Amazon CEO Jeff Bezos sold more than $1B worth of stock this week • Hacker News Board

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#71

Post by candiodari » Sat, Nov 04, 2017, 9:04 AM UTC

thisisit wrote: post #68

prewett wrote: post #26

My initial question was how did he sell $1B and not affect the share price substantially. And sure enough, the share price did drop a bit. But average trading volume is about 2 billion shares, which is about $2B. It's pretty crazy that the market has so much liquidity that $2B of AMZN changes hands every day, and that it could soak up a $1B sale and barely change the price.

Because of the order type. Market Orders soak up all the liquidity as they need to be executed at the best price available. So, if the price is at $10 and I dump a huge amount of shares, it will go through the bids..$10, $9.9, $9.8...you get the idea. Limit Orders kind of provide liquidity. It doesn't execute unless a certain condition is met. So I can dump a large sell at $10, it won't change the price. Anyone in th…

I think you'll find limit orders limit the price while they're executing. Say I place a $10 million MSFT limit buy order at $80, that means that until my $10 million is used up (the order is "filled") the price cannot drop below $80.

Conversely if I place a $1B sell order for $1100 (ought to be close to what happened here) the price cannot rise above $1100 until that amount of money has been extracted out of the market.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#72

Post by zxcmx » Sat, Nov 04, 2017, 9:28 AM UTC

candiodari wrote: post #71

thisisit wrote: post #68

Earlier quoted context omitted.

Because of the order type. Market Orders soak up all the liquidity as they need to be executed at the best price available. So, if the price is at $10 and I dump a huge amount of shares, it will go through the bids..$10, $9.9, $9.8...you get the idea. Limit Orders kind of provide liquidity. It doesn't execute unless a certain condition is met. So I can dump a large sell at $10, it won't change the price. Anyone in th…

I think you'll find limit orders limit the price while they're executing. Say I place a $10 million MSFT limit buy order at $80, that means that until my $10 million is used up (the order is "filled") the price cannot drop below $80. Conversely if I place a $1B sell order for $1100 (ought to be close to what happened here) the price cannot rise above $1100 until that amount of money has been extracted out of the mark…

In that case, there was a "bezos wall" this week :)

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#73

Post by KGIII » Sat, Nov 04, 2017, 10:20 AM UTC

loeg wrote: post #66

KGIII wrote: post #63

Earlier quoted context omitted.

It is also possible that he never realized the gain. An example would be to gift the shares directly to a trust which sells and then 'loans' BO the money. Tada! You made a billion dollars disappear. That is, I believe, lawful. Consult a qualified legal representative, however.

One problem with this plan is that the debtor is obligated to repay the principal with interest. If billionaires could do this, they would be doing it all the time. And the IRS would be screaming about it. Instead, they're stuck with higher risk options like illegal tax evasion or just paying the tax they owe.

The above should count as tax avoidance and interest rates can be decided by the parties involved. Tax evasion is illegal. Tax avoidance is legal.

Consult a qualified tax professional and legal council.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#74

Post by oblio » Sat, Nov 04, 2017, 10:23 AM UTC

Consultant32452 wrote: post #59

oblio wrote: post #57

Earlier quoted context omitted.

The real question is: how much do the top 20% make and/or own? If it's 95% or more, then those taxes seem quite fair, don't they? Found some data: https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni... Top 20% owned 93% of wealth in 2014, and I don't see why that number wouldn't go up. It's a bit harder to find numbers for income, though.

I don't take incident with the 20% mark. I only take incident with the insinuation that the great societal benefits Bezos enjoys for his 20% was provided by someone else.

If Amazon does shenanigans to hide money you and I couldn't hide from the taxman, then that might still be true.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#75

Post by alok-g » Sat, Nov 04, 2017, 11:03 AM UTC

candiodari wrote: post #71

thisisit wrote: post #68

Earlier quoted context omitted.

Because of the order type. Market Orders soak up all the liquidity as they need to be executed at the best price available. So, if the price is at $10 and I dump a huge amount of shares, it will go through the bids..$10, $9.9, $9.8...you get the idea. Limit Orders kind of provide liquidity. It doesn't execute unless a certain condition is met. So I can dump a large sell at $10, it won't change the price. Anyone in th…

I think you'll find limit orders limit the price while they're executing. Say I place a $10 million MSFT limit buy order at $80, that means that until my $10 million is used up (the order is "filled") the price cannot drop below $80. Conversely if I place a $1B sell order for $1100 (ought to be close to what happened here) the price cannot rise above $1100 until that amount of money has been extracted out of the mark…

>> I place a $1B sell order for $1100 the price cannot rise above $1100

That should not prevent the price from falling with such an order.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#76

Post by cisanti » Sat, Nov 04, 2017, 1:47 PM UTC

swendoog wrote: post #42

adventured wrote: post #7

$94.6 billion net worth at present per Bloomberg. I know he is basically guaranteed to be running all of these sales off a sale schedule set far in advance for obvious reasons. However, I'd probably be doubling up those $1 billion sales until/unless this market gives out. Raising $6 or $10 billion - enough to fund Blue Origin for maybe a decade - by selling out of a $94 billion base, sure beats doing the same out of…

I can't help but wonder what it's like to have that kind of money. Does such a person ever wake up, and wonder how the dice rolled so amazingly in their favor? Or do they wake up and stand proud, recognizing that they are so successful because of their own hard work and intelligence? Do they ever think about how insane life is that they ended up with 94 billion, while some people are starving? I'm not making any mora…

I don't know the answer, but how do you feel every morning waking up knowing your top 1% of the world and top 0.xxxx% of the history of all man kind? I don't think you think about it too much and keep doing things... Maybe even wine a bit :))

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#77

Post by alexasmyths » Sat, Nov 04, 2017, 3:04 PM UTC

tradersam wrote: post #41

alexasmyths wrote: post #25

Earlier quoted context omitted.

All of this is entirely dependent on whimsy. Amazon P/E is basically in the clouds. They and Telsa in some ways are basically impossible to value. So, people make difficult guesses. Though I agree that because AMZN could probably simply 'turn on profit' at any time, and so the classical P/E is not a great measure ... at the same time ... a small dip in something could ruin them. It only takes just a little bit of ret…

> though I agree that because AMZN could probably simply 'turn on profit' at any time I'm confused—Amazon is profitable already, no?

They are barely profitable.

Massive revenue, tiny profit.

So, this makes their P/E ration quite massive and crazy as well.

Usually companies are based on the present value of all future earnings, kind of implying a P/E multiple of like 8 or 25 or whatever. Amazons is crazy high.

This is because it's assumed that Amazon could, at any time, start declaring massive profits, but they chose to re-invest instead.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#78

Post by joering2 » Sat, Nov 04, 2017, 3:41 PM UTC

jpatokal wrote: post #60

joering2 wrote: post #54

Earlier quoted context omitted.

I witnessed exchange of $300MM of stock for cash in late 90s at my job. You are correct that noone sels $1B of stock and doesn't make dent in trading value. So to do that right, you get on the phone with broker who agrees to buy such quantity. You put order SELL at $5 and 1,000,000 shares ONLY, which means noone can buy just 10 shares: you take 1MM or none. Once your call reach the market, within seconds the other pa…

That may have been the case in the 1990s, but isn't 10 seconds an eternity in today's HFT world? You'd need to arrange the sale off the exchange.

No you wouldn't. Its not like hundreds of big fish is waiting at their keyboard trying to push "BUY 10MM stock" at the right spot, because it might show up at the stock exchange. These "deals" are secret as of when they take place. As I said, you get on the phone, 3 seconds one party post "BUY 10MM", second party post "SELL 10MM". Done and done.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#79

Post by eighthnate » Sat, Nov 04, 2017, 7:17 PM UTC

prewett wrote: post #26

My initial question was how did he sell $1B and not affect the share price substantially. And sure enough, the share price did drop a bit. But average trading volume is about 2 billion shares, which is about $2B. It's pretty crazy that the market has so much liquidity that $2B of AMZN changes hands every day, and that it could soak up a $1B sale and barely change the price.

Because it was probably traded book to book or via the back-end pools. Most likely bezos' broker called other brokers/hedge funds/etc to gauge interest and one or few of them agreed to take on the position.

This happens all the time when the big boys want to open/close/rebalance large positions within a short time frame.

Re: Amazon CEO Jeff Bezos sold more than $1B worth of stock this week

#80

Post by loeg » Sat, Nov 04, 2017, 7:18 PM UTC

dingaling wrote: post #70

loeg wrote: post #66

Earlier quoted context omitted.

One problem with this plan is that the debtor is obligated to repay the principal with interest. If billionaires could do this, they would be doing it all the time. And the IRS would be screaming about it. Instead, they're stuck with higher risk options like illegal tax evasion or just paying the tax they owe.

But the interest rate between two private parties is entirely arbitrary. 0.01% over 25 years, say.

As a creditor, you're obligated to pay taxes as if you charged a fair market rate, regardless of what you actually charge the debtor. So the actual floor rate at which the creditor isn't losing money is more like 33% (presuming business tax rate, or higher for individuals) of 3-4% (for 25 year loans), or about 1-1.3%.

Also, 100% + 0.01%^25 is still more than the sum loaned. And realistically, the interest rate must be higher than 0.01% annually. Sure, you could invest it over 25 years and theoretically beat the interest floor, but this adds a lot of unnecessary risk. When you've already won the game, I think paying the 25% in tax for a guaranteed cash return is worth it over dabbling in high risk, gray area legality tax avoidance.