The man who is $10bn down

ONE word was enough to move markets. A tweak of his investment strategy was regarded as a message from the oracle.

From his Bedouin tent complex surrounded by satellite dishes and illuminated by arc lights in the desert 30 miles north-east of Riyadh, Prince Alwaleed bin Talal bin Abdul Aziz al Saud would make himself available for a live interview on his favourite business channels, CNBC or Bloomberg. If he mentioned a share he had bought, the price soared.

But no longer. Already reeling from months on a steady downward trend, markets late last week spiralled into sheer panic. On Friday the Dow Jones Industrial Average dived 390 points, taking it to just 8019, far below the level seen in late September and its lowest for four years. The FTSE 100, which closed down 126 points last week, is now set for a terrifying Monday which is almost certain to see the index crash to well below 4000.

The dashing Saudi Prince - one of the world's most powerful private investors and recently crowned by Forbes magazine as the wealthiest man outside America - now looks to be the planet's biggest loser in the great stock market meltdown. The Saudi royal, 45, is believed to have suffered losses on paper approaching a stunning $10bn (£6.3bn).

Several of his most-trumpeted investments, such as restaurants group Planet Hollywood and airliner TWA, have ended with the companies going into bankruptcy. But some of the Prince's biggest investments are synonymous with the burst internet bubble.

The Prince, if his statements are taken at face value, ploughed roughly $2bn into AOL Time Warner as shares in the media giant dropped from $60 to $12. Another investment was in online auction house Priceline, where the share price has plunged from $150 to $2.60. And then there is WorldCom. The US telecoms carrier has gone from near $60 to 11 cents and faces imminent bankruptcy after massively overstating its income. Other dud investments include ailing German media company Kirch, imaging group Xerox, and mobile phone maker Motorola.

Even giant US bank Citigroup, the cornerstone of his rise from desert oblivion, has suffered. His holding has lost nearly 30%, or £1.5bn, of its value since January, cutting the value of his stake to less than £4bn.

Prince Alwaleed's big mistake was to continue piling into equities just as the biggest bull run in stock market history was coming to an end. His problem is that while share prices are extremely volatile - as last week's wild gyrations illustrate - major stock market crashes like this one are actually long-term affairs.

The real damage is caused by major falls over months and years. The Wall Street Crash of 1929 was really an extended slide with the real scale of the rout becoming apparent only over the longer term, reaching its low point in 1932. In Britain, 1929 saw a 19% drop in share prices but in 1930 there was a further 9% fall, followed by 24% in 1931.

The bear market of 1973 and 1974 was sharper, but again it was a cumulative effect that took its toll. In that slump the UK suffered more than America. In 1973 shares in London were down 31% but then fell 55% the next year. Tthe current slide looks more like the 1970s with the UK hit far worse than the US. Analysts are surprised. Steve Russell, strategic analyst at HSBC, said: 'It is disappointing that we have not performed better than the US, but it is not like 1972

to 1975 when there was a real global crisis. We are suffering more now because our pension funds are having to get out of shares.' The FTSE 100 fell by 10% in 2000 and 16% in 2001. This year it is already down 24%.

But Prince Alwaleed insists he is unperturbed by this damage. 'We're getting hurt but I'm a long-term investor,' he said recently. 'I'm not panicking and I'm not scared.' On Wednesday, he announced he would sink another $500m into Citigroup shares. 'Citigroup is very cheap, too cheap at current prices,' he said. The Prince has been saying much the same since Citigroup peaked in the high $50s a couple of years ago.

Last week the shares were trading at $37. But he remains well ahead on Citigroup, having acquired his stake originally at single-figure prices when the banking group faced liquidity problems a decade ago. And backing London property developer Canary Wharf has also paid off handsomely.

He is also apparently hanging on to substantial stakes in Rupert Murdoch's News Corporation and computer group Apple, even while those companies have suffered. And he is sticking with his £230m stake in the Disneyland Paris theme park, though he has seemingly jettisoned a once-hyped joint venture with pop star Michael Jackson to develop a resort and entertainment empire.

The latest losses have raised new concerns that the Prince - who has an £85m palace, Boeing 737 and 767 jets, at least one helicopter and a 288ft ultra-luxurious yacht anchored off the Cote d'Azur - might not be playing with his own money.

For years, rumours have circulated that the American-educated Prince is fronting for other Middle East investors. He raised eyebrows some months ago by meeting Libyan president Colonel Gadaffi to discuss investment options.

And then New York Mayor Rudolph Giuliani returned his cheque for $10m after September's terrorist attacks when the Prince urged the US to 're-examine its policies in the Middle East and adopt a more balanced stance toward the Palestinian cause'.

Now the emotional chill felt by the Prince that day has spread to his followers on Wall Street.

Don't blame us, blame the big boys