If I had a chance to ask Santa something this year, I wouldn’t ask for a hassle-free dream cruise, a well-behaved new kitten, or even a gourmet chef in my own kitchen. I’d have just one question: “How do you pay for all those toys?”

I’ve been shopping for toys. Those Barbies and remote-control Hummers don’t come cheap. Even a handful (or would that be a footful?) of stocking stuffers can easily set you back ten or fifteen bucks. So how does Santa fund that extravaganza of giving that he does every Christmas?

The obvious assumption is that he must be independently wealthy. If so, Santa is well aware that he better not spend more than 4% of his portfolio if he wants to preserve it. That means, to keep his portfolio in line with inflation, he would need to earn an average of 7% over time. Of course, to earn 7% going forward, Santa probably has 60% of his portfolio in stocks and 40% in bonds.

How large would his portfolio have to be in order to get gifts for all those children around the world? First let’s try to estimate now many kids that might be. The population of the world is about six and a half billion. About a third of those are Christian; about 16 percent are not religious. If we assume the non-religious people also celebrate Christmas, that gives us 49% of the world’s population. Half of six and a half billion is three and a fourth billion. If we further assume that half of those are children, that means Santa is providing gifts for more than one and a half billion kids.

Even if we figure only five bucks a pop, a billion and a half gifts comes out to seven and a half billion dollars. If that is 4% of Santa’s portfolio, he has to have a net worth of at least 187.5 billion dollars. That’s a serious chunk of change. To put it in perspective, the two leaders on the Forbes magazine list of the world’s richest people for 2005 are Bill Gates, with a net worth of 46.5 million dollars, and Warren Buffett, with a net worth of 44 million dollars. The total net worth of the world’s ten richest people comes to 262.2 billion dollars.

Santa was already giving gifts when Clement Moore wrote about him in 1822, so he’s been building his fortune for at least 200 years. My guess would be that he invested heavily in real estate during the early days of the United States. Obviously, he has had a diversified portfolio over the years. He probably made fortunes in railroads, oil, gold, and—in recent years—Microsoft stock. I’ll bet more recently Santa’s owned property in London, New York, and Paris. I wonder if he’s selling now? Of course, the fact that there is no income tax at the North Pole would have helped a lot.

Even with such a huge fortune, Santa obviously has to do his gift-buying wisely. He certainly gets some significant quantity discounts, whether he’s buying toys or the raw materials to make them. He very likely follows the example set by such giants as Wal-Mart, negotiating the best contracts with suppliers in China and other developing countries. That would help offset what must be enormous transportation costs to get everything to the North Pole.

Many billionaires have used their fortunes to do a lot of good in the world. Santa Claus, though, may be the most extreme example ever of how much you can give away if you are a wise long-term investor.