If Bezos tried to liquify his assets folks love to obsess over, he would probably tank the stock market and cause bigger financial problems.

Here’s a thread explaining why.

Hopefully it teaches the less financially literate folks of twitter what net worth means too:

Stocks = ownership. If you have 1 share of a company that has 1 million shares outstanding in the market, then you own .001% of the company. If you own all 1 million shares, you own the entire company. If you own more shares than anybody else, then you own the company

Amazon has 504 million shares outstanding and circulating in the stock market.

Of those 504M, Bezos owns 55.5M, which is about 11% ownership of Amazon and the highest stake of any one person/entity in the world, therefore he owns Amazon

This screenshot is from a 2018 article but it’s still relevant and useful for the context of this convo

It’s showing us that of his net worth (back in ‘18), 98.6% of it was based on the stocks he owns in his company Amazon.

Therefore, Bezos does not have billions of $ readily available to him in his bank account. Therefore the logic behind “he could give us each X amount of dollars and still have Y left over” is extremely flawed.

If I have $1 in my bank account and own a home that is paid off worth $100k, then my net worth is $100,001. Does that mean I have $100k worth of buying power right now? No cuz my net worth is mostly tied to the value of my home (an asset) and less tied to my cash on hand

And that’s the same with Bezos. He is not sitting on billions of $, he is sitting on billions $ worth of assets. Mostly in stock (98.6%) but also in stakes of other businesses he owns, the Washington post, his homes, his jet, etc

“Well couldn’t he just sell his assets and have $134B of cash in hand?”

No.

He can absolutely sell his assets but it wouldn’t be worth $134B if he did. The reason = the mechanics of the stock market

If Bezos wanted to have most of his net worth in liquid form (cash, not assets). He would have to sell his Amazon shares.

Here is where things get tricky. If he tried to sell all $134B worth of stock at once, he would overwhelm the sell books and tank the price of Amazon stock

Because stock prices work based on supply-demand, a supply of 11% of all outstanding shares hitting the order books at once kills the demand-price action that maintains a stock’s value.

Him selling his stake would drop the stock price so much that the $132B (most of his net worth) would turn into something much lower real fast.

He would still have a lot of cash no doubt, but it wouldn’t be close to the $134B folks think he has laying around, which would ruin all the “if he gave away X, he’d still have Y” calculations.

Nobody actually knows what the Y amount would end up being but I guarantee if would be <<<< $134B

“But you said he would tank the whole stock market, not Amazon’s stock”

Yup and that’s because of amazon’s importance to the market. Amazon is a top 5 (3? 2?) stock across all the major indices. If amazon’s stock abruptly crashes, it would send the whole market into a frenzy

“What’s going on with Amazon?”

“Maybe the economy sucks & they know something we don’t”

“Should I sell my stocks?”

It’s psychological. Investors seeing one of the largest & most important companies stock price tanking would freak out the whole market & cause mass selling

Mass selling = stock market

So Bezos selling his stake to give us each a couple $ would crash the market & ruin retirement accounts & investment portfolios across the nation, thereby creating a damaging cycle in the financial/banking world that wouldn’t be good for anybody

Not to mention, if he sold all his stocks, he would no longer have ownership stake of his own company. That wouldn’t make sense.

Then I saw people saying “well let’s split his assets.”

First of all, stocks are not easily transferable. The process of him gifting all Americans his stocks wouldn’t be worth it at the end of the day, purely based off the legal/admin aspects

But let’s say he did gift all of us his stocks so he could share his net worth with us. Most folks need cash during emergencies, not stocks. So what do you think would happen if all Americans tried sell the gifted Amazon stock at the same time?

The exact same thing that would happen if Bezos sold his stake to give us the cash:

Amazon would tank and the market would likely crash

And once again, if he gave away all his stocks then he would no longer be the owner of his own company, which again wouldn’t make sense.

So there you have it, I hope that was somewhat educational.

I’m not trying to tell you to stop telling Billionaires how to spend their money, but I do hope you can at least see that it’s not as simple as “rich people should give us all their net worths”

And I’m not trying to defend billionaires or even say that they don’t have a responsibility to help during a global crisis, I just want folks to actually know what they’re mad about

While you’re here, check out my other thread explaining how the stock market works using shoes as an example https://twitter.com/mixed__money/status/1205252684179214336?s=21

Also, if I could re-do the thread I think I’d focus more on the net worth components and not the “tank the stock market” aspect. I still think that factors but I was more so just trying to point to the nuance that arises from “he can just give us his worth and still be ok”

If you left the thread with a better understanding of how net worth works, then I’m happy. If you left the thread thinking I’m an idiot cuz I generalized some market principles for the sake of a simple explanation, then please provide corrections/clarifications in the comments!