It’s always fun to look at the lists of the world’s richest people, and Forbes is well aware of this.  Instead of just talking about the list, the teacher in me decided to make it someone educational.  So check out the different categories of what you can learn from the list.

Economy:
The number of billionaires fell 30% from the previous year.  Doesn’t seem like a lot, but it is.  Over 300 billionaires can no longer charter afford to charter 747s for trips, they are stuck with just, private jets.  Bleh!  In all seriousness, this drop in wealth is the perfect representation of just how much this world has suffered from the recession.  These people are invested in the world’s largest companies, and we are all associated with them whether we like it or not.  When they make money, we do, when they lose money so do we.  Read the summary article.

Winners:
Don’t think everyone lost money.  You don’t stumble your way onto the billionaires list.  The mayor of New-York, Michael Bloomberg, made his fortune his self-named company, Bloomburg.  You may know them best for their TV channel on expanded cable, but Bloomberg is also one of the biggest suppliers of financial data.  Good times and bad, Wall Street needs that data.  His fortune increased 28% to $16 billion.

Here’s a guy you’ve never heard of, John Paulson.  Paulson saw the coming doom of the economy and bet heavily on it.  He shorted everything he could get his hands on and made $3.5 billion (personal income) in 2007 just on shorting credit.  In 2008 his hedge fund gained 38% while the S&P 500 was down 39%.  There’s your case for finding a good balance of diversification.  Read about the winners.

Diversification:
The billionaires that dropped off the list weren’t simply going from $1.1 billion to $900 million, there were people that lost 90% or more of their fortunes.  While it’s hard to feel their pain, you’d choke on your food too if you lost everything you’d worked for your entire life in a span of 12 months.  When looking at the people that lost the most, you’ll see they forgot lesson #1 in investing – Diversification and Asset Allocation.  It’s pathetic that even former bankers and other financial giants don’t understand this.  Take a page from Bill Gates:  Every quarter he sells some Microsoft stock and moves it into his foundation or reinvests it in other companies through a separate investment company.  He’s lost money, but not nearly as much as others have (percentage wise).  Read about the losers.

Real Estate:
There are no lessons here, just a great slide show of some of our favorite billionaires’ homes.  Interesting highlights:  Donald Trump lives where he works, Oprah doesn’t allow cameras in her house, and someone tried to break into Warren Buffett’s house.  My favorite one is George Lucas.  Lucas is the creator of Star Wars, of which I’m a big fan.  His home is on Skywalker Ranch, a huge piece of property in northern California that is home to many of his businesses, and includes cattle, honey farming, and five acres of olive trees.  Read about billionaire real estate.

Full List of Forbes’ Billionaires

By The Weakonomist

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categories: investing, lists, media