Aren’t extremely wealthy people that wealthy due to the valuation of their stock? IIRC generally the higher the networth, the higher share is kept in stocks
And they don't spend money, they take debt against their existing assets to fund projects and investments. So long as they can service the loans across economic downturns, they don't particularly have to feel the effects of a recession, outside of the mentioned opportunities to buy the market at a discount.
I suspect $$ is just a number for them. Being able to control more resources is the ultimate game. You gotta have zillions of $$ to join the tournament, though.
Person A has a net worth of 2B
Person A has a loan at 500M backed by their holdings
Stocks drop 50%, Net worth is now 1B
Person A buys $500m of stocks
Market Recovers 100%
Person A now has 2B original holdings and 1B gains, $500m owned = 2.5B
Very simple example, and not the only way to do it - but people need to remember net worth being 500B is not 500B in the bank, and at some point the number doesnt matter
More importantly you keep the portfolio semi-balanced.
Just using Google / Gold as a comparison [1].
Assume you have 100 units of each.
In late 2021, Googs gone up ~100% so you have to rebalance because you have $200 in Goog and $92 in Gold. So lets say you rebalance to 80 Goog (160$) and 144 Gold ($130).
In late 2022, Googs gone down ~40% so you have to rebalance because you have $96 in Goog and $141 in Gold. So lets say you rebalance to 100 Goog ($120) and 118 Gold ($112).
So over the course of 2 years Goog has gone up 20% and Golds gown down 5% but your investments are overall up 16%. Obviously a 100% Goog investment is higher but with more risk.
If you didn't do any rebalancing then you have a gain of 7.5% (100*1.2 + 100*0.95 = 215)
