Bloomberg has launched an index that follows the net worth of the world’s 20 most wealthy billionaires. Each net worth figure is updated every business day at 5:30 PM EST. But its numbers could only be inaccurate, if those figures are updated daily.
Bloomberg says of its methodology for the new product:
The index is a dynamic measure of the world’s wealthy based on changes in markets, the economy and Bloomberg reporting.
This assumes that Bloomberg knows what the value of these people’s private assets are day-by-day, whether they have quietly sold some of their holdings in public companies or if they have sold five or six of their private homes for hundreds of millions of dollars in cash. Put another way, what Bloomberg says it knows is unknowable.
Bloomberg claims its research is a serious form of reporting. The large trading terminal company says it can measure the economic activity of the 20 people it follows right down to the dividends they are paid and commodities they hold. Among the drawbacks of the data, Bloomberg admits, is that “No assumptions are made about personal debt.” In a world that is mostly deleveraging, leverage is still used among the rich. The debt part of the equation could be as important as asset valuation in the case of some of the 20 richest.
The new Bloomberg project is nothing more than a publicity stunt. As such, it really has no value for what is supposed to be, a legitimate business and journalism enterprise. As a matter of fact, the index hurts Bloomberg’s reputation.
Douglas A. McIntyre
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