How Much of the Money in the Forbes Richest List is Real?

[erpowers]

I was looking at the Forbes Richest List today and I noticed that a seemingly large amount of the billionaires on the list had money that was tied to a stock market valuation. So, it seemed that for some on the list, if the stock market went down most, if not all, of their net worth would be gone. Even in the case of the Waltons, (the family that owns Walmart) it seems that much of their net worth could be wrapped up in a stock market valuation. I realize that rich people are likely told not to keep too much cash money on them, but how many of the people on that list would have zero net worth if the stock market crashed tomorrow? Take for instance, Mark Zuckerburg, if Facebook collapsed tomorrow would his net worth go to zero? How much of what people like Mark Zuckerburg buy is bought with credit, or a keystroke? Are most of these people using any form of cash to buy hundred million dollar ranches and hundred million dollar yachts?

I guess maybe the real question I should be asking is, should a person's net worth include a stock market valuation? A stock market valuation does not seem like real wealth to me because it can be so volatile. However unlikely it is, if Amazon, or Facebook collapse tomorrow that wealth is gone. So, why is it counted as net worth?

[Hoyt]

1. If the government started nationalizing or redistributing large chunks of wealth,

much of it would evaporate and throw the world into an unprecedented depression.

Reasonable tax increases would not, however.

One reason I don’t pay too much attention to wealth figures. I do believe higher taxes are proper and long overdue on higher incomes. But, not sure that’s going to change things to extent some folks believe/want.

[KPN]

4. I don't know. A real progressive tax code would ordinarily serve to moderate greed.

That in itself would change things I should think. Maybe wishful thinking, but it wouldn't hurt in that regard. Certainly, supply side policy hasn't been the treasure chest its been ballyhooed to be the past 40 years.

[tblue37]

2. I bet a lot of them offshore their money to avoid taxes. nt

[PoindexterOglethorpe]

3. You can be sure that Mark Zuckerburg

is more diversified than just owning FB stock.

A person's net worth should include a stock market valuation. Amazon and FB are not the only two companies in the exchange. There are hundreds, more like thousands of companies. If you have a 401k or any kind of pension plan you have money in the market.

Also, a stock market crash doesn't mean values go to zero. Even the very, very worst of the crash and the Great Depression, the market only lost about 80% of it's value. I'm being a bit sarcastic here, as you might guess. But, not only did that take about 4 years, notice the values didn't go to zero.

I have money in the market. If it weren't for my investments I'd be homeless. I have a tiny pension and a below-average Social Security check. I also have equity in my home (8 years in to a 30 year mortgage). If I die tomorrow my heirs will inherit my investments and home, and so yes, my net worth absolutely does and should include my investments.

[A HERETIC I AM]

5. All of it

Shares of publicly traded stock are liquid assets.

You used the expression “stock market valuation” several times, as in “ that much of their net worth could be wrapped up in a stock market valuation.”

It is more accurate to say that their net worth is largely in company stock. Or just leave out the word “market”, as in “much of their net worth could be wrapped up in a stock valuation.”

Just because the price of a stock can fluctuate, it does not mean the shares can not be sold at any time for actual dollars.

The Koch brothers have a combined net worth of somewhere north of a hundred billion dollars, but none of the companies they own are publicly traded. Is their wealth any less real?