The stock markets are like a double edged sword. A booming market can push you up in the list of the rich but a market crash can reduce your wealth dramatically. The market crash of 2007-08 resulted in substantial losses for many people. The downgrading of the credit rating of the American economy by Standard & Poor has resulted in some panic selling in the stock market which has depressed the prices across the board and has wiped off billions of dollars from the net worth of rich individuals. Mexican telecom tycoon Carlos Slim is estimated to have lost $6.7 billion in a week.
Slim’s overall portfolio has lost almost 9.5% in value. The valuations of all his companies have taken a hit and their shares are trading at much lower levels than a week ago. Carlos Helu Slim and his companies control almost 70% of the Mexican mobile market. The valuation of his companies has been adversely affected because the Mexican Peso fell by 2.3% against the Dollar. Slim has companies in the field of construction, real estate and financial services and they have all lost value ranging from 6% to 11%.
All investors and billionaires have been adversely affected. Bill Gates has lost about 5% of his net worth and Warren Buffet’s wealth has reduced by 4.3%. But these big guys will bounce back as soon as the situation stabilizes. It is the small investor that suffers the most as his entire savings are wiped out in such situation or he becomes so weak that he is unable to recover even when the situation improves. Hopefully the government will take quick remedial measures so that the 2007-08 scenario is not repeated all over again.
Via: bloomberg, independent