They are especially unreal if their fortune was built on cryptocurrency and NFTs. One of the big players was this curly-haired guy, Sam Bankman-Fried, whose wealth has experienced a catastrophic roller coaster ride.
Sam Bankman-Fried’s fortune has been erased as his assets become essentially worthless, according to the Bloomberg Billionaire Index.
And that came before FTX and its affiliates filed for Chapter 11 bankruptcy early Friday.
At its peak, his net worth was $26 billion and still stood at $16 billion on Monday. But by Wednesday it had shriveled to $1 billion, according to Bloomberg.
By late Thursday, it was gone. The Bloomberg Billionaires Index put the value of FTX’s US business at just $1 — down from $8 billion after a January fundraising round — due to a potential trading halt. Bankman-Fried owns roughly 70% of FTX US.
In addition, his $500 million in Robinhood stock was stripped from his net worth figure after Reuters reported it was held by Alameda Research, the crypto trading firm he founded, and may have been used as collateral for loans.
Earlier in the week, Bloomberg had assigned a $1 valuation to Alameda. On Thursday, Bankman-Fried said he is shutting down Alameda.
That’s amazing. $26 billion just evaporated into thin air. He’d spent millions putting his company name on sports arenas and teams before everything went poof, and he had to have known the company was worthless. So much jiggery-pokery was going on to prop up an empty shell, and now it has all collapsed. It does my heart good.
Next billionaire on the chopping block: Elon Musk. He’s desperately flailing about, selling off Tesla stock to keep his latest acquisition afloat, and it should be obvious to everyone by now that he’s an incompetent businessmen, a bad clown juggling his inherited wealth clumsily to acquire an unwarranted reputation and an inflated net worth. The ongoing Twitter debacle is illustrating that in a spectacular fashion.
The bad news is that I can’t quit Twitter now. I have to stick with it to watch the final explosion, all while waving my cowboy hat and going “Yeeee-haaaww!”. It’s going to be glorious.
Then, after I get my next game life, I wanna watch Mark Zuckerberg fold with a piteous whimper.
A phrase from a Douglas Adams novel strikes me as most appropriate here: “sudden massive existence failure.” We could call this sort of thing a SMEF.
And another thing that needs a good SMEF these days is the entire glibertarian/Horatio Alger/Ayn Rand ideology that glorifies rich jackasses like these guys and demands we all look up to them as paragons of rationality, work ethic, progressive vision and even morality, who must never even be questioned, let alone regulated, by any other unworthy Lilliputian malcontent or sore loser. That whole ideology has been made into a worshipful religion, and it needs to be buried along with all the other religious-based scams that have plagued decent people throughout human history.
There is a bit in, The Count of Monte Cristo which I’ve always liked where Monte Cristo is lecturing Baron Danglers on the categories of wealth. The Count says that a financier’s wealth is largely illusionary, built of promissory notes and paper castles. One good breeze, one rumor of insolvency, will reduce a financier’s wealth ten-fold or more. Possibly to nothing, or debt.
One of the basic financial/investing rules is, “Diversification is your friend”.
Reading the OP, it strikes me that Sam Bankman-Fried’s $26 billion fortune wasn’t very diversified. He could have put at least a $1 billion into something more tangible like an Index fund or even Amazon etc..
Very poor planning there.
Musk says Twitter might go bankrupt.
This is not smart, buying a company for $44 billion and then filing for bankruptcy a few months later.
Twitter, unlike Facebook and some of the others, is actually a valuable and useful service.
It’s not just social media but also a news media outlet. As such it is widely used and widely read.
If Facebook or crypto disappears, many would not miss them.
I and many others would miss Twitter.
Musk wasn’t wrong to try and streamline Twitter to profitability.
The way he went about it made it worse, not better.
It’s not even that – it just didn’t exist. It was fundamentally based on the mark-to-market “value” of crypto-tokens which only appeared to have value because they were being traded between different companies under his control – but those valuations could never actually be realised because nobody else was buying (at least, not in sufficient volumes).There never was a $26 billion fortune. He couldn’t diversify because you can’t buy index funds with fairy gold and hot air.
Imagine I create a billion worthless crypto tokens, then sell one of them to another company I control for a buck. Am I a billionaire now?
Except, in SBF’s case, the corporate relationships are a bit more complicated… [Link goes to FT Alphaville, who have been all over this. Registration may be required.]
Palmer Luckey, horrible person, has ideas about that.
Oculus Founder Palmer Luckey Created a VR Headset That Kills You If You Die in the Game
I’ve always liked the definition of “millionaire” that required one to have a million pounds (or what have you) in liquid assets. Essentially, a million in the bank, potentially (in principle) withdrawable from a cash machine. Same goes for billionaire.
A shitty little house near me is nearly worth a million quid now simply because of where it is and the ever heating UK housing market. It is extremely unremarkable and by no means worth “a million quid” (i.e. 30-40 times the UK average annual salary). It is typical of the houses in this area. By contrast my parents’ house, worth 7 times the UK average national salary at the time, bought in the late 80s, is worth silly amounts of cash, is enormous (by UK standards), and is in an absolutely gorgeous location (just not next door to London). Millionaires? Nope.
This gentleman’s billions are even less real. I doubt he could have ever liquidated his reported billions even at the height of the hype. It’s all spreadsheet wealth for grifters and greedy gullible goons.
Louis
A great example of nominative determinism.
I came to think about economics late in life, after formal training as a “hard scientist”. And the thing that had me flummoxed for a long time was the lack of a “Law of Conservation of Money or Value”. Once I realized that Money is Not Conserved, it started to make a lot more sense to me. And yeah, “Diversification is Your Friend” is like the bedrock of personal finance if you have two nickels to rub together. Don’t just put it all in one dime. Two nickels is better.
I always liked Dr. Strangelove, especially the scene where Strangelove’s own hand tries to choke him to death. Which is apparently what happened here with Bankman-Fried and FTX. So sad. /s
Great pic!
Well, I also selfishly want to see Twit and Facearse collapse ignominously, but I feel for those who are going to lose their job, and for those using those platforms honestly.
It’s a question of balance: is the evil they cause excused by the fun and convenience they bring to millions of users? My mind whispers nononever, but others will have different opinions.
And concerning the ongoing cryptoscam-traincrash and related zillionaire arrogance, I believe Bob the Angry Flower has the right prespective:
https://www.angryflower.com/348.html
when humans mess up, ask a vegetable, I say…
@ Louis #7 and Dr. Pablito #9
I’m not a billionaire, real or phony, and I know nothing about economics, but I’m in a bit of a state of shock this evening. This afternoon I put down a deposit on a house.
I’ve never in my life owned a house. I’ve tended to move around a lot, and having a place of my own simply wasn’t a possibility. But my savings and an inheritance have now made it possible. My son was pointing out to me that given the way the bottom has fallen out of the rental market, if you want to be sure of having a roof over your head, it really needs to be your own. I couldn’t argue with that.
Furthermore, I’m not going to be around much longer. Everything I have is going to be my son’s, and if what he wants out of it is a house, then now’s the time to buy. The market for houses for sale isn’t any better than the rental market and it’s not going to get any better, so there’s no point in waiting.
We found our house yesterday. As we were walking out of the place, I told my son, “That’s the house I’m going to buy.” He was with me all the way on that. It’s a fine big place with everything we need in a decent neighborhood, and what was especially amazing was the asking price. The way things are these days, I think the owner might have got 20-30K more out of it, but maybe he’s one of those people who’s just happy enough with what’s enough. Maybe somebody after my own heart.
The only downside here is that our neighbors-to-be have one of those little yap-yap mutts. Agreed, they’re not as bad as Republicans, but still there’s no place for the likes of them on this earth. I promised my son we’ll take care of him. I think what we’ll do is, when we move, we’ll take our present neighbor’s cat with us. He’ll sort the little beast out.
So what exactly do you do with a house? I think the basic idea is that you live in it. But apart from that I wouldn’t know. I have no experience here. Well, never too old to learn.
Watching Musk’s leadership of Twitter makes me think how totally great it would be to live in a Mars colony that Musk was ruling. And by “totally great” I mean not at all great.
PS – “you never count your winnings, while you’re sitting at the table.
There’ll be time enough for all that stuff when the dealing’s done.”
Musk warns of Twitter bankruptcy as more senior executives quit
Senior executives of publicly traded companies aren’t allowed to make forward-looking statements like that because it affects the market. Musk has already paid substantial fines for that in the past.
He’s also going to pay by losing value in his stock. I will go check now but I’d be shocked if the stock is not circling the drain right now.
Musk will get hit with some shareholder lawsuits that may cost him again what he paid for the company. Since current shareholders experienced a 10x jump in the share price and are probably holding on to it … they are going to be really pissed to see their overnight wealth vanish overnight thanks to Elon.
Perspective. Dangit.
I don’t want Elon Musk to go bankrupt yet. I want Zuckerberg to get so desperate that he sells Facebook (excuse me: “Meta”) to Musk, and Musk buys that hoping to merge it with Twitter and recoup his losses from the synergy/monopoly power, and then the whole thing fails and he goes bankrupt. Sadly, though, since Musk has fired all the people whose job it was to deal with emergencies and who had institutional knowledge of how the whole thing worked in practice, the actual Twitter service is pretty certainly going to crash and burn the first time there’s any major issue and when that happens it won’t so much “bleed” users as lose users the way a dandelion loses seeds when you blow on it, or the way a puffball loses spores when crushed.
(Also, of course, Eli Lilly is probably going to sue over the “verified” $8 account claiming to be their official one which posted that insulin was now going to be free, which caused their stock to lose 5% of its value in 2 hours — about $20/share — from which it has not really recovered. And then there’s the FCC, which had binding agreements with Twitter’s former management about how Twitter had to run, with — if I am informed correctly — fines pre-specified for failures, which Musk has totally ignored. There’s going to not one but two tie-ups in the court system over this — first to smash Musk and then to figure out who takes precedence in getting paid between his creditors and the various accrued fines and penalties.)
You have to ask, Who hates Twitter? Who profits by deliberately bankrupting it in record speed after acquiring it? Various fascist dictators with large amounts of fossil fuels for sale are probably thrilled at the idea that Twitter might disappear. All those activists having color revolutions would be silenced. Free speech!
I’ve always thought Musk looks like Dr Evil, and can’t wait for the federal agencies to step in and start imposing some whomping huge fines on his wealth and overweening ego. He is blatantly flouting federal law, and obviously has been deliberately setting Twitter on fire. I don’t know if that is criminal, but the entire transaction seems blatantly suspect from a national security perspective.
raven @3:
Another is “never invest in a company if you can’t understand how they actually make money,” and cryptocurrency is a huge instance of people not having a clue how it works.
@moonslicer #12 —
So, you own a house. Congrats. What do you do with it, you ask? If this is your forever home you take damn good care of it. You baby it. You sink wads of cash into routine repairs. Something is always in need of repairs or replacing. But, you can do anything you want with it, unless you have an all powerful HOA looking critically at everything you do. Want to paint an interior wall red? Nobody’s stopping you. You can be as noisy as you want because you aren’t sharing a wall with anyone. And the opposite is also true. You will never again have to endure hip-hop being played at full volume in the next door apartment (speaking from experience while living near a university district.) It’s all yours, dude. Enjoy.
Who was it who said “The rich aren’t like you and me”? They aren’t not only like us, but they’re completely alien to the human race. Nevertheless, they are worshiped as gods. That’s one of the primary sicknesses of our society.
Marcus@15: Musk bought all of twitter for $54.20 per share; meaning that every shareholder gets paid. The stock is now delisted. So there likely won’t be shareholder lawsuits. He’ll bleed money meeting interest payments on the money he borrowed to make the USD$44B purchase price, and if he wants to keep his shiny toy running he’ll bleed money on operating expenses as advertisers flee. Even so, I doubt he’ll go bankrupt as he owns a large chunk of Tesla, and his net worth is estimated at ~$200B.
His real loss will be the harm to his ego. Now whenever he walks into a room he’ll be seen not only as a pothead clown (which I think he likes as his image), but also as incompetent (which I think will eat away at his self-esteem).
“as his assets become essentially worthless” – but if this can happen then his “assets” must have always been worthless. So much of modern finance and the wealth of billionaires is based on nothing but hot air and imagination. In the longer term this will damage our civilisation, not just the individual “billionaire”.
Mastodon is not bad as a twitter alternative. I would much rather read the folks I follow on mastodon than twitter now.
@Moonslicer, #12,
What do you do with a house? In my experience spend money on it. All the money. Many many money. And then you are poor. See also: children.
But seriously, congratulations!
Louis
R. L. Foster @20
I take it you’ve never heard of rowhouses. It doesn’t Have to be an apartment to share a wall. And, yes, you can hear music, and other things, through them. I know this from experience.
An amusing take:
Wow after reading @15 and @17 is it really coming to pass…Musk’s complete and total self-inflicted implosion? Hopefully. And good riddance if so!
Pride goeth before destruction, and an haughty spirit before a fall.
Moonslicer: I’ll join in the congratulations. We’ve owned several houses, all bought to upgrade and sell, until this one, our forever home (if the US doesn’t sink too much further). Yes, you sink money into them, but my experience is that doing that, especially if the money goes towards maintenance/upgrades where you do as much of the work yourself as you can, makes the house feel more and more like your home; a part of you. When I walk across a floor that I stripped, sanded, and re-finished myself, even when I don’t consciously think about it, I have a stronger sense of just belonging where I am than I ever did when I rented.
hemidactylus:
And such wishful thinking is the solace of poor people who care about such stuff.
Those billions were sour, anyway. Right?
(Also, I gotta love you vesting credibility upon the Vicarish one.
Still… one born every minute and all that)
@#30, John Morales:
If the sole remaining Indianapolis newspaper isn’t enough for you — the only non-paywalled site that was in the top results at the time I searched for a link — then here’s Fortune.com’s article, NBC’s version, and here’s Forbes. Or you can look at Eli Lilly’s stock (right now you want the 5-day view to see the crash). And, as always, I’d feel uncomfortable if a wrong-headed jerk like you liked me.
And here comes local Musk fanboy John Morales to defend him.
Those billions came from two sources: stock market and stock market evaluation of companies doing business with the government (aka literal government contracts). Guess what happens when you lose the trust of the stock market? That one “One good breeze, one rumor of insolvency” and his wealth is gone.
So yeah, those billions were sour from the start but not in sour grapes way as you intended.
I always ask the same question to every Musk fanboy: How would Musk pay million dollars for anything? And the answer is always the same: he would go to the bank and take a loan, by offering his stocks as a collateral. Or he would sell his stocks and get money that way. So if his stocks are worth 0 because he is persona non grata for whatever reason, he doesn’t have any assets, liquid or otherwise. Musk doesn’t own a house, he owns a car and that’s it.
That doesn’t even begin with issues with stock market as a whole. I advise reading the book “The Ponzi Factor” to see what the issue is there. In short, if you are not getting paid guaranteed dividends from the stock and your only way to turn a profit from owning is to sell it to the next sucker, that stock is a Ponzi asset and not a valid financial instrument.
Crying laughing. Apparently FTX tried to get Kraken to buy FTX as an angel investor. Kraken, of all entities. The company that prides itself on its libertarian values and thinks that parental leave for employees is a waste of time. Among other things. (Such as being investigated by the NYS Dept. of Financial Services and fined by the Commodities Futures Trading Commission for unregistered margin trading. Also for violating sanctions by trading with Iran.
https://www.reuters.com/markets/currencies/ftx-approaches-crypto-exchange-kraken-funds-axios-2022-11-10/
jo1storm:
Heh.
So fucking clueless, you are.
So do those billions exist, or do they not?
Are they his, or are they not?
(make up your mind)
Sure.
All he owns is his car.
A couch-surfer, he is, when not sleeping in his car. Rough life.
(You really are a credulous creature, no?)
So getting back to this crypto-bro, looks like back in the primary he also blew over $11 million trying to buy a US representative by backing a candidate for Democratic nominee for Oregon’s 6th District in the House of Representatives. She lost the primary.
@35 microraptor, $11M backing Carrick Flynn in the Oregon 6 primary, and another $16M to the same PAC which I think mostly went to backing other Democratic candidates (against their Republican opponents, rather than cases like Flynn’s), and $6M to the House Majority PAC which campaigns for Democratic candidates in the HoR, and $0.5M to the Senate Majority PAC which campaigns for Democratic candidates in the Senate, and a whole lot more to the “FTX Foundation”, which gave money to climate-change charities and global health charities and vaccine research, as well as some things less popular around these parts like “AI safety” research.
So it seems like a weird combination of altruism and massive fraud. Dunno whether it’s (1) fake altruism because he hoped politicians he’d given money to would then be friendlier to cryptononsense, or (1′) fake altruism because he hoped everyone else would overlook whatever shady things he was doing if he was visibly donating to good-sounding causes, or (2) incompetence and/or bad luck rather than fraud (though it looks a hell of a lot like fraud right now), or (3) some sort of utilitarian “if I commit this fraud I can use the money do more than enough good to make up for it” thing (plus of course “if I commit this fraud I will get a lot of wealth for myself”, which goes without saying but the weird thing in need of explanation is the combination of apparent altruism and apparent fraud) or (4) something else I haven’t thought of.
I think probably mostly not #1 (seems like he would have selected different politicians in that case), mostly not #1′ (seems like he would have gone for more mainstream causes in that case), more likely some combination of #2 and #3, starting with “this crypto stuff is kinda sketchy but it does seem like it’s making a lot of money and I can do a lot of good with that”, and gradually shading into “this is outright fraud but I need to do it in order to get out of the hole I’m in from the 17 previous increasingly-sketchy things I did”.
Lol. Learn to read. Those billions don’t exist because they are in stock market. If he actually tried to get them in any form of currency that is not stock market, they would melt like snow in the sun. What that means is that he can buy other things on the stock market but he can’t buy anything in real economy.
You are not current with your information.
https://nypost.com/2021/07/05/elon-musk-is-living-in-a-prefab-tiny-house-worth-only-50k/
@ R.L. Foster #20, Louis #25, Walter Solomon #26, Paul K #29,
Thanks to all for your good words. We haven’t even moved in yet and we’re already learning. The new house has a fireplace. We don’t like fireplaces and we don’t plan on using this one. What we learned, though, is that you don’t just block up a chimney. That can cause serious problems. So lesson learned: whatever we might think about doing, we need to look into it first. I know nothing about houses, repairs, etc. I’ll have to learn.
I’ve often heard from homeowners about the constant layouts on maintenance and repairs. “That’s our rent!” We’ll try to be prepared.
As for noise, this house is what’s called “semi-detached” in Ireland. I.e., we’ll share a wall with neighbors on one side (as opposed to a terraced house where you have them on both sides). We do hope they’ll keep the noise down. We’re quiet people ourselves and when we want to sleep at night, we want to sleep. Having your own isolated house won’t guarantee you that. That’s what we have now as a rental. The people next door were fond of loud parties out on the balcony until all hours and didn’t care whether or not their neighbors (or, apparently, their own children downstairs) were sleeping. We managed to solve that problem, but the fact is that if people are into noise, you can have noise no matter what your situation is.
So we’ll see what happens. For me, at any rate, this is indeed a forever house, first and last I’ll ever have.
Oh, incidentally, the “fake corporate Twitter account caused a stock price drop” has apparently happened again; somebody pretended to be Lockheed-Martin and said they would no longer sell arms to the US, which again dropped their stock around 5%. Gonna be hilarious lawsuits.
@#34, John Morales
The answer in practical terms is: no. His money is tied up in non-cash assets, and if he tries to get actual money for it, he will destroy the value of those assets and be left with a much smaller amount. And, what’s more, it appears that he is going to be forced to sell a bunch of Tesla stock in order to service his debt — which not only will drive the price down but is a tactic he can only employ up to a certain point, after which he loses control of the company.
A large chunk of them, at least, are not — that’s what liabilities mean. When he took out loans against his Tesla stock he was signing over a biggish chunk of his assets to the bank, and hoping he could earn enough fast enough to make up the difference. Turns out that advertisers are refusing to pre-buy space with Twitter (they usually make about a third of their annual income in prearranged ad purchases, and thanks to the Musk takeover they sold basically none this year — it’s not even a post-purchase protest by corporations pretending to be “woke”, it was a fear on the part of the companies that after the takeover Musk would unilaterally alter the conduct rules, which turned out to be entirely justified) and so he’s going to need money from some other source to service the debt, which means selling Tesla stock. Which is already down a few percent because the markets can read the writing on the wall. Looks like no more badly-assembled super-hackable cars for Musk, and probably no more government subsidies to make a bad knockoff of NASA either.
@moonslicer #38, truly, home ownership is education in the meaning of “entropy”. Every piece of a home is always and inexorably trying to become something simpler or less organized. That aside, depending on room layout, I would think a fireplace could be a very comfortable thing indeed, given Ireland’s climate. However you must install a faux fire, a “gas log,” with electric ignition, an automatic closure for the flue, and a cute little remote clicker. Then you can have the warm flickering hearth exactly when you want it, and never have to deal with mess and smoke stains and drafts. Excuse me, draughts.
The greatest strength of Twitter is the entertainment value of watching it burn. (The algorithm doesn’t care why people look, only that they do.)
@35, @36
Bankman-Fried also dumped some $500k in our Congressional district (NY-22) by backing the conservative Dem (field of 4) during the primary. I could’ve wallpapered my house with the mailings we got from the so-called “Protect Our Future PAC”, which turned out to be B-F’s once I did a little searching. We had a great progressive candidate who came in a close 2nd in that primary, and B-F got what he wanted (derailing the progressive and suppressing a younger voice who was/is pushing for controls on dark money and campaign finance reform, generally). Currently, it appears that the Dem (Conole) will lose, and we’ll have a regular MAGAt representing us. So B-F got what he wanted. When I read the news about FTX the other day, I was hoping, literally, that he would lose. every. penny.
@jimf #42, it seems unlikely to me that anyone who would vote for a MAGA-Republican would prefer a progressive Democrat to a less-progressive one, which suggests that campaigning for Conole in the primary improved the chances of not getting a MAGAt in that HoR seat.
Still, if there’s a general pattern that SBF’s PAC pushed for more-conservative Democratic candidates over more-progressive ones, that makes it more plausible that its real purpose was to try to push for a political environment more favourable to his cryptofraudulent endeavours.
(… I had a look at the first few names on the PAC’s list of endorsed HoR candidates, comparing each to the best-performing other candidate in the primary. VA-07, CO-7, IL-04: no other primary candidates. MI-13, IL-03, NY-22 (this one’s yours), MI-11: their preferred candidate was more conservative. VT-AL: their preferred candidate was more progressive. OR-06, FL-23: I couldn’t tell. So on the whole it does look as if SBF’s PAC prefers more conservative Democrats to more progressive ones.)
My understanding is that their official line is that they preferred Conole because he was particularly strong on pandemic-preparedness. I don’t know enough about Conole or his Democratic rivals to know whether that’s actually credible.
LOL. All of Musk’s intentions regarding Twitter were wrong.
Unrelated: jo1storm is an imbecile.
@42 You don’t understand NY politics. The NY political establishment views the progressives as their enemies; they don’t care if Republicans win, as long as progressives don’t.
@Jim Balter:
Could be. Or I could be an actual economist talking to you about things beyond your understanding. Stock market has been separate from most real economy for decades now and nothing has proven that as a fact like the latest pandemic.
https://www.vox.com/business-and-finance/22421417/stock-market-pandemic-economy
To quote the article:
When your whole net worth is based in stocks, that’s a bad thing, because stocks are speculative capital. Once enough somebodies start speculating that you are insolvent, you will become insolvent. Ever heard of rush at the banks when panic ensues? Somebody says that the bank is insolvent, people rush to get their money, the bank can’t pay everyone all at once, it becomes insolvent.
It is like that for stocks as well.
@45
I understand NY politics well. I especially understand CNY politics. For example, I understand that my county (Oneida) has been under Repub control for the last 40+ years and that the local established Dem party is as strong as jello. They appear to have no problem endorsing candidates who are also running on the Conservative Party line. And the Repubs are fine with this. In fact, it is common to see lawn signs with a full slate of Repubs along side, say, a sign for NY Assembly that’s the so-called Dem.
But, there is a strong and growing Indivisible chapter here that is fighting that establishment. And they are effective. For example, in the June Democratic primary for NY-22, Conole won the larger Onondaga County (Syracuse), while the more progressive Klee-Hood won Oneida County (Utica).
And I am sick and tired of the argument that, if the Repub wins, that means that the Dems should’ve run a more conservative candidate. We’ve been doing it for years and it hasn’t worked. Maybe it’s time to take a stand on issues and draw an obvious comparison to the Repub instead of trying to be “Repub-lite” to attract those mythical suburban moms. Maybe we could try to excite younger people and disaffected workers instead offering up more of the same that just turns them off.
@jo1storm #46, Krugman is not saying that the stock market is “separate from most real economy”, he is saying that the stock markett is only part of the economy. The sentence immediately before what you quote is this: “To put it plainly, the stock market is not representative of the whole economy, much less American society. And what it is representative of did fine.”
So the point Vox and Krugman are making is not that the stock market is unreal or illusory; they’re saying it’s real but it’s only part of the picture, and it matters to businesses and their major investors and and not so much to ordinary not-so-rich people who mostly own money and houses-if-they’re-lucky and cars and food and things.
Whereas your claim is that the stock market is largely meaningless even for people heavily invested in it like Elon Musk.
It is, absolutely, true that if Musk tried to turn a large fraction of his nominal wealth into cash in a hurry then its value would go down because a lot of people would say “look, even Elon Musk prefers selling Tesla shares to keeping them”, which is why you say that if he wants a lot of cash he is more likely to get it by taking out loans with those shares as collateral. It is, absolutely, true that the future value of those shares (which is what matters to him since he can’t just sell them all immediately without tanking their value) is highly uncertain, so he could end up a lot poorer (or a lot richer) than he is now.
But (1) that doesn’t mean that there’s the Real Economy and there’s the Stock Market and Musk’s difficulty is transferring assets from one to the other. If he wanted to turn $40B of Tesla shares into $40B of Apple shares he would face the exact same difficulties as he would turning them into $40B of cash. And if he had $40B in a diverse basket of equities, he could sell a lot more of them a lot faster without dropping the price disastrously. And, further, if you owned, say, $1M worth of Tesla shares and wanted to turn them into cash, you could do it right now and not have any discernible impact on the price.
It’s not about stock market versus everything else. It’s about huge lumps of not-so-diverse assets versus everything else, and its about assets you are personally tied to the value of versus everything else. You’d get the same effects if Donald Trump suddenly wanted to sell all his hotels: he’d get lower prices for them because everyone would suspect he knew something bad about their value that the rest of us don’t.
And (2) it doesn’t mean that his wealth is all imaginary and he can’t do anything with it. He did, in fact, buy Twitter. This did, in fact, give him control of the company, with … interesting … consequences that we are all watching now as we munch our popcorn. I could not have bought Twitter and I assume you couldn’t either; this is because Musk is, in fact, richer than either of us. His wealth is certainly more volatile than that of most normal people, but that doesn’t make it unreal.
Your analogy with bank runs is a pretty good one, because it illustrates that this isn’t a stock-market-versus-everything-else problem. If a bank does anything with its customers’ money that’s riskier than burying it in a hole in the ground, then they can be wiped out by a bank run.[1] But It doesn’t matter whether the bank used the money to buy houses, or art, or collectors’ issues of comic books; the depositors are knocking at the door demanding their money as cash Right Now, and the bank doesn’t have the cash, and everything goes to hell. The possibility of disaster is always there when your nominal wealth is tied up in things that are speculative or illiquid or both, and that’s not a situation specific to the stock market, nor is it a problem only for banks and billionaires.
[1] It seems as if this is part of what happened to Sam Bankman-Fried, whose name I am just now realising is prophetic: a bank-man (a cryptocurrency exchange is pretty much a slightly weird sort of bank) who got fried.
Not sure if we can count on this whole “I have
reinventedinvented the 3d chat program” thing with Zuckerberg to actually sink the company. It’s really ridiculous and I have no idea why they didn’t shelve the idea long before any of us had ever heard of it. But even though they pitched it and I’m sure it has a pretty ridiculous price tag, they would have a hard time spending $44 billion on it.It’s a useless boondoggle but it’s a cheap one compared to Musk screwing up on his “I’ll buy Twitter” fake-out. Musk just wanted to elevate the stock value so he could sell at a profit again.
A must-watch comment on the subject of billionaires (at the second half of the episode)
Frankie Boyles new world order
https://youtu.be/Pvjlw75RJtU
@#49, lanir:
The problem for Zuckerberg is that Facebook is very gradually losing users. Meta isn’t just Facebook, but most of their products/services have tie-ins to Facebook and use that linkage as a selling point. If Facebook reaches the critical point where it obviously has too small of a user base, then all the rest of Meta’s stuff dies along with it. (Note that “too small” is a subjective, perceptual value — it could have millions of users and still be “too small”, but could also still be big enough with the same number of users as long as it can maintain a public perception of ubiquity.)
The choice is: try to come up with new products that people want which are completely independent of Facebook — which would, if successful, secure an independent revenue stream, but which might spook investors if seen as an admission that Facebook is sinking — or keep trying to build stuff that hooks back into the Facebook Pile Of Stuff, which keeps the company tied to Facebook and ensures that anti-Facebook users won’t touch any of it. So far, they’re mostly doing the latter.
Which means that Meta can’t afford as many screwups as otherwise might be the case — they’re fine as long as they are perceived as an unavoidable online presence, they can continue to sell ads and authentication services. But every failure like the Metaverse which reveals the company as out-of-touch and unpopular with new users means some ad-buyer somewhere shakes their head and says “I think we’ll spend our money elsewhere”. They’ll probably survive this failure, but they don’t have a lot of failures left before the rats abandon the sinking ship.
@gjm11 48
There’s just one problem with that reasoning. The assessed value of US stock market is over 2 times the value of USA GDP. (46.4 trillion vs 23 trillion). Which means that, just like in the bank, not everyone would get their piece if they tried to convert their stocks into the goods and services.
All money is illusory and slightly unreal. I lived through hyperinflation in Yugoslavia. Everybody was a billionaire then but what could you buy with month’s salary (12 billion Yugoslav dinars)? Two liters of sunflower oil. If you could find it in a shop or knew a guy in the production facility. It’s all based on trust. If you don’t trust the money, then you go back straight to barter. It is only that stocks are more illusory than most other forms of currency (for the lack of better word). More based on trust than most other forms. What is important with money is the ability to spend it, the amount of products and services you can get for it. The capacity. I like the example of Pablo Escobar here. He was hiding inside his mountain hideout. His daughter Manuela got hypothermia. Unable to get out and get the wood or pay for it, Escobar did not hesitate to burn the stacks of money worth up to US$2 million to keep her warm. That was the value of money for him then: as fuel for the fire.
I think we are misunderstanding each other. Musk bought twitter via stock market. At no point did he get out of the stock market to do it. And just because something is illusory or unreal doesn’t mean that it doesn’t have effect on the real world. Else religious violence and/or stochastic terrorism wouldn’t exist. The money is an idea and ideas are bulletproof (ha!). The value or worth of it is susceptible to changes and disagreement.
I never claimed this. I guess that it is quite meaningful for him. “Matter of life and death” meaningful possibly. It is meaningful to me too, since I do have twitter account, but much less meaningful than to Musk. Riches and power are shadow on the wall, power resides where people think it resides. Else confidence tricks and scams wouldn’t work.
When your whole net worth is based in stocks, that’s a bad thing, because stocks are speculative capital.
That depends largely on the nature and performance of the companies whose shares you own. It also depends on what stock markets are doing at any given time, and what you do with your stock at the time. But no, stocks are not ALL “speculative capital;” they’re shares of companies that mostly have REAL capital, and can be sold for cash (though not always for as much cash as you might need or expect) to people who often have reason to consider them good investments.
And no, stock-selling panic is really not the same as a run on banks. If @jo1storm wants to hint that they’re an “actual economist,” they’re gonna have to do a bit better than that.
@Raging Bee:
You are correct, it is not the same as run on banks. No analogy is perfect :)
Because central bank has to cover every bank deposit (so you’ll eventually get your money) and nobody is covering for stock value. For example, while Alphabet’s GOOGL stocks trade for 96.73$ each, the printed value on them is 0.001$ which is what Alphabet will be legally forced to pay if things really go to shit.
Depends on the frickin’ stock, doesn’t it? You are thinking of how stocks USED to work and how they are described in most economics textbooks. The issue here is that most stocks these days don’t offer either dividend (profit percentage) or voting rights. They are just there, the guaranteed value is 0.001$ with no other benefits (GOOGL type C stock). You can trade them with other people and that’s the only way to get a profit from them: find another sucker who would buy them from you at a higher price. Companies themselves have real capital, that is true, but they are not guaranteeing their stocks with it. That’s what the value of company IRL and it’s stock market evaluation are not the same thing.
*That’s why the value of company IRL and it’s stock market evaluation are not the same thing.
Depends on the frickin’ stock, doesn’t it?
Um, yeah, that’s what I said.
You are thinking of how stocks USED to work and how they are described in most economics textbooks. The issue here is that most stocks these days don’t offer either dividend (profit percentage) or voting rights. They are just there, the guaranteed value is 0.001$ with no other benefits (GOOGL type C stock). You can trade them with other people and that’s the only way to get a profit from them…
WTF do you mean by “most stocks these days?” Also, just because a company’s stock doesn’t pay a dividend, doesn’t mean it’s “just there,” or that it has no value. That’s why you can trade it with other people, just like stocks have generally always worked.
@jo1storm #52, comparing the total value of US stocks with the GDP is nonsense because they have different units. The total value of stocks is a number of dollars. The GDP is a number of dollars per year.
(We now do in fact know that jo1storm is not an economist. No economist would make an argument that begins “the total value of stocks is bigger than the GDP” and ends with a conclusion that doesn’t have something like “per year” in it somewhere.)
The total value of a company’s capital assets is absolutely not the actual “value of the company IRL”. A company that provides a service people are willing to pay for has a future income stream from its customers; if its customer base is growing because most likely customers haven’t heard of it yet, then even treating its customer contracts as an asset you’ll undervalue it if you just add up the assets.
Incidentally, you have GOOG and GOOGL the wrong way around. GOOGL is the class A stock which comes with voting rights. GOOG is the class C stock with no voting rights. (I do agree that there is something very sketchy and bubble-y about “shares” that neither pay dividends nor confer voting rights, by the way.)
@Raging Bee
GDP per year is the amount of new products and services created. That includes housing market as well as new value created in trade. I agree that better comparison would be monetary base (M0), which is all the money in circulation in the economy. Which is 5.4109 trillion dollars. You are correct. It is even worse! There is almost ten times the amount of “stock value” than there is actual US dollars in circulation. Good thing it will never happen that everybody decides to convert their stocks into cash, right?
Actually, it used to be that 1) Company guaranteed the minimal price of stock and 2) stocks used to pay dividends and 3) you actually had voting rights that came from owning a stock. That’s why the other name for stocks is shares, you know?
You always could trade stocks but their main value came from dividends and voting rights. So you could gain “controlling share” etc. But trading stocks for profit and not keeping them for dividend is what we call speculation. You are betting that you will be able to sell them for higher than you paid for them. So, it is not “just like the way stocks have generally always worked”, stocks used to be so much more.
So yes, stocks do have value. It actually has at least four values but for you what is important is three: guaranteed value of the stock, expected value of the stock which is guaranteed value of the stock + dividend and
what it is currently trading for (also known as speculative value of stock).
@gjm11
Assumed future earnings should not be a part of current value of company. Agreed?
Agree, but that’s a lot of wishful thinking, don’t you agree? You might gain a lot of new customers. Or an earthquake might happen. Or a pandemic. Or the CEO could be arrested under drug charges while burning a rain forest. So the evaluation suddenly goes down.
On another note, that is why all the companies want to be valued as tech service companies, even if their core business has nothing to do with tech. See for example WeWork and what happened to them for why that’s a bad thing. Uber also presented itself as software company and not a cab service it really is.
Sorry for that.
Agreed. Should they even be called shares then?
Keep in mind I am simplifying things here. There is no way I can summarize knowledge of three semesters worth of subjects in a comment.
Is, and all your subsequent posts make it even more clear
What, you don’t know?
It’s quite possible to be an imbecile and an economist, but you’re an imbecile and a liar.
I apologize … it is evident that you do. And we appear to agree.
that is true the value is in what other people collectively say it is regardless of any intrinsic value the corporation as represented by the stock has other wise there would not be a market.
Of Tesla the market history has been interesting the price has gone from $402.67 to $195.97 that kind of volatility closer to speculation isn’t it?
All of Musk’s fortune is tied up with that valuation his investments are dependent on that valuation as well as his other companies as long as it is perceived by the market that the cars are making a profit enough to pay for all the rest it works when it looks like it wont the value will change. It is not a complete undecipherable scam ponzi scheme like crypto but it is abased on mostly agreements between people about its value and the value of money generally
@jo1storm #59, if the stock market were meant to be a bank, and if there were no such thing as fractional reserve banking, then indeed it might be alarming for the total value of the US stock market to be bigger than the total amount of cash in circulation. As it is, though, I’m not sure what response other than “so what?” is relevant.
I mean, the idea seems to be that US companies can’r really be worth so much, if there isn’t enough cash in circulation to pay for their apparent value. But that’s obviously false. There’s no connection between how much cash is in circulation and how much total value a bunch of companies can have. Imagine that tomorrow every US banknote is set on fire and every US coin melted down for scrap; there is no more cash at all. No doubt that would have a big effect on the economy, probably a very bad one, but if you think it would _necessarily make all US companies completely valueless then I can’t imagine what sort of mental process gets you there.
And no, I don’t think it’s “wishful thinking” to say that having a future revenue stream from a bunch of already signed-up customers adds value to a company, just because it’s uncertain.
Going briefly back to #52, I notice there’s something I didn’t address. You reject my argument that if Musk’s wealth enabled him to buy Twitter then that means it had some reality to it, on the grounds that (1) “Musk bought Twitter via the stock market” and (2) something can be unreal but have effects on the real world, like nonexistent gods or conspiracies or whatever. But I don’t know what useful thing it could mean to say that money is or isn’t real, if not that having it does or doesn’t enable you to affect the real world in proportionately large ways. Or, as you put it yourself, “What is important with money is the ability to spend it, the amount of products and services you can get for it.” For me, too, the question of how “real” Elon Musk’s nominal fortune of eleventy gazillilon dollars is, is exactly the question of what that fortune actually enables him to do. And one thing Elon Musk was able to do with whatever-he-had was to take control of Twitter, a thing that the vast majority of us would not be able to afford to do. I’m not sure exactly what “bought Twitter via the stock market” means (e.g., I’m pretty sure that after the transaction Twitter shareholders collectively had an extra $44B of actual money), but to whatever extent it’s true it’s a refutation of the idea that the stock market is unreal. If having a lot of stock-market wealth can be converted into ownership of a very expensive thing (such as Twitter) then stock-market wealth is real, because “what is important with money is the ability to spend it, the amount of products and services you can get for it”.
(Of course Twitter is clearly worth much less than what Musk paid for it, and it seems likely that what he’s done with it has made it worth less than it was before. So this doesn’t prove that $44B of whatever-Musk-had had as much value as $44B of actual literal money. But I think it does prove that it had rather a lot of value.)
We are talking about different things, again. That would be correct for every normal company except for tech companies. Or, to be more precise, IT companies. If I were a car maker and prove that I have orders for 1 billion dollars worth of cars next year and I have the production capabilities to produce and deliver them to the customers, then you could reasonably evaluate that the future revenue stream would be close to 1 billion dollars. You look at my current market share, do some calculations involving total market value and decide that my chance for 5% growth would be 90% and act accordingly. Assumed return of investment (ROI) is whatever.
On the other hand, if my car company presented itself as not a car company but information technology company that is not really selling cars but is actually producing and selling self driving AI, then weird things start to happen. Suddenly, my future growth evaluation becomes much higher. It is not only future contracts you are looking into, but future potential customers for software not for cars. The other way to put it is that the worth of innovation is over-valued. That’s why every company is now trying to display itself as tech company that is revolutionizing the market. As an example, WeWork was valued at 47 billion before their IPO and was revaluated at 10 billion after actual look into the company books. Today’s value is around 5 billions. Why that happened? Because if you evaluate it as a software company with magical revolutionary algorithm, then you get something close to 47 billion by using the current formulae. But after they looked into the documents, potential investors (the market) realized there is no magical algorithm and that the company should be valued as a real estate company it actually is and used different formula to calculate the value.
It is mostly irrelevant except for one conclusion: like the lottery or roulette wheel, on stock market everybody can take part but not everybody can be a winner. And not everyone can be paid out. Money goes in, but rarely comes out. Nobody is counting stock market losers.
44 billion is nothing compared to trillions on stock market and can be easily converted to cash.
By that logic, this guy from the post above could have bought half of Twitter at his peak, I guess? Except he didn’t actually have the money that is not in crypto. Should have invested in stock market from the beginning.
Everything is real and everything is possible when you are building castles in the sky of the imagination. If you or me were able to con(vince) enough (right) people that we are already billionaires, then we would soon become billionaires. For how long, I don’t know, but we would for some time become billionaires. Let’s open a startup together! Let’s promise we will solve the issue of too high trucker’s wages by replacing them with self-driving trucks! We are so close to AI breakthrough! We will revolutionize transportation! There’s 22 million millionaires in USA, if every one of them invested just a thousand dollars into our company, we would quickly become billionaires! What’s a 1000$ for a millionaire? Nothing. So invest now!
Then when everyone finds out we don’t actually have the AI, we will quietly melt into the night with our ill-gotten gains. but until then, its gravy train all the way. That’s my point: the wealth is real until the breaking point it suddenly isn’t.
To quote #2 flex
At the point of Twitter buyout, Musk’s wealth was real enough because the trust in him was high enough. After it and him proving worse than useless in running the company, the trust will erode and his wealth might as well disappear into thin air.
@Jim Balter
Any actual point you are trying to make or are you content with insults?
jo1storm:
So… Musk could easily get $44B in cash, according to you, though it’s not cash, but sour wealth.
Oh, right. It was real back then. Back in those days.
How did you put it? “those billions were sour from the start”.
Sour, but real enough according to you.
Any day now, he shall succumb to penury. And you shall be vindicated.
—
Same wishful thinking that prompted my #30.
(I do like the slithering and contextualising, as well the appeal to expertise, though. Kinda cute)
@John Morales
I was waiting for you.
No. If Musk wanted to convert his Tesla stocks to cash and not to buy another company on stock market, then he wouldn’t get 44 billions. On the other hand, many people converting Twitter stocks to cash after company buyout is not an issue. See the difference?
It is called bezzle. The time between the moment investor gives the money to the conman and the moment the con is discovered. Life is good then. Musk’s billions are overvalued and they were overvalued from the start. They were built on the idea of working self-driving AI. That’s what makes them sour.
Penury? No, but his wealth will diminish. It had already started, just keep looking at stock market for three more months. Until the next yearly and quarterly reports.
There is no truth without context.
Waiting, eh? With baited breath, no doubt. ;)
Sure.
Ahem.
Quoth you: “44 billion is nothing compared to trillions on stock market and can be easily converted to cash.”
Well, I haven’t had multiple semesters of scholarly erudition, but no.
I mean, I can see what you’re trying to express, but you are just confusing yourself. Either 44 billion can be easily converted to cash or not.
(You are perhaps using some exotic concept of ‘cash’?)
(sigh)
Such prancing moondancing!
Quoth you: “Guess what happens when you lose the trust of the stock market? That one “One good breeze, one rumor of insolvency” and his wealth is gone.”
Ah, deepitudes!
There is also no context without truth.
It follows what wherever context is, there is truth, and vice-versa.
The context: he has hundreds of thousands of thousands of thousands of sour money at his disposal.
:)
Actually, it used to be that 1) Company guaranteed the minimal price of stock…
How the fuck was it ever even possible for any company to do that? How can anyone “guarantee the minimal price of its stock” after it’s been bought in the IPO?
You always could trade stocks but their main value came from dividends and voting rights.
Wrong again. Dividends and voting rights certainly add to a stock’s value (voting rights not so much, if the original owner(s) kept 51% for themselves); but those are not the only source of value in a company’s stock — which is, remember, an investment whose value can grow, and does tend to grow in the long term, as the company grows and gains more profits and assets.
So you could gain “controlling share” etc. But trading stocks for profit and not keeping them for dividend is what we call speculation.
There is actual growth in a company’s capitalization or value, and there’s speculation. They are NOT the same thing. Speculation can continue driving up stock prices after the company has stopped growing. Sensible investment managers have (or at least pretend to have) strategies that involve holding a stock as it grows, but then selling it before legitimate growth in value gives way to far-less-predictable speculation. This is something I learned, both in basic economics courses, and from investment managers.
Keep in mind I am simplifying things here. There is no way I can summarize knowledge of three semesters worth of subjects in a comment.
LOL You think that’s hard? Try summarizing knowledge gained from decades of dinner-table conversations with a PhD economist who’s worked for both the Fed and the CBO, among others. Go to bed, lightweight.
It is easy for the whole market, it is not easy for one man. Clearer?
It is easier to buy from a thousand people than to sell to a thousand people. Is that even more clear?
So fucking annoying…
Ok, let’s try it like this. If I were a single owner of the company and started to sell all my stocks and convert them into cash for no reason at all, it would cause a panic and I won’t be able to sell all of my stocks at the current price. Because the price would drop with each transaction. On the other side, if there were 100 owners and they are all selling their stocks to me in a single transaction, then the price won’t drop. Understand now?
By adding a previously often used clause but not so much anymore, making shares closer to bonds. It is not used any more for a lot of reason.
No thank you, it is 8am where I am at : )
Correct. Now, discern between those two and convey that to the stock market. And check whether that is actual growth coming from sales or from new investors. All of a sudden, not an easy task, right?
And then there’s accounting jiggery pokery, and market games, like buying your own stocks then doing a new emission two months later… In short, it is complicated.
I am glad for you. Having said that, it seems that this comment section has turned into economics fight.
Econ fight! Econ fight! Woo! :D
By adding a previously often used clause but not so much anymore, making shares closer to bonds.
“A previously often used clause?” That’s not an answer. Remember, bond prices can go down too.
If I were a single owner of the company and started to sell all my stocks and convert them into cash for no reason at all, it would cause a panic and I won’t be able to sell all of my stocks at the current price. Because the price would drop with each transaction. On the other side, if there were 100 owners and they are all selling their stocks to me in a single transaction, then the price won’t drop. Understand now?
Actually, none of that is necessarily true. Sole owners of companies sell out all the time, and only rarely cause any sort of panic that drives the price down the toilet. The price doesn’t drop if there’s buyers who think it’s a good investment. OTOH, one hundred owners trying to sell out at a time would be far more likely to cause a serious price drop, because that would indeed look like a panic. (And besides, NO ONE EVER sells their assets “for no reason at all.”)
Do you have ANY clue what you’re talking about? If you’re looking to get into an econ-fight, you’ll have to bring a better grasp of both econ and business decisions.
jo1storm:
Already told you I understand what you’re trying to express.
You think his wealth is not real wealth, and were he to actually try to spend it, it would vanish into thin air. And that’s why it makes sense to you to imagine that (and I quote you) “he owns a car and that’s it”.
A simpleton’s view of how wealth works.
@John Morales
Oh, now we are talking about wealth all of a sudden. Dude, he is currently (re-read definition of bezzle) wealthy but his wealth is based on shaky legs because it is tied to market price of stocks he owns. If he actually tried to use it for anything that investors don’t like and causes a panic, his wealth is going to melt. It is as simple as that. Would you acknowledge that as true or not?
That’s the spirit! And that was my point: Musk is not NO ONE. He is the current owner and public face of the company. He already caused one panic by smoking a blunt on the talk show and talking smack on twitter.
Correct. But it is true in this specific case.
True, if it was one hundred separate transactions and not well published single deal/ contract.
Ahem.
Quoth you, in your very first comment to me:
“That one “One good breeze, one rumor of insolvency” and his wealth is gone.”
Obviously not.
As gjm11 noted, that was clearly not the case when it came to paying $44B for a business on his whim. This is established fact.
The significance of this fact appears to elude you; hint: his wealth is yet to melt.
But sure, any day now.
—
Be aware that the ultra-wealthy don’t “have” stuff the same way we peons do; for example:
<clickety-click>
https://www.scmp.com/magazines/style/celebrity/article/3198319/inside-elon-musks-new-us78-million-gulfstream-g700-private-jet-twitter-ceos-plane-arriving-2023-has
Salient pullquote:
“Musk currently has four jets, three of which are made by Gulfstream. Musk also owns a Dassault 900B, the first jet he ever bought. All of Musk’s jets are registered to Falcon Landing LLC, a shell company with ties to Space X, the FAA registry shows.”
(The new one looks really nice)
Counter point:
https://www.theguardian.com/technology/2018/sep/07/tesla-chief-elon-musk-smokes-marijuana-on-live-web-show
Yeah, proves the dude can indulge his whims.
Yeah, he’s a boor. Yeah, he’s probably not the best boss.
Or a nice person. Yeah, he’s a bullshitter and a troll.
But none of that is the point; point is that his wealth is neither imaginary nor so fucking fragile that it’s gonna vanish just because he’s annoying.
Quoth you:
“He already caused one panic by smoking a blunt on the talk show and talking smack on twitter.”
Clearly, that particular panic did not cause his wealth to melt away, either.
So it’s indeed a counter-point, but to your own claims, not mine.
Like it or not, he can bloody well afford to buy Twitter, wreck it to the ground, and he’ll still be ultra-wealthy. Maybe a few tens of billions down, but hey — easy come, easy go. :)
As long as he doesn’t annoy the wrong people. Which is the point of saying it is fragile.
It melted a bit if one third of wealth is considered “a bit”. One panic after another and it will jump from 33% to almost a 100% loss.
https://www.forbes.com/sites/rachelsandler/2022/10/21/elon-musks-fortune-has-fallen-by-more-than-100-billion-in-less-than-a-year/?sh=6dc41df33ea4
Until he steps out of a line one time too many that causes trust in him and his stocks to evaporate. Then he will stop being ultra wealthy. That’s how panics work.
@ jo1storm
Just a word to the wise – Morales is a notorious troll who doesn’t care if what he says is true or not – he lives to pick fights and argue. He’s admitted it in the past. Nothing he says is genuine, it’s all just fatuous nitpicking for the sake of having a fight. Continue to engage if you’re having fun. I’m just saying you’re arguing with a human bot whose only goal is to argue, and you will never convince him of anything, he only want to argue for the sake of it.
You really, really don’t grok $BIGNUM.
From your adduced link, my emphasis:
A mere $209.4 billion! Almost a pauper, now.
(It’s amusing they round off to the nearest hundred million dollars)
Anyway, you’re all over the place. I just had a look at your dope toke incident, which is dated dated 7 Sep 2018.
Incidentally, looking at the historical dataset for Tesla shares:
Sep 07, 2018 $17.34
Nov 11, 2022 $195.97
(Previous close was $190.72)
—
And left unsaid by you is that, until then, he will remain so.
Do you remember all the way back when I responded to the effect you imagined I am a fanboi? This was the claim: “Wow after reading @15 and @17 is it really coming to pass…Musk’s complete and total self-inflicted implosion? Hopefully.”
You clearly don’t think that is the case, either — I mean, you are claiming that this instance is not sufficient, and only when “he steps out of a line one time too many” will this doomish fate befall him.
Which will be soon, but is not yet, right?
(What remains amusing is that you still imagine the entirety of his assets consists of shares in his companies)
@Silentbob
Thank you. Don’t worry, so far a good time was had by all.
Obviously.
Which is a huge drop from 409.97 on November 04, 2021. But hey, who is counting?
I am not claiming that. Whether twitter scandal turns out to be the incident that breaks the trust and cause his doom remains to be seen. The events are still in progress.
If we go by official data, that is the case. Musk owns shares in his companies, his companies own stuff that they lease to him.
Well, you started with the purported panic of the toke, but years after the event and even during this current panic (it is a panic, in your estimation, no?) the stock price is up tenfold. Which, by the logic you espouse, means his wealth has increased likewise.
So, clearly, the incident was not exactly problematic in the longer run, was it?
Consider that perhaps his hijinks and the associated panics may be desensitising investors to his antics; more inured to the stimulus, needing greater stimulus to panic properly given the effect past panics have historically had hitherto.
Panic fatigue, if you like. :)
You really think that? OK.
You already know what I think of people who think that.
Me, I reckon he’ll just carry on just fine, if this is the sort of panic at hand.
Sure. Whyever would he seek to diversify any of his assets or distribute his wealth using the best lawyers and accountants? Perish the thought!
—
PS Bob the supposedly Silent has quite regularly over the last few weeks (or has it been longer? I forget) popped in to the odd thread to decry my trollishness.
Over at Mano’s (or was it here? I forget) I pointed out that it sure looks more like he’s trolling me. <shrug>
I expect this to continue into the indefinite future.
It is all a poker game played on trust. When the trust ends, so does the game. If Musk ever becomes a leper to be avoided at all costs, that will cause all of his stocks to plummet to zero. Diversifying in such a way is not smart if your own name is tainted. But I don’t really care that much.
Wile E. Coyote, supergenius.
Which, in your estimation, may well be what’s happening right now.
You’ve already said that a few times, so I already know that’s your claim.
Wow. It’s apparent really, really don’t get to what I refer, do you?
(Not really enhancing your economist credentials, there)
Only comparatively. :)
You cared enough to make many a comment about it, so that’s a lower bound right there. How much time have you invested?
Anyway, that’s the thing that impels the sentiments expressed hoping for his financial ruin, isn’t it? People who don’t like him wishfully imagining his days as Musk the billionaire are numbered. I know you imagine you’re using hard-nosed economics when you think you are justifying your belief, and that’s a bit sad.
So, we’ve exhausted the possibilities of this discussion, I think.
@John Morales
Or I am a socialist and think no billionaires should exist as a rule :) That’s a possibility too. And I might also be considering Musk one of the worst ones, because he ruined projects for public transportation with his hyperloop idea. That’s also a possibility. And Musk the fraud being financed by government money is also a bad thing. So the sooner he is seen for a charismatic fraud that he is, the better.
As for how much time I’ve invested? I love talking about economics. It gives me pleasure.
It is all a poker game played on trust.
Dude, that analogy is like Hitler at an ice-rink. Now you’re sounding like you know nothing about either business or poker.
When the trust ends, so does the game. If Musk ever becomes a leper to be avoided at all costs, that will cause all of his stocks to plummet to zero.
No, it really won’t, at least not as long as two of his companies, Tesla and Space-X, are still functioning companies that own capital and make things that people want to buy. That’s real wealth that won’t just go poof the second anyone questions its reality.
I know you imagine you’re using hard-nosed economics when you think you are justifying your belief, and that’s a bit sad.
All he’s really doing is recycling some very stale, overused impending-doom-and-gloom rhetoric from the 1970s, when tired old leftist jeremiads of The Whole System going down in flames any day now just you wait, was merging with Born-Again-Christian ravings about Ezekiel, Revelation and the End Times coming any day now just you wait.
I’m not sure if it is a bad thing or not.
But it is true that Musk has received a lot of help from the Federal government, which he seems to ignore.
Space X is undeniably a success and important to the USA.
And, where do they launch their rockets?
It is not in Musk’s backyard.
They are launched at US Federal facilities, Vandenburg AFB and Cape Canaveral.
Or I am a socialist and think no billionaires should exist as a rule…
If that’s really what you want, then you’re gonna have to up your game and at least try to sound more informed and credible. Raving incoherently about how other people’s wealth isn’t really real has never helped, and it isn’t helping now.
And besides, if huge chunks of billionaires’ wealth wasn’t real, then they wouldn’t be as big a problem for the rest of us, would they?
It wouldn’t be if there were no bubbles in the economy. As such, when reality reasserts itself and those bubbles burst, it is rarely just billionaires who get hurt in the explosion.
How was I incoherent?
Well, I don’t know about that. Some of the shares are owned by the companies, not Musk personally, and they used them as collateral for the loans. Companies rarely survive their stock market crash unscathed. Again, it is all about trust.
It’s an ancient joke but if you don’t know it, then you won’t understand the analogy.
It goes like this. Poor Peter goes from USA to Great Britain to visit his in-laws. His wife’s family is very rich. He returns with a new car, fancy bling and is now obviously quite affluent, because he immediately buys a fancy new house and a sawmill in which he used to work.
His friends ask him: Peter, we all know you, before you went to Great Britain, you were as poor as a church mouse. What gives? What happened? Did you save your father in law’s life so he rewarded you or something?
Peter: Well, here’s the story. After dinner, my brother in law introduced me to some of his friends. As a joke, we decided to play poker for money. I had two queens, his friend says that he has two kings. I say, show me. At that point my brother in law and his friends jumped at me and started to yell. “Peter, this is poker on trust. We are all gentlemen here. Our word is more important than any contract, our honor is more important than our lives or fortunes. We all trust each other implicitly. If you doubt our word, you offend us grievously. If he says that he has two kings, then he has two kings and that’s the end of it.” After I heard that, I apologized deeply and we continued playing. After that my luck at cards became almost supernaturally good.
His friends: But Peter, you are no gentleman.
Peter: Exactly. And as trustworthy as a chocolate hammer.
he said with a wink.
Not 1970s rhetoric, 2000s rhetoric. Tell that to Enron. Lehman Brothers, Fannie Mae and Freddie Mac.
https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008#Economists_who_predicted_the_crisis
That article isn’t rhetoric, it’s a summation of informed analyses that account for many if not most of the complex mix of interrelated factors that influence business cycles.
And no, a stoopid joke doesn’t make your analogy any better.
RB:
A less uncharitable reading is that jo1storm is acknowledging their use of rhetoric and therefore adducing the article with intent to validate the rhetoric, rather than considering the article itself to be rhetoric.
(The joke, however, is indeed stupid — about as stupid as the British are made out to be in the joke itself)
I really hope Space X isn’t too badly affected and set back by Musk’s Twitter shenanaggin’s and self-embarrassing here. Space X has done some pretty amazing things and really advanced the private space industry and come up with some awesome new rockets and spacecraft. Would really suck if they suffer from Musks’s appalling misjudgements and blunders. That worries me as a big fan of them not him.
Feeling quite validated right now:
https://www.google.com/finance/quote/TSLA:NASDAQ?sa=X&ved=2ahUKEwi9xsu6kbr8AhWQSPEDHYyQCigQ3ecFegQIMRAY&window=6M
Current stock price is: 113.06$ dropped from 195.97$ in November.
Yeah, most of it will and I frickin’ told you so.