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apartments in Manhattan sold for more than $20 million in 2005, up from five in 2004, with a few fetching $40 million-plus. NetJets couldn't meet the enormous demand for its private-jet flights over the Thanksgiving holiday. Imports of French cognac into China surged 24% in 2006. And, last May, an unidentified Russian bought Dora Maar with Cat for $95 million, the second-highest price ever for a Picasso.

Never in history have the haves had so much. Burgeoning wealth and incomes from globalizing industries, swelling asset markets, media ubiquity and fast-developing emerging economies are accruing disproportionately to the entrepreneur class and the already rich. This is giving the world's affluent a greater capacity to splurge, build, invest and gamble than ever before.

Those of lesser means in the developed economies are suffering or stagnating financially by comparison, though in absolute terms standards of living are holding up or advancing modestly. Thus do we see the expanding "wealth gap" that populist politicians bemoan, capitalists celebrate and editorialists puzzle over. While there are some aspects of the income-and-wealth divergence that can be explained by cyclical forces, the long-term pattern in which the rich get rapidly richer seems durable. And there remain exploitable investment opportunities tied to this trend.

The numerical evidence is plentiful, thanks to data collectors who want to reverse the trend or take advantage of it. For years, both the number of wealthy households and their aggregate resources have been growing much faster then world gross domestic product. The latest Merrill Lynch-CapGemini World Wealth Report estimates that the number of people globally with financial assets exceeding $1 million climbed 6.5% in 2005, and their combined financial wealth rose 8.5%, to $33.3 trillion, for an average of $3.8 million each. It's getting to the point where "millionaire" will no longer serve as useful shorthand for defining who's rich.

THE FINANCIAL NET WORTH of this segment grew 20% in North America, 23% in Latin America, 50% in the Middle East, 15% in Asia and 9% in Europe.

In the U.S., according to the liberal think tank Economic Policy Institute, the richest 1% of Americans had net wealth 190 times that of the median household, up from a ratio of 168 in 1998 and 131 in 1983. The top 1% owned 37% of all domestic stocks held by individuals in 2004, and the top 10% owned 79% of all stock. The real income of the richest 5% of U.S. residents climbed an aggregate 31% from 1985 through 2004, versus 14% for the middle 20% and 12% for the bottom 20%.

see "Wealth Inequality: Data and Models several forces clearly seem to contribute to it.

The income premium on higher education has grown in recent years, as the economy became more service-based and rewarded those with better communication, organizational and creative skills. And educated folks have gotten better at passing on educational and economic advantages to their children, while those lacking education have fewer reliable, good-paying manufacturing jobs available to them. This contributes to a winner-take-most economy, with slight inflation-adjusted declines in the median household income in recent years.

The opening of world economies to competitive forces and capitalist incentives has allowed innovative people to access deep global financial markets. Lower tax rates on capital in the U.S. and elsewhere obviously have played a role, as well.

With technology allowing cheap global communication, information and entertainment products can easily reach a vastly larger audience than ever before. Economists have long theorized that technology would help create a class of super-rich celebrities.

Tom Cruise is worth what he is because his movies can address markets numbering billions. Satellite TV has meant that English soccer star David Beckham could go from a team in Manchester to one in Madrid to, this month, one in Los Angeles, where he was given a $250 million, five-year contract and will be watched by sports fans in Europe, Africa, Latin America and Fresno.

FROM A CYCLICAL ANGLE, the percentage of U.S. GDP now attributable to corporate profits is near a multi-decade high. These profits are driven by global demand and fast productivity gains. They drive strong dividend and capital-gains income toward the affluent, while restraining wage growth. UBS points out that prior profit cycles also have seen the median wage stagnate until the middle of an economic expansion, after which it gains some ground.

Finally, this wealth buildup has created plenty of well-paying jobs in the asset-churning professions. The American service economy is commonly thought of as relying on fast-food soda jerks and hair stylists. But among America's key exports is that investment banker in the Upper Class section of a Virgin Atlantic flight to London, preparing to cut a billion-dollar deal.

Ajay Kapur, global strategist at Citigroup, has been bundling these economic trends into a theme that he calls Plutonomy a global economy disproportionately propelled by the rich. To Kapur, the pattern of rapid and lopsided wealth buildup around the world is a durable one.

"The spread of free financial markets, patent protection and the rule of law," he says, means that more smart, ambitious people than ever are able to turn a good idea into capital, and capital into liquid wealth.

Indeed, Kapur disagrees with the popular idea that the current high share of corporate profits in the developed economies which tends to be funneled into the pockets of the rich and of business owners will ebb toward historical norms.

"To me, the profit share of GDP will get even higher, back to the (record) levels of the "50s," he says. Then, the arms buildup for the world wars spurred a long period of innovation and wealth accumulation, and the broken economies of Japan and Germany were rebuilt. Today, Kapur suggests, we are still reaping the benefits of Cold War spending, while financing the rapid expansion of China and India.

The spending power of the rich has grown so formidable and shows so few signs of reversing, investors probably still have an opportunity to harness this dynamic in their portfolios.

Citigroup, among other firms, has assembled a basket of stocks that should benefit from the Plutonomy thesis. Luxury-goods stocks have outperformed the market for more than a decade, so the market has to some degree sussed out the macro forces. Yet in many ways the backdrop remains favorable for the sector.

The Citi basket includes 24 names, including Coach; Sotheby's; Polo Ralph Lauren; Tiffany; Four Seasons Hotels and, from Europe and Asia, Bulgari (BUL.Italy); Burberry (BRBY.UK); Mandarin Oriental (MAND. Singapore); Julius Baer (BAER.Switzerland); LVMH (MC.France); Porsche (POR3.Germany) and Shangri-La Asia (69.Hong Kong).

As noted, stocks of this ilk already have outpaced the broad market over recent years. And, on average, they carry higher valuations than the broad indexes. Still they haven't left the rest of the market in their wake. In the past year or so, this portfolio has merely kept pace with the global markets, Kapur notes.

HE THINKS THAT these stocks tend to hit their stride for outperformance in periods when equities are doing better than housing in the asset-class race. That, certainly, began to occur last year and could well continue for some time. He adds that, in the past, the relative valuation of the luxury group hasn't prevented it from delivering superior returns.

UBS strategist Tom Doerflinger last year put together a similar list, though this one geared toward companies with a strong franchise in selling to the affluent in the States. It includes such stalwarts as American Express; Best Buy; Constellation Brands; Merrill Lynch; Nordstrom; Simon Property Group; Starbucks and Whole Foods Market.

A distinguishing strength of luxury companies is their brands' enduring power, which transcends time, country and culture. Doerflinger notes that Louis Vuitton and Tiffany trace their history to the 19th century.

Because of their exclusivity real or imputed and the lack of price sensitivity of their core customers, these brands have enviable pricing power. Says James Hurley, who follows the luxury sector for Telsey Advisory Group in New York: "I expect we'll continue to hear about sustained momentum" in these businesses. "We have price increases coming our way soon" from European luxe specialists, inspired by strong demand and the greenback's decline last year versus the euro. That will provide a pricing umbrella for domestic competitors such as Coach and Tiffany, who will "go along for the ride."

The best of these brands manage both to maintain their prestige at the high end and to broaden their base with entry-level items. Tiffany's $100 "Return to Tiffany" dog-tag charm necklaces and Coach's colorful $88 iPod covers do the trick.

In the market for consumables, newly well-off people in emerging economies grasp for Western brands that attest to success and disposable income. Starbucks has proven quite exportable, and European liquor companies are duking it out in the burgeoning Chinese cognac market.

THE BRAND POWER of the luxury nameplates presents a tremendous challenge to more mainstream purveyors trying to gain a foothold in the wallets of the well-off.

"For mid-market brands trying to trade up, it's easier said than done," Hurley observes. "Just go to the department stores and see what's marked down." As an example, he points to the singer Gwen Stefani's handbags, listed at $300 to $600, as "markdowns waiting to happen."

Gap's

Can this sort of merchandising work? Hurley thinks mid-tier companies like Banana Republic will have a hard time commanding prices anywhere near those that premium brands enjoy.

Indeed, the net losers in the new world of Plutonomy are mass-market brands. Their core customers aren't enjoying much of an increase in income, while their home equity has slipped and they're being squeezed by inflation, albeit it mild, in necessities.

For every Target that has had some success in wooing the style-conscious with clever store and product design, there is a Wal-Mart that stumbles trying. Middle-of-the-road department stores such as J.C. Penney and Kohl's have had good runs, sprucing up product lines for those of moderate incomes, but the headwinds will turn brisk if the income concentration story plays on.

Yet this winner-take-most setup doesn't mean that the stock market will only reward companies that ply the most posh ZIP codes. There are several stock plays on the cash-strapped consumer.

Richard Bernstein, strategist at Merrill Lynch, said last month that dollar stores were an under-appreciated group that would be a big beneficiary of lower energy prices in 2007. So far, these lower fuel costs have arrived in a dramatic way. If, indeed, real wage growth turns positive in a tight labor market in the latter stages of a profit cycle as many now predict then the dollar stores could get even more of a lift. Stocks of companies like Family Dollar and Big Lots have been perky in recent months.

Obvious losers as many lower-income consumers become over-extended are subprime lenders, several of which have already filed for bankruptcy protection while others have seen their shares walloped.

In a dimmer corner of the financial industry sit pawn shops and payday lenders, which are thriving. Stephanie Pomboy of MacroMavens has been cited more than once in Barron's targeting these lenders of last resort as a play on the housing bust.

EZCorp and First Cash Financial are winners here. Be warned, however, that regulatory and legislative rumblings are emerging that would crack down on the practices of payday lenders, which many view as predators on the poor.

KAPUR'S PLUTONOMY THEORY also helps make sense of what appear superficially to be some disconnects in the economic data.

For instance, it has become popular among some Wall Street economists to marvel at the abiding growth in overall consumer spending, even as gasoline prices spiked in 2005, as housing turnover collapsed last year, and as consumer-confidence surveys have periodically dipped to dour levels. The simple fact is that the swollen incomes and investment accounts of the top several% of households can drive an awful lot of spending.

The $16.5 billion that Goldman Sachs paid its employees last year makes up for an awful lot of wage stagnation elsewhere. Multiply that by all the other beneficiaries of the asset-economy boom merger lawyers, hedge-fund impresarios and art dealers and it helps explain why broad consumption figures defy the democratically sampled surveys of consumer confidence. It's a phenomenon that many find uncomfortable, but it's a fact.

Barron's economics editor Gene Epstein points out that many economists focus on the government's disposable personal income figures to divine the public's spending power.

But this number is strongly influenced, quarter to quarter, by "factors affecting the wealthy, such as fluctuations in investment income and the change in the tax take due to more people moving into high brackets during an expansion. And since consumer spending by the wealthy is generally impervious to income, that explains why DPI is a far less useful number than wages and salaries in explaining consumer spending," he maintains.

Similar technical factors involving capital gains among the wealthy also serve to depress the national savings rate, often rendering it negative. While most households, it's true, fail to save much, if anything, the country is producing a sizable nest egg.

Kapur invokes the fast-expanding ratio of wealthy citizens' net worth to income. This has allowed them to spend more quickly than income rises. To some degree this is rational, and bodes well for the continuance of high-end consumption.

THIS IS NOT TO suggest that the economy can thrive indefinitely with an ever-widening income gulf, especially if the earnings of those at the median point or below stagnate or backslide for any stretch of time.

And, as anyone who watches cable news or reads the papers can affirm, the conspicuous divide between the often overindulgent rich and the struggling average worker has become a potent and potentially explosive political and social issue.

Several members of Congress were elected last year on sharply populist positions. Former Sen. John Edwards, a North Carolina Democrat, is readying his 2008 presidential bid on his tested theme of "Two Americas." And some media personalities are forging lucrative careers decrying outsourcing and scapegoating immigrants.

The outrage among the public and in Washington about executive-pay deals of the sort that handed Robert Nardelli $210 million for departing as Home Depot CEO will spur congressional hearings and possibly legislation before long.

While the notion of the estate tax remains unpopular in polls, even though just a tiny fraction of Americans will ever be subject to it, chances of repeal have dimmed.

History has shown that Americans, more than most of their counterparts around the world, favor equality of opportunity but shun measures to actively redistribute income. They choose to preserve the possibility of outsized rewards, so long as they believe a decent proportion of society has a legitimate shot at winning them.

Still, when the pie is being cut as unevenly as it is now, support grows for bolstering labor's slice of economic rewards. This may lead to more egalitarian measures and perhaps have a shaming effect on, say, corporate board members determining how much to pay a new chief executive.

Overseas, authoritarian or socialist governments might well be moved to target the hyper-rich of their countries or foreign interests who have hit the globalization jackpot. Who knows what a Hugo Chavez is contemplating?

There's little evidence to suggest that any likely measures will derail the long-lived emergence of an ever-richer tier of achievers, entertainers, asset-mediators and inheritors. But it's clear that the world of Plutonomy is creating dangers as well as opportunities as it evolves.