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****NEWSFLASH: BILLIONAIRES DON'T HAVE THE CASH YOU THINK THEY DO....... 
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Billionaires can be "broke," too. Yes, you read it right.
One of the biggest misconceptions about money is that a person worth X has X to blow.
But that's not the case. AT ALL.
I'll explain...
****Billionaires can be "broke," too. Yes, you read it right.
One of the biggest misconceptions about money is that a person worth X has X to blow.
But that's not the case. AT ALL.
I'll explain...
Let's take the world's richest man, Jeff Bezos, for instance.
Compared to his multi-billion dollar fortune, he only makes $80K a yearâand has for the past 20 years.
A cool salary, yes, but nothing crazy. (Also drives a $17K Honda.)
However, his $145B net worth sits in STOCK.
Compared to his multi-billion dollar fortune, he only makes $80K a yearâand has for the past 20 years.
A cool salary, yes, but nothing crazy. (Also drives a $17K Honda.)
However, his $145B net worth sits in STOCK.
Jeff Bezos is likely the most liquid billionaire alive.
Could he liquidate that stock and sit on a 100 billies in cash?
Yesâin theory. But it would come at a CRAZY cost. Taxes. He'd lose ownership in Amazon. Etc.
Could he liquidate that stock and sit on a 100 billies in cash?
Yesâin theory. But it would come at a CRAZY cost. Taxes. He'd lose ownership in Amazon. Etc.
So in spite of what people think, he doesn't actually have $145B to just go out there and blow.
And he's probably the most liquid billionaire alive.
For other more conventional fortunesâlet's face it, Amazon is a once-in-a-lifetime companyâthe liquidity becomes scarce.
And he's probably the most liquid billionaire alive.
For other more conventional fortunesâlet's face it, Amazon is a once-in-a-lifetime companyâthe liquidity becomes scarce.
Let's take a look at someone like pre-president Donald Trump. Or pick any real estate titan.
Let's say you're worth $5B, own some high rises, etc. Real estate is HIGHLY illiquid AND subject to leverage.
Meaning of that $5B fortune, 90% is probably locked up in those buildings.
Let's say you're worth $5B, own some high rises, etc. Real estate is HIGHLY illiquid AND subject to leverage.
Meaning of that $5B fortune, 90% is probably locked up in those buildings.
The average liquidity for a billionaire is 18% of net worth.
Sounds reasonable but I call bullshitâunless liquidity includes securities (stocks/bonds).
In real life, I'd venture to say 2.5-5%. Which means a billionaire may have $25M in cash.
WHICH IS A LOT OF F*****G CASH!
Sounds reasonable but I call bullshitâunless liquidity includes securities (stocks/bonds).
In real life, I'd venture to say 2.5-5%. Which means a billionaire may have $25M in cash.
WHICH IS A LOT OF F*****G CASH!
And there's a reason for this. On a micro-micro level, think of it this way.
If you get your allowance from your parents, what happens then? You spend that ish.
But if your money gets locked in a college fund, what happens when you turn 18?
Exactly.
If you get your allowance from your parents, what happens then? You spend that ish.
But if your money gets locked in a college fund, what happens when you turn 18?
Exactly.
And again, net worth is just a projection, an estimate.
Like Mark Cuban says, with non-liquid assets, your net worth can be whatever you want it to be.
Let's look at Kylie Jenner. She sold her company, runs away with $340M.
LOT OF MONEY. Not quite billions.
HOWEVER...
Like Mark Cuban says, with non-liquid assets, your net worth can be whatever you want it to be.
Let's look at Kylie Jenner. She sold her company, runs away with $340M.
LOT OF MONEY. Not quite billions.
HOWEVER...
If she wanted to, she can leverage that obscene amount of cash into $3.4B overnight.
Do the math. 10% down payment on three high rises, 90% financed.
Boom.
She'd be giving up the liquidity, sure. But she'd control billions of dollars, once again.
Do the math. 10% down payment on three high rises, 90% financed.
Boom.
She'd be giving up the liquidity, sure. But she'd control billions of dollars, once again.
The cycle of life.....and the cycle of money.
But just remember, just like love, money's a lot more nuanced and multi-faceted than just a $ sign.
I'm out.
But just remember, just like love, money's a lot more nuanced and multi-faceted than just a $ sign.
I'm out.
