HOW BILLIONAIRE MAKE THEIR MONEY

did you know that in 2017 Jeff Bezos made an average of 107 million dollars per day every day of the year that is around 40 billion dollars that year, Mark Zuckerberg, on the other hand, lost over 16 billion dollars in a single day in July 2018 but how does this happen if you take a look at the Forbes billionaires list you see billionaires making or losing millions or billions
per day but how this video is sponsored by Skillshare if you don’t know what Skillshare is by now well it’s a learning platform with over 25,000
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and I got 500 of you two whole months of premium access to skill share for free when you sign up with the prime link in the description of this video see the way most of the richest people in the world make their money it’s probably not the way most people think billionaires do not have billions of dollars deposited and their checking accounts every day the way they make money it’s a little different the number you see in the Forbes list is a reflection of their net worth not how much cash they actually have in hand Jeff Bezos doesn’t have 150 billion dollars in cash ready to be spent Mark Zuckerberg does not have sixty billion dollars laying around in his Bank of America card most of these billionaires wealth comes from taking their company’s public or investing in companies which is how their net worth is measured the way you measured these billionaires net worth isn’t just measuring assets fewer liabilities but their company’s market capitalization versus their stake and their companies not how much they have in cash basically their net worth is how much the company is currently worth
versus how much of the company they own for example Mark Zuckerberg owns a 13 percent stake in Facebook he is currently worth around sixty four billion dollars at the time of this video which means Facebook’s market cap is around four hundred billion dollars market cap is simply how many shares of the company exists multiplied by how much each share is worth so for example if you have a company with 1 million shares and each share is worth $20 the new company is worth 20 million dollars, in other words, it has 20 million dollars in market capitalization now this value fluctuates
from supply and demand at the company image to the public and twee investors and many other factors market prices do not always reflect how much the company is actually making but it can play a role for the company’s image for example in 2018 Facebook lost 190 billion dollars in a single day after announcing a slower revenue growth in higher focus
on user privacy which meant higher expenses for the company this market cap decrease in facebook also meant that Mark Zuckerberg lost almost 16 billion dollars that day since his net worth is tied to his ownership and Facebook if facebook suffers so does his net worth this is one of the reasons why you see massive companies spending millions sometimes billions of dollars to keep a good positive image around their brand especially to their investors because these billionaires net worth isn’t based on how much revenue the company is making which is a good indication of how strong the company is but rather how much of the company’s market cap they
own because if they have a great image then investors will keep their money invested and drive other people to invest driving their company’s market cap to go higher now on the other hand if everyone pulled out their money invested in the company regardless of whether the company is doing well or not the company will have a lower market cap which will lower the market value of a company which also lowers the owners total net worth now buying or investing in companies based solely on market cap value might not be a good idea for long term investment that is why great investors like Warren Buffett, for example, do not look at the company’s value and market cap first when they look to invest or buy a company before Warren Buffett invests in a company he first takes a look at how the company is performing he looks at their financial history their revenue over the years their expenses their infrastructure their net revenues their leadership and many other factors he then assigns a
number of what he thinks the company’s worth after he assesses the company in the science of value he then looks at the current market cap and decides whether the company is undervalued or overvalued if he believes the company is undervalued he must if he thinks the company is overvalued he passes that is how Warren Buffett was able to make a
billions by taking advantage of a salad oil scandal yes Buffett made billions with a salad scandal and this is how he did it in 1963 American Express lent money to a salad oil company and took oil as collateral until the debt was paid but the company had faked a simba tory and defaulted on his debts making a massive scandal which drove investors to take their money out of the bank of america stock driving their stock prices to go down as well as the value of the company American Express lost almost 40% of its value overnight the company image was at an all-time low but Warren Buffett said that the structure of the bank was still good the operations of the bank were not the cause of the problem the bank was actually doing great and it had a great infrastructure it was the scandal around it and the loss of that loan that drove the value of the company down buffett said that this company was undervalued due to the scandal so he invested around
thirteen million dollars in the company which is now worth over fourteen billion dollars when it comes to the average billionaire most of their wealth is based on how the company they have ownership in is doing or what they say they are bridge on paper now most billionaires might not have billions in the bank but it doesn’t mean that they are not rich they are still some of the richest people in the world and for them it doesn’t really matter if the market cap goes up or down unless their whole corporation goes down their financial lives will still be more than okay especially if their companies distribute dividends they’ll still get a pretty good paycheck every quarter in case they want to buy a second plane or something for example in just dividend payments from Microsoft Bill Gates made over forty four million dollars in 2018 he still owns one hundred and three million shares of Microsoft which paid 43 cents per share in 2018 this is after selling over 38 billion dollars to start the Bill and Melinda Gates Foundation and donating 64 million shares of his company this is not including the
appreciation of his shares and the rest of this investment portfolio

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