Perception of Wealth
29th January 2019
When a sports car speeds down the street one of the thoughts that many people will have is ‘whoever is driving that car must be wealthy’. We associate wealth with physical property, a car, clothes, or a holiday home. Inherently there is nothing wrong with this view, but it rarely represents the entire picture. One person driving an old beaten up car might have millions in their bank account, and the Ferrari driver could be all but broke when it comes to his net worth. Consequently, we do not know if what we see is a result of wealth or lack of healthy spending habits. The poem below by Shel Silverstein tells the story of how more is not always better.
My dad gave me one-dollar bill
‘Cause I’m his smartest son,
And I swapped it for two shiny quarters
‘Cause two is more than one!
And then I took the quarters
And traded them to Lou
For three dimes – – I guess he don’t know
That three is more than two!
Just then, along came old blind Bates
And just ‘cause he can’t see
He gave me four nickels for my three dimes,
And four is more than three!
And I took the nickels to Hiram Coombs
Down at the seed-feed store,
And the fool gave me five pennies for them
And five is more than four!
And then I went and showed my dad,
And he got red in the cheeks
And closed his eyes and shook his head – –
Too proud of me to speak
Jeff Bezos is the gold standard when talking about wealth. Many are in awe of his fortune which has reached over $140 billion at the time of writing. The issue comes in the form of how people perceive his wealth. There is a belief that billionaires could at a moment’s notice spend their entire fortune on anything, but that is not the case. Bezos holds the majority of his net worth in stock, Amazon and other smaller investments which he has made over time. His wealth is directly tied to how well Amazon is performing on the stock market. When Amazon underperforms Bezos net worth goes down. Currently he owns 16% of Amazon stock, if he wanted to liquidise all of it, a few problems would present themselves. Firstly, news of a mass sale would send shock waves to other investors who could sell in panic causing his net worth to go down considerably. Furthermore, selling $120 billion worth of Amazon shares at once would also not be an easy task as very few companies have that amount of cash on hand and even less willing to spend it all on one stock.
Debter, L. (2018) Jeff Bezos’ Fortune Drops Another $8 Billion As Amazon’s Stock Falters, Available from: <https://www.forbes.com/sites/laurengensler/2018/10/29/jeff-bezos-fortune-drops-another-8-billion-as-amazons-stock-falters/#42aa90551cf8> [Accessed: 18 January 2019]
Dolan, K. (2016) Jeff Bezos Sells 1% Of His Amazon Stake For $671 Million, Available from: <https://www.forbes.com/sites/kerryadolan/2016/05/06/jeff-bezos-sells-1-of-his-amazon-stake-for-671-million/#19fa803e36f3> [Accessed: 17 January 2019]
Forbes (2019) Jeff Bezos, Available from: <https://www.forbes.com/profile/jeff-bezos/#67ba76c31b23> [Accessed: 17 January 2019]
Silverstein, S. (2010) Where The Sidewalk Ends, Particular Books