For the IPO Millionaires.

As has been famously noted, the rich are different from you and me. For one thing, their net worth can drop more precipitously when their investments go south.

Consider Gary Winnick, who a year ago was the wealthiest person in Los Angeles. Most of his fortune consists of his holdings in the telecom company he co-founded, Global Crossing Ltd. Last May, Global Crossing's stock was trading above $60 a share. By last September, it had plummeted to $20. In February, it was back above $60. As of last week, it was trading around $33.

Queasy? Think of Winnick, whose fortune rocketed to above $6 billion, plummeted to below $3 billion, whipsawed back above $6 billion, and now rests at around $3.8 billion -- putting him at No. 3 on this year's Richest List. While none of those on the list will likely become destitute, their dramatic swings in wealth reflect the volatile nature of the New Economy, and its impact on Los Angeles.

There are more millionaires and billionaires now than ever, and a great deal of that wealth is tied up in stock. While the stock market was steaming ahead, as it had been until recently, that was all to the good. But now that Wall Street and Main Street are more skeptical of profitless "momentum" companies, interest rates are rising, and signs of inflation are beginning to surface, fluctuations in the market are becoming more pronounced. And that's causing corresponding gyrations in individuals' wealth.

Like Winnick, many wealthy folk are entrepreneurs who created a company and reaped the rewards once it went public. The worth of those entrepreneurs and their stock-options-laden employees rises and falls with the market. With the IPO market essentially on hold since April's dramatic tech stock shakeout, there will likely be fewer overnight multimillionaires cropping up in L.A., as elsewhere.

"There is a large number of very, very wealthy people as a result of the economy and the stock market. This also happened in the '20s; it's not unique," said New York University economist Edward Wolff, who studies the well-to-do. "The IPO has become a major vehicle for a vast amount of wealth, which you see particularly in California. For the people who have accumulated a large amount of this wealth, these people are dependent on the stocks in their company maintaining value. This is very new."

The amount of money raised and distributed through IPOs has been staggering over the past few years, and companies have competed for talent by promising lucrative stock options in addition to salary. Only recently has owning those options become a possible liability.

And some of the super-rich, realizing that the shine may be fading, are bailing out to do their own thing. Nowhere is that more evident than at Global Crossing, where virtually the entire top management team has departed in recent months. As of June 30, another two co-founders, President David Lee and Senior Vice President Barry Porter, are leaving to start their own venture capital firm, Clarity Partners, in Beverly Hills. But they're not getting out whole. Lee, Porter and Winnick all saw their fortunes substantially diminished over the past year. (Another Global Crossing co-founder, Abbott Brown, missed the list altogether after being No.22 last year.)

Stock market wealth

While the window of opportunity for vast IPO-generated wealth may have closed, at least temporarily, it has been an awesome run. Between 1997 and 1999, 323 California companies went public through IPOs. These companies currently have close to 134,000 employees holding about 10 percent in the total value of the firms through stock options, according to a recent study by economist Joe Mattey of the Federal Reserve Board of San Francisco. As of February, the market capitalization of these IPO companies was $676 billion.

This means the average IPO employee has options worth $500,000.

"Executives will typically hold much more, but this is an average," Mattey said.

But much of the stuffing was knocked out of that IPO wealth during April's Nasdaq downturn.

"The size of the drop for these firms was more than on Nasdaq," Mattey said. "heir (total market capitalization) loss was 37 percent. So all of a sudden, the average was closer to $300,000. The IPO phenomenon made the leaders of these firms fabulously wealthy. But now [ldots]"

Well, now they're still fabulously wealthy, at least the 50 people on the Richest List. Fact is, the wealthy in L.A. are generally much less exposed to market downturns than the elite in some other areas. For example, the number of newly minted millionaires here subject to the sharp fluctuations in tech stocks pales in comparison to the number in Northern California.

About 82 percent of the companies that went public in the three-year period between 1997 and 1999 are located in the San Francisco Bay Area, Mattey said. The remaining 18 percent is scattered around the state, although largely concentrated in Los Angeles and San Diego.

Partially due to that relative dearth of IPO exposure, the names of L.A.'s 50 richest people remain largely the same as a year ago, and most experienced a nice boost in their wealth. The total net worth of this year's list is $61.9 billion, a 3.5 percent jump from last year's total of $58.9 billion. There are 18 billion-aires, up from 16in 1999.

A diverse group of moguls

Even as L.A. gets increasing attention as a hotbed of Internet and venture capital activity, its wealthiest residents are much more diversified than the super-wealthy of Northern California or Seattle, both in terms of investments and sources of income.

The most affluent people in L.A. have made their money in a variety of ways: entertainment (David Geffen, Steven Spielberg, Merv Griffin), real estate (Eli Broad, Donald Sterling, Ed Roski Jr.), oil (Marvin Davis, Selim Zilkha) and biotechnology (Alfred E. Mann). That diversity extends below the $500 million level required to make the list, making it easier to view the recent stock shakeout with equanimity.

"Easy come, easy go," said Lloyd Greif, president of investment bank Greif & Co. in West L.A. "A lot of the people who have enjoyed the good times recently are not going to lose sleep now, although I've seen a lot of repositioning in the past 30 days."

That's not to say that the recent market oscillations haven't shaken a few people's fortunes and sent them scrambling to their portfolio managers for advice. But money managers for the very rich say most of their clients understand that after many years of unprecedented returns on their investments, a pullback was inevitable.

"The downturn has come from a very high level, and one in which we are seeing people continue to appreciate the need for diversity," said Vern Kozlen, senior vice president at City National Investments, which does business with a number of people on the list. "While the last few years have provided dramatic upward returns, this year has been one of transition."

New note of caution

What is certain is that, like everyone else, the wealthy are likely to be more careful about where they put their money. That doesn't mean they won't be buying another Mercedes-Benz or taking another vacation or purchasing another home. After all, in April, as his company's stock was falling, Winnick himself bought a $10 million Bel-Air mansion next door to the four-acre estate he had bought in 1998 for $16.25 million. He plans to tear it down and consolidate the properties into a single sprawling estate.

But the millionaires who have funded hundreds of local start-ups over the past few years as angel investors are likely to become much less generous with their pocketbooks. Venture capitalists and investment bankers note that valuations in these wannabe Internet companies have come down dramatically in the past few months, and entrepreneurs looking for a capital boost are finding it harder.

"Deals that would have gotten funded in January will get turned down in May," Greif said. "Bud there are still more angel guys out there than ever before."

And the number of angles will likely continue to grow, right along with the aggregate net worth of L.A.'s richest people, even though some have suffered hair-raising setbacks.

"These people might bought stock when it was $4 a share, saw it shoot up to $100 a share and then fall back to $30 a share," said Eli Broad, this year's richest Angeleno. "So they may have gone from a huge fortune to a smaller fortune, but the fortunes haven't disappeared."

Fun Facts

Millions and Billions

Millionaires ascending to billionaire status: 4

Billionaires descending to millionaire status: 2

Rise and Fall

Top percent gainers in net worth, vs. year ago.

+66.7% Louis Gonda

+43% Steven Ferencz Udvar-Hazy

+42% Alfred E. Mann

Biggest drops in net worth, vs. year ago.

-47.1% David Lee

-46.9% Barry Porter

-38.7% Gary Winnick

Pecking Order

Most dramatic changes in rankings, vs. year ago.

+36 Alfred E. Mann

+10 David Murdock

+9 Louis Gonda

-25 Barry Porter

-24 Barron Hilton

-22 David Lee

Proportional Wealth

Ratio of billionaires to millionaires among 50 richest.

This year: 5.6 billionaires for every 10 millionaires

Last year: 4.7 billionaires for every 10 millionaires

How They Made It

No. of richest deriving their wealth from various sources.

Entertainment 13

Real Estate 8

Investments 9

Inheritance 5

Accumulating Riches

L.A. billionaires today: 18

Year ago: 16

No. of L.A's 50 richest who are wealthier than a year ago: 29

No. less wealthy: 9

No. with the same wealth: 1

Ay Carumba!

Cumulative net worth of 50 richest: $79.4 billion

Venezuela gross domestic product: $59 billion

Average percapita net worth of L.A.'s 50 richest: $1.6 billion

Venezuela per-capita gross domestic product: $2,900