Many superrich like Jeff Bezos, Larry Page, Sergey Brin and Mark Zuckerberg had a prosperous 2015, with combined earnings of $58.8 billion -- more than the value of Korea’s exports to the U.S. in 2011.
However, not all superrich were as successful. Many of them had a rough year, losing money in investments and other endeavors.
Dov Charney founded clothing brand American Apparel in 1989 and raised his assets up to $550 million in 2007.
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Dov Charney (American Apparel website) |
Charney now has a little over $100,000 after American Apparel saw continuous losses since 2009, and after a series of sexual harassment allegations surfaced which ultimately got him booted out of his company in 2014
American businessman and philanthropist Sam Wyly is another former superrich who made it to the Forbes’ List of Billionaires in 2006 with $1.1 billion in assets. However, he was caught hiding stock trades by creating offshore tax shelters, and has since filed for bankruptcy in 2014.
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Sam Wyly (Bloomberg) |
According to wealth consulting firm “Wealth-X”, among the “ultrahigh-net-worth” individuals with over $30 million in net assets, around 45 percent have reportedly lost some of their wealth, and 11 percent have lost over half of their assets -- total of $760 billion, more than Switzerland’s gross domestic product.
Wealth-X analyzed several reasons that led to the losses incurred by the superrich. Firstly, they said that many of the unfortunate superrich have a problem with their investment methods, namely that they invest too much in one area and lack liquidity.
A perfect example is Curtis James Jackson III, better known as rapper “50 Cent.” Jackson owned several businesses in clothing and film production which were too focused on his own tastes.
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Curtis James Jackson III, aka “50 Cent” (Bloomberg) |
Jackson, who had total assets of $240 million last May, saw his businesses collapse and he filed for bankruptcy, now reportedly having only around $15 million.
Wealth-X CEO Mykolas Rambus said in media interviews that many American financial advisers suggest diversifying investments, and added that having fixed funds such as cash or real estate is crucial.
Another reason is due to the unexpected changes in the world economy and financial markets, as seen from the case of William Herbert Hunt and his brother Nelson Bunker Hunt.
The Hunt brothers became overnight superrich in the 1970s with total assets of $9.6 billion as they owned around 15 percent of the world’s silver at the time.
However, the price of silver dropped by 80 percent in the 1980s and the brothers saw a massive drop in their riches. Later, the brothers regained their riches through the oil industry, earning $4 billion in 2014, only to decrease again to $1.7 billion recently due to falling oil prices, although they have reportedly stashed away $960 million in cash.
Much of how the superrich retain their riches depends on how quickly they react to the market environment and how they invest. Moreover, there isn’t a clear cut way to prevent losses other than gaining knowledge and information to make investment decisions.
By The Korea Herald Superrich Team (
sangyj@heraldcorp.com)
Hong Seung-wan, Cheon Ye-seon, Bae Ji-sook, Yoon Hyun-jong, Min Sang-seek, Kim Hyun-il, Sang Youn-joo
