The coronavirus has already cost the ultra-wealthy more than $100 billion. Here's why they're likely to feel more pain from the market drops than the average American.
- Cases of the novel coronavirus may be concentrated in China, but the stock market losses are not.
- Bernard Arnault, the chairman of Louis Vuitton parent LVMH, lost $8.8 billion from his personal net worth in the past week as reduced spending in China hurts luxury sales.
- The world's 500 richest people lost $139 billion from their collective net worths on Monday in the largest single-day drop since the Bloomberg Billionaires Index started tracking that metric in October 2016.
- The ultra-wealthy tend to be disproportionately affected by stock market routs because of their preference for riskier investments.
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Stocks have plummeted for a seventh straight day amid growing panic about the novel coronavirus.
The drop isn't expected to have a lasting effect on average investors, whose portfolios are expected to recover as stocks bounce back with time. Some billionaires, however, might not be so lucky.
The world's 500 richest people saw $139 billion wiped off their collective net worths on Monday alone, Bloomberg reported. Markets across the globe have continued to fall since then. The S&P 500 is down 10% from where it was when the week began, The New York Times reported.
Chinese citizens may be shouldering the brunt of the public health crisis, but the economic fallout has not been as contained. No one lost more money than French billionaire and LVMH chairman Bernard Arnault in Monday's market drop, Bloomberg reported. Arnault lost $4.8 billion on Monday and another $1.5 billion on Tuesday, then regained $900 million on Wednesday, before losing an additional $2.7 billion on Thursday, leaving him with a net worth of $46.2 billion, the Bloomberg Billionaires Index shows. Business Insider's Mary Hanbury previously reported that the coronavirus could reduce the sale of luxury goods by as much as $43 billion this year due to reduced spending in China.
Jeff Bezos shouldered the second-largest drop on Monday, losing a total of $10 billion in the past week, according to the Bloomberg Billionaires Index.
Over 83,000 people have been infected by the novel coronavirus and over 2,800 have died, Business Insider reported. While there are now confirmed cases on every continent except Antarctica, the vast majority are in China. Researchers believe the virus originated in bats and may have jumped from animals to people at a market in the Chinese city of Wuhan.
It's not unusual for billionaires to lose a lot of money when the market corrects, and their investment choices might be to blame
Billionaires fared worse than ordinary 401k millionaires during the stock market meltdown at the end of 2018, Business Insider reported. Billionaires across the globe lost 7% of their collective net worth in 2018 due to market instability at the end of that year, Wealth-X found in its 2019 Billionaire Census. It was the first time in seven years that high net worth individuals saw their fortunes shrink, according to French technology consulting firm Capgemini.
In its 2019 World Wealth Report, Capgemini found that individuals with net worths between $1 million and $5 million lost less than those with net worths over $30 million and billionaires during that market rout.
"It's the risk versus reward scenario," Capgemini's Deputy Head of the Global Financial Services Market Intelligence Strategic Analysis Group Chirag Thakral told Business Insider in July. "Where in a good market [billionaires] are the ones leading the growth, in a bad market, they're the ones who are affected the most."