Zillionaire's wealth is almost entirely predicated on the value of their stock holdings. The value of that stock is mostly dependent on how much money the company is making, and the ratio of value to profit is typically around 20 to 1. So if a company sells a million dollars worth of widgets and makes 10% profit on that sale, the company would have made $100,000. Multiply that by 20 and you get 2 million dollars which is typically what the company would be worth on the open market, i.e. the stock market. So typically a company is worth twice as much as they sell.
There are also whims. Some people get so excited about a company's future that they will pay a premium for stock which is what happened to Tesla. If Tesla doesn't realize the enthusiast's expectations the price will undoubtedly collapse. Shoot, it may have already done so. I haven't been watching.
Whims sometimes also work the other way. People take a dislike to a company for some ephemeral reason and the stock price sits on the bottom.
The way to get rich used to be by saving money, but with the way inflation is running these days, saving money long term is just a slow way of going broke. If you want to increase your personal pile of cash, you need to be putting that money to work, and that requires keeping a close eye on whatever it is you are betting on. Mutual funds are a good solution for people (like me) who don't have the discipline to keep an eye on things.
The big problem is that over half of the people don't make enough money to have enough extra to invest in anything. Some portion of those people wouldn't make an investment even if they could. I like to think it's a small portion, but I really have no idea. Maybe that's why the poors are all poor.
I am a little concerned that technology has become so intertwined with our lives that should something bad happen we would all be in a world of hurt. Fortunately, all the physical stuff that we depend on is pretty reliable, like our networks for distribution of:
- natural gas
- electricity
- water
- food over the road
We might experience a pinch here or there, but there are enough people who are concerned about these things that they are going to work to alleviate that pinch.
I think that's enough rambling for today.
2 comments:
During the Apollo program, there were *certain* people who cried, Rickets Not Rockets.
(money spent on space programs meant less money for medical research)
These same type were quoted as saying money was being sent into space. Yes, actual paper currency sent into space.
That same 'money launched into space' idiocy resurfaced during the Shuttle program.
Of course whatwith the growing number of zillionaires there is hardly any money left for the rest of us.
When shopping I glance at what people put in their cart (or trolley, or buggy according to regional preferences).
A quick calculation reveals the majority of their expenditures is fun food, i. e. empty calories (an oxymoron, but you get the meaning)
If only they set back a dime for every dollar.
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