When you’re rich out of market shares can you actually, i mean, are you able to buy things whenever you want? or should wealthy be measured more precisely by physical goods?
In: Economics
No wealth should never be measured by physical goods.
If your wealth is in shares, You can sell small amounts of shares to fund your lifestyle. Many founders or high level employees with much of their wealth in shares set up regular stock sales, so they free up cash and prevent perception of insider trading. You might have 1m shares and sell 10k of them each quarter, a week after your company reports earnings.
You’re not actually rich until you sell the shares and get the money. Until you do that there’s always the chance that the value could fall to zero.
Way too many paper millionaires got greedy in the internet bust in the early 2000’s. Had they cashed out at least a portion of their gains there’s a good chance some would still be wealthy. Instead they left the money in the market to try and chase more gains and ended up losing it all when the bubble burst.
market share is the percent of total sales in an industry generated by a particular company.
this is correlated to money, but correlation isn’t causation
I think what you’re asking about is the difference between “net worth” and “liquid assets”?
Net worth is the total value of everything you have, minus anything you owe. Own a house? The value of that house counts as part of your net worth. Still owe on a mortgage? The remaining balance due counts *against* your net worth. All of your bank accounts count towards your net worth, as do the values of any stocks you may hold. This is kinda your “theoretical” monetary value.
Liquid assets are things you own that either are cash, or can quickly and easily be converted into cash. This includes all of your bank accounts (because you can withdraw $20 and go buy a meal anytime you want), but not the value of your house (because selling your house is A Big Deal and you can’t easily sell your house if you want a hamburger). This is kinda your “actual” purchasing power.
thank you all for the kind answers!!
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