I’m not saying it’s not an interesting metric and these companies don’t represent a disproportionate size of the stock market, etc. But comparing market capitalization (a point in time, balance sheet item) and GDP (an annual output number) is comparing apples to oranges. What % of GDP is their annual profit, or even their annual revenue?
That’s reindexing everything to different bases and then making the argument see, everything looks better! It’s how people decide that stocks are cheap today based on expected metrics 2 years out, when lots of things can change in 2 years and no one has any clue if those future measures are correct.
At least market cap / GDP matches Warren Buffett’s proposed measure for evaluating valuations in the market. The idea that 8 stocks should have a combined market cap equal to U.S. GDP is nuts. Even just making up 60% of current GDP is nuts.
If those folks are able to cash out their stock options, … OK, then they’re worth $10-20M right now. If they can’t, it’s all wealth on paper and it can disappear just as easily.
Reminds me of people who got rich on the stock market and decided to retire early, then years later had to return to the workforce because they’d spent all their wealth.
In that situation I would cash in. You have to be pretty profligate not to be able to retire on $10-20 million.
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People living beyond their means is a story as old as money, regardless of what their means are.
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Was reading an article yesterday claiming that something like 35% of people making over $250k are living paycheck to paycheck.
Of course that meant after maxing out a 401k, paying for 3 expensive vacations per year, $10,000 to charity, $3,000 to your alma mater, $5,000 in new clothes each year…
IMO, barring a handful of things like massive medical bills while still earning $250k, anybody paycheck to paycheck on $250k is doing it by choice.
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even if you could not cash them in now, could you transfer the control to someone else for a fee?
Reminds me of “poor” Sherman McCoy in Bonfire of the Vanities when he laments his “meagre” income.
There is no level of income at which you cannot make yourself poor if you try hard enough.
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I can confirm that a paycheck to paycheck lifestyle is achievable on 250k without either the maxed out 401k or 3 expensive vacations per year, if you are married to the right person.
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$250k is the new $100k
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That sounds painful.
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That’s what the FDIC said
(I know, not that recently)
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Yeah, you would think 10-11k a month going into the bank account and about 2k going out to the mortgage would not have required using the annual bonus to top up the emergency fund each year, yet that became the norm.
250k feels like a lot less when 4 kids are going to summer camp (and then two back to Montessori in September)
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Now try 400 kids.
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Almost all people, at all income levels live somewhere pretty close to their means. Some just below, some right on it, some above it. Whatever your income level, many tend to adjust expenses to fit it (and fit in). The biggest one being the mortgage. Most people like to own as much house as they can, which means a mortgage that eats up a good chunk of that income. And if there is still room, cars, vacations, kids activities, clothes, etc. Didn’t mention taxes, but that takes up a larger and larger percent of that income as one makes more.
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Eh, IMO there exist levels of income where this is also by choice.
I live a fair bit “nicer” than I’d personally choose to because my partner wants to, and okay, it’s not the end of the world. Even so, we save about 34% of our income and the monthly mortgage before taxes and insurance is 4% of our income. About 6%, all-in.
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I thought it was a team effort but you’re barely in the game!
