Last Thursday Elon Musk and Jeff Bezos, the two richest men in the world, lost a combined 18 billion dollars. That’s a big loss for one day. In fact, it was the 9th worst dally loss in history. But they were not the only ones to lose big. The three of the four next wealthiest men in the world (Warren Buffet, Bernaud Arnault and Bill Gates) lost an additional combined 8 billion dollars. The stock bloodbath was a direct response to news of inflation and rising interest rates. That’s a lot of money to lose. And it’s relevant for the rest of the investor world. So what are the take-aways?
First, even the greatest financial geniuses in the world do not bat 1000 when it comes to making market predictions.
Second, the market is a fickle mistress. She turns on a dime in response to bad news.
Third, fear is very powerful. Most investors operate on the basis of fear, not long term thinking.
Fourth, this is not the first time these men have lost billions. Jeff Bezos lost 18 million in one month during 2020. But he bounced back. It is reasonable to believe that he will do so again, as will Musk and the other billionaires who had a bad day.
Fifth, if you had a bad investment day last Thursday, you are clearly not alone. Don’t panic. History teaches us to hope that long term consistency is stronger than short term crisis.