Mar

12

Mexican Carlos Slim, world’s 3rd richest person, sits several unattenuated standard deviations above the mean of a very poor nation.

"Diners at Slim's ubiquitous Sanborns restaurants can use Slim's wireless service to connect to Slim's Internet provider and check their holdings through Slim's brokerage, part of Slim's Grupo Financiero Inbursa group. Banking online, they can pay bills to Slim's car insurance company or credit cards for Slim's retail stores, among them Sears Mexico and the Mixup record store chain."

From Hany Saad: 

Here is what I wrote about Slim a few days back in response to Scott Brooks's post about the new Forbes list of billionaires. Slim had the most unusual jump in net worth.

News like this, while interesting to skim through, can be very valuable if analyzed deeply. In fact, they can give you subtle clues on what cycles are about to change (specially if you keep historical data of the list year over year). I certainly try to keep in mind that the data can be flawed especially when it comes to analyzing the net worth of the super wealthy. I will state here the obvious example as an exercise in analyzing humdrum data like the above profitably.

Notice how Carlos Slim, 67, Mexico, $49 billion, telecom, had the highest jump in net worth and is getting uncomfortably close to Buffet? You compare that with a chart of the peso to weed out the possibility of a huge jump in the local currency as the main reason for the increase in net worth. This is not really important in the case of Slim and most of the others since they mostly keep their wealth in US dollars. In fact, Slim doesn't even reside in Mexico. This exercise is, however, useful in the case of others like the Egyptian Naguib Sawiris, whose OTOH is required by law to keep a significant percentage of his "disclosed" net worth in the Egyptian pound.

Some other obvious questions to ask other than the general currency differentials include: What sectors are they involved in? How did the sectors do in general over the period? How did their specific company fare relative to the sector? Did they target new markets? Which ones? How did these new markets do? If all the above is not significantly changed compared to the previous year to warrant the big change in their net worth, then the info can become even more valuable and more digging can be worth your while.

In general, this can be a good exercise in ever-changing cycles, if you keep in mind the importance of incentive and self-interest as the only driving motives. This is how this trader reads the news.


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2 Comments so far

  1. Alex Forshaw on March 13, 2007 9:12 am

    Slim is the biggest player of some of Mexico’s biggest economies of scale.

    Good point about factoring out the peso as cause for his net worth jump, but as I recall, Mexico has several other billionaires who simply occupy a different plane of wealth from the uber-rich mean. The more an individual conquers one economy of scale, the more he can broaden his reach into other economies of scale. And if he conquers enough of those, he can take over the biggest economy of scale of them all, (government) force.

    I think that many Latin American economies reached this point long ago. One thing to remember about people like Morales and Chavez is that they see themselves at war with their countries’ elites. If Chavez can siphon off 50% of the (mostly white) upper class’s wealth in the process of destroying 90% of it, Chavez is happy, because he sees himself as a representative of mesoamericans, and sees Venezuela as a fiction.

    Pablo Escobar saw it the same way. One of the reasons he was able to win one civil war against Bogota, and carry on another for over a year, was that he had a willing army of (meso) underclass soldiers.

    Mesa, if memory serves, is of a Palestinian father and a Mexican mother. Like virtually all of Mexico’s “legitimate” elite, he is at least half non-indigenous.

    That kind of net worth (relative to national GDP) is more reminiscent of Berezovsky than Buffett. I have not found a single instance of someone achieving that many standard deviations higher wealth relative to GDP without massive involvement in economies of scale up to and including government force. I think that might have been the “market” he “targeted.”

  2. Alex Forshaw on March 13, 2007 10:39 am

    I meant “Slim” instead of “Mesa,” btw (2nd to last paragraph, feel free to delete this/edit that comment if you want). Not sure where Mesa came from.

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