argues, because fear is everywhere.
In 1970, Mr Baron says his net worth was "minus", but by 1980 he had earned his first million and founded Baron Capital doing research for hedge funds including George Soros.
Originally his goal was to achieve a modest $25m under management.
It has been said, of course, that he epitomises the rags to riches American Dream.
He agrees that he's living a very different life to his father who was earning around $35,000 by the time he took retirement.
"This wasn't the plan," he protests, meaning his billionaire status. "But yes, I'm incredibly fortunate."
Mr Baron's chosen holiday spot has not suffered the same damage from the housing collapse as happened elsewhere in the US.
Prices range from half a million for a starter home to between $15m and $75m for an ocean-front property, according to John Gicking of Sothebys International Realty, who is a former Wall Street trader.
He says property prices went up dramatically in the last decade, though they are now 25% lower than at the peak in 2007.
He reckons the market is protected by the fact there are "higher calibre buyers", many of them from Wall Street, and says he can tell when the stock market is having a really bad day because the phones stop ringing.
Even the rental market is strong. The cost of renting a beach front house for the summer could top $1m.
It is not easy to spot millionaires and Wall Street big shots on the street because everyone dresses down in beachwear or shorts.
I meet Byon and Marina who are tanned and smiling, crooning "baa baa black sheep" to their small daughter on the streets of East Hampton.
Byon says it had been a great decade for them as the economy in New York has been very strong.
Marina tells me as she works at a hedge fund "we have benefited from the downside".
She means that hedge funds can successfully gamble on falling markets by short-selling, and volatility is actually good for business.
"I'm hoping," she says, "that if tumultuous markets continue that will only bring good things for the firm I work for."
She concedes that things have changed since she entered the workforce in the mid 90s and that today's graduates are struggling with "issues we didn't have to deal with".
The drive to create a fortune seems as natural here in the Hamptons as breathing the heady salt-laden air.
Taxi driver Jason Damark, 20, hopes to end up running his father's cab business here, and in 10 years time, he wants to move on and own more companies.
"Everyone wants the American dream," he says, "but the secret is actually working for it. I work day and night, he tells me, so I deserve the money."
Do ordinary Americans resent the kind of wealth that Hamptons residents have accumulated? Billionaire Ron Baron doesn't think so.
"Maybe," he says, "they are pleased to see someone doing better because it represents the kind of opportunity they might have for themselves or their children.
"That's what this country's all about," he boasts.
I ask if it is possible for young people in today's America to do what he did. "Absolutely," he tells me.
More than half the S&P 500 companies were started in recession or depression times.
He founded Baron Capital in 1982 when interest rates were 18% and stockmarkets had been falling for years. "There are," he says confidently, "always better opportunities when times are tough."
It is a winners' philosophy. It may have limited appeal to those who have been plunged into joblessness and poverty by the crisis which many still blame on Wall Street.
You could argue it is one of the prime reasons why America became, and is still, the world's number one economy.