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Companies and Billionaires

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Re: Companies and Billionaires

#11

Post by hkmurakami »

idlewords wrote: post #10
oldmanjay wrote: post #9

Earlier quoted context omitted.

Perhaps obviously, when your interpretation makes the article not make sense, it's useful to try interpretations that work. I guess another way to put it is that a very human mistake to make is to infer something and assume it was implied, then use that assumption to form a dismissal. I get that your particular interpretation is likely meant as some subtle manner of dismissal of the Koch brothers (something along the…

This is a spreadsheet, not an article, so I'm confused about your first point. When looking at a list of billionaires, it's natural to wonder "where did this fortune come from?", and in the case of the Koch brothers, the answer is "oil". I don't think it requires a deep dive into my psyche to defend this interpretation of the "source" field, though I'm always happy to swim around down there.

Suppose I make my first $10M getting lucky in technology, then make my next $1B getting lucky in real estate by leveraging my lottery winnings.

What's the source of my wealth in this case?

(this seems to be a clarifying exaggeration of what is being asked here)

Re: Companies and Billionaires

#12

Post by chollida1 »

idlewords wrote: post #2

I don't understand why the source of the Koch brothers' wealth is listed as "Diversified". They owe their fortune to petroleum.

Well if you are asking where did their initial wealth come from, you are correct, it came from oil.

But keep in mind that they have more than doubled their net worth in the past 8 years. And in those 8 years it was a diversified portfolio that more than doubled their wealth, so given that more than half their net worth was accumulated with a diversified company I can see where Forbes is coming from.

http://www.huffingtonpost.com/entry/koch-brothers-net-worth_...

For what its worth Bloomberg also lists their industry as diversified.

TL/DR you and Forbes both have a point and the only reasonable thing is to is to take Obi Wan Kenobi's advice and agree that you're both right "from a certain point of view"

Re: Companies and Billionaires

#13

Post by idlewords »

chollida1 wrote: post #12
idlewords wrote: post #2

I don't understand why the source of the Koch brothers' wealth is listed as "Diversified". They owe their fortune to petroleum.

Well if you are asking where did their initial wealth come from, you are correct, it came from oil. But keep in mind that they have more than doubled their net worth in the past 8 years. And in those 8 years it was a diversified portfolio that more than doubled their wealth, so given that more than half their net worth was accumulated with a diversified company I can see where Forbes is coming from. http://www.huffin…

Thank you, that's a helpful explanation!

Re: Companies and Billionaires

#14

Post by kilroy123 »

Naïve question. The richest people in the world, who are billionaires from pretty much just stock. How do they convert that to real money to buy things?

Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

Re: Companies and Billionaires

#15

Post by sardonicbryan »

idlewords wrote: post #4
Nav_Panel wrote: post #3

Earlier quoted context omitted.

Looking at their wealth breakdown now: $12.7B from Georgia-Pacific (a "pulp and paper company") $10.6B from "Other Businesses" $9.6B from Koch Pipeline (petroleum) $4.5B from Flint Hills Resources (refining/chemicals/biofuels) $3.8B from Molex ("connectors and interconnect components") $3.5B from Koch Fertilizer $3.0B from Invista ("polymers and fibers") all other sources below $2B Looks pretty diversified to me. Jus…

To me, "source" implies where the wealth came from, and it's misleading to say that the Koch brothers grew rich from a diverse portfolio of anything. They were born into oil wealth.

I think the intended usage for this spreadsheet is more along the lines of "derived," as in where does X derive their current wealth from, or "What current holdings qualify the person for this list." Otherwise this table would involve an order of magnitude more research and editorializing. For example, Elon Musk has "Tesla" listed as his source even though as we know his initial wealth came from Paypal. At least, that is the usage that seems to best fit with what's in the spreadsheet.

Re: Companies and Billionaires

#16

Post by elliotec »

kilroy123 wrote: post #14

Naïve question. The richest people in the world, who are billionaires from pretty much just stock. How do they convert that to real money to buy things? Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

I think yes probably both.

Re: Companies and Billionaires

#17

Post by dfischer »

kilroy123 wrote: post #14

Naïve question. The richest people in the world, who are billionaires from pretty much just stock. How do they convert that to real money to buy things? Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

These individuals can easily call up banks and get a loan on their worth.

"Hey, Morgan Stanley I need 2 mil deposited in my account" - "ok"

This is also how they avoid income tax. ;) They can take in millions and it's just a loan. Then they pay it back off with stock or other asset deals.

Re: Companies and Billionaires

#18

Post by jhulla »

kilroy123 wrote: post #14

Naïve question. The richest people in the world, who are billionaires from pretty much just stock. How do they convert that to real money to buy things? Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

They diversify into other investments. For very large holders of stock, they use a preset and scheduled sales plans to negate any color of insider trading or impropriety.

The very largest insiders have to disclose their sales publicly.

See for yourself: Zuckerberg's sales of FB.

https://biz.yahoo.com/t/15/8822.html

Re: Companies and Billionaires

#19

Post by ryandrake »

hkmurakami wrote: post #11
idlewords wrote: post #10

Earlier quoted context omitted.

This is a spreadsheet, not an article, so I'm confused about your first point. When looking at a list of billionaires, it's natural to wonder "where did this fortune come from?", and in the case of the Koch brothers, the answer is "oil". I don't think it requires a deep dive into my psyche to defend this interpretation of the "source" field, though I'm always happy to swim around down there.

Suppose I make my first $10M getting lucky in technology, then make my next $1B getting lucky in real estate by leveraging my lottery winnings. What's the source of my wealth in this case? (this seems to be a clarifying exaggeration of what is being asked here)

In my view: Technology. Without that first $10M, you'd never have had the opportunity to make $1B in real estate. When I think "source" I'm digging down to root cause.

Re: Companies and Billionaires

#20

Post by tomeehan »

kilroy123 wrote: post #14

Naïve question. The richest people in the world, who are billionaires from pretty much just stock. How do they convert that to real money to buy things? Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

> Do they just simply wait until the stock is at a high point, and sell a lot? Maybe move that money to other investments?

Pretty much. If they own shares in a public company, they can just sell them on the open market.

You can see director's dealings on the company's 'Insider Transactions': (i.e. Apple: http://finance.yahoo.com/quote/AAPL/holders?p=AAPL)

If the company's not public — they can receive cash through salary/bonus/dividends. If they're privately financed (i.e. VC's) they can liquidate some of their shares during a funding round (they sell some of their shares to the VC).

(This is a total ELI5 — sorry to any financiers/accounts reading this)

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