The rich and famous in America are a select few but they command a lot of clout and influence in their respective industries. Money may be the root of evil but it also delivers power in the hands of certain personalities. Typically, a powerful bank account gives a million or a billion reasons to gain dominance in a particular field. However, business ventures for wealthy individuals may turn out to be risky moves. And these risks are worth a boatload of money. This 2012, ten rich and powerful personalities lost a lot of wealth for their financial decisions and moves. The lessons of their losses may prove to be a useful foresight to avoid these situations in the future.
1. Mark Zuckerberg: Founder of Facebook (-$8.1 billion)
Mark Zuckerberg became one of the youngest and fastest billionaires in the world on the heels of the success of Facebook. As the founder and CEO of the world’s most popular social networking website, Zuckerberg earned the immediate respect of older millionaires and billionaires for his computer wizardry.
However, Zuckerberg’s technological advantage didn’t translate well in the battlefield that is the stock exchange market. His initial venture in unveiling his IPO was not the critical success it was hoped to be and he stood to lose USD 8.1 billion.
2. John Paulson (-$4.5 billion)
John Paulson accumulated double-digit losses at his firm that eventually led to a hedge fund loss amounting to USD $14 billion in assets.
3. George Soros (-$3 billion)
Another hedge fund magnate George Soros had a slight dip in his production when he lost USD 3 billion. But most of these losses were charitable donations that accounted for most of the drop-off. Soros is the Chairman of the Soros Fund Management, LLC and Founder of the Open Society Institute.
4. Harold Simmons (-$2.2 billion)
Harold Simmons is a notable buyout investor whose claim to fame is his vow to donate USD $36 million before November to boot President Barack Obama out of the White House. However, his Valhi holdings have dropped their value by 30 percent over the last year. So it’s hard to tell how much value his statement about booting Obama holds now.
5. Anne Cox Chambers (-$1.3 billion)
Chambers is a well-known media empress but her popularity seems to decrease in its luster after the same happened to her public competitors. Cox Enterprises, a private media conglomerate that covers all media formats such as newspapers, television, radio and cable television, have seen a huge decline in revenue throughout the years.
6. Mark Pincus (-$1.24 billion)
As the CEO of the gaming company Zynga, Mark Pincus is starting to feel what happens when the opposite of “all work and no play” is achieved. Zynga has completed a free-fall plunge out of the Forbes 400 list because its game have been gradually tuned out by its target demographic. The demise of the Facebook IPO in the stock exchange market didn’t contribute well to the company as well.
7. Philip Falcone (-$1.1 billion)
Falcone is known as the CEO of Harbinger Capital, a private hedge fund based in New York, notable for betting against sub-prime mortgages in the United States and United Kingdom. The assets of Harbinger Capital is said to have peaked at USD $26 billion in 2008 but have abruptly declined to USD $9 billion in 2010. With the company having dropped out of the Forbes 400 due to an SEC investigation, it seems the company is continuing with its value drop.
8. Robert Stiller (-$1.05 billion)
Stiller is the innovative brain behind Green Mountain Coffee and its specialty gourmet coffees from organic fair trade. This initiative was positively received when it was first introduced because it gave equal market exposure to all kinds of coffee farmers. In 2006, this company also launched the environment-friendly natural paper hot beverage cup that boosted its image within the coffee industry.
But the magic of its brand may have become lukewarm a bit after the company was forced to liquidate numerous shares to reduce its net worth to roughly USD $250 million.
9. Sheldon Adelson (-$1 billion)
Sheldon Adelson’s fortunes have always been tied up to the Las Vegas Sands Corporation that runs the Venetian Resort Hotel Casino and the Sands Expo and Convention Center. However the shares of Adelson’s company have decreased noticeably and this has caused losses of up to a billion dollars. Adelson seems not to mind however. His personal wealth is still pegged at USD $20.5 billion.
10. Sam Zell (-$900 million)
Sam Zell is the chairman of the Equity Group Investments or EGI, a private investment firm founded in the 1960s. The success of this company led to the birth of Equity International, a similar investment firm that focuses on real estate companies.
Even with the sustained growth of EGI, Zell’s Equity International has a lower estimate of its value that eventually led to a decrease of its estimated net worth.
The Nature of Financial Losses
Most of the losses incurred by these influential billionaires are risks by nature. For one, they have enough money to take a chance on a financial move that may or may not develop into profitable decisions for their company. When money is concerned, especially in stock market exchanges, many variables come into play that can affect the outcome of a financial venture. This is especially true for Facebook’s decision to open its IPO.
Other times it involves playing with the perception of key game changers in an industry or market. When a company has grown stagnant or fails to generate further interest, its entire commercial stock may be affected. Eventually, this can lead to losses that can pile up to millions or billions of dollars.
In other cases, Murphy’s Law comes into play and a company is just faced sheer bad luck. During these times, a company should look hard and consider rebuilding their strategies.
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