So how do they pay these massive positions they take against company stock while it's still vesting? Do they use a loan to pay their loan and then refinance once the stock price rises?
Well, usually, they have enough cash reserves to pay the relatively small monthly payments. Another option is to take an interest only loan where you only have to pay the interest on the loan every month, and you don’t pay the principal till the end.
Lets just put it simply, rich take loans against their holdings to pay for life and interest, stacking the leftovers into their holdings which in return allows to them to take another loan. This repeats over and over as long as the interest can be paid. They can name it however they wany but this is what they do in simple language
It's not debt in the same way one would view consumer debt. National debt refers to the amount of money a government has invested into its econony. Much like CEO debt however, this loan can sit pretty as the value of the country -- the size of its economy and its ability to pursue revenue from it -- would increase. Inflation due to reckless monetary policy happens only when the expected or real growth of the economy is disproportional to the amount of money a government spends to grow it.
Had this question for so long , even watched some videos on it but didn’t understand but after watching this vid I understood it completely. Keep up 💯❤️
Hopefully people realize these guys do not have all that money in liquid and that the rich lists like forbes just includes people who cannot hide it because they have a stake in publicly traded company. So they’re there because they have no choice.
@@Dom-hi8lb which is why I said they might not want said "fame" It's also possible for there the money to have been obtained through bad causes. Wether that be corruption or any other illegal ting
@@dedotatedwam6001 I know! I just guess I more so meant that in addition to the compensation packages being delayed, & them crashing the stock, etc, the SEC also imposes their rules on control person’s.
Great video, thanks! Two more scenarios I wish you had covered: 1) When a company gets bought by another in an "all-cash" or part-cash part-parent-company-stock deal, and 2) When a startup goes for an IPO. How much of their stakes do founder CEOs typically cash out at these points? Do vesting schedules usually apply in such scenarios too?
That hurts company financials, which is hard on high growth companies, and even can cause big companies to go into unnecessary debt. If you have a majority stake in a company, you probably invested your own money into the company, and you probably want to keep your holding to be profitable. Plus, share buybacks cost less per year.
awesome video like always; have one question why do big companies offer stocks to employees in their compensation? i recently joined one of the FAANG companies just needed a bit clarity on this
Oh, it’s supposed to increase motivation and loyalty. The idea is that employees with stakes in the company will care more about the future of the company. Thus, they will do better work. Also, if you need to wait 5 years for your compensation to vest, you’re less likely to jump around jobs.
@@LogicallyAnswered Most 4-year vesting plans with a 1-year cliff are actually 4 years total, not 5. The employee vests 25% of the options at the end of the first year and then vests a % of the rest every month for the next 3 years.
It's a cost-effective way to pay people without increasing your payroll costs. When I started at Amazon, I'd get 5 or 6 shares a year, worth about $1500 total. Those shares 10Xed, so I technically got paid $15,000 more per year without impacting the company's payroll numbers. (It's the gift that keeps on giving, since I sold those shares years ago and bought 500 shares of AAPL).
Here's my question, how do they avoid paying taxes when they cash out. Do they cash out through a company... like does Telsa just send $8.5 billion to your bank account and then you get taxed $6 billion. Like literally how do they cash out?
They don’t. They have to pay taxes when they sell their stock. That’s why most billionaires never sell more than they need. Now of course, they could write off other losses or something against these gains to reduce taxes, but that’s completely separate.
They sometimes pledge the stock as collateral to a bank in exchange for a line of credit and then use that to buy what they need. This way, they avoid selling the stock and paying taxes on it.
@@LogicallyAnswered hey there thanks for the reply. Great content by the way. As a follow up question in thr cade of Bill gates divesting from Microsoft did he really pay taxes on all those Microsoft shares he sold off over the 20 year period?
@@NeptuneDesign He had to pay capital gains taxes on it, but that's only 15%, was less than he'd pay in income tax. And consider that the 15% is a small fraction of what it's earned over time. My stake in Amazon went up 1000% before I sold it; even paying 15% in taxes on that, I'm still *way* ahead. And like Gates, if you invest the money in something else, you'll make that 15% back in no time.
Congrats ! I started right before Covid when the recession hit.I held those stocks and made a killing. I bought dividend stocks and made a lot during Covid.
Lol, I'd *LOVE* to have _"rich people problems."_ At the same time, "Lower-Upper Class" problems are far better than the "Middle-Lower Class"-"Lower-Middle Class" isues I went through from childhood through my early 30's,so I can't complain too much! Heck, right now it's just a relief to look at my balance sheet and see zero's next to my "Mortgages" and "Credit Card" balances, especially since at 30 I didn't think I'd ever be able to get 1 piee of property unless I inherited it. Amazing what a messy and soul crushing divorce can do if you can channel your disgust and anger at the Civil legal system in a positive way. So I can say with 100% assuredy, people trying to live on half of the median income for their area, especially if that area is already poor, have it extremely bad, and instead of catching a break from the systems in place, well if your a man expect the punches to keep coming from every angle as they want you as politically and socially impotent as possible.
What if CEOs and large shareholders hedged their positions at the time of sale, say like with a put or a credit spread? Then, they could sell and not be immediately hit with downside selling pressure.
CEOs who get personally involved in the product or company are most likely to Not sale off their assets. Also, those CEOs who see value in the product, the company and also put in honest efforts in their role in the company would also want to keep a peace of the action. It is only in the event that the CEO has no bonding with the product, nor does he see value in it, would he want to liquidate.
No, they cannot swap stocks they own themselves for stocks owned by another CEO / investor of another company. Is this what you mean? Reply using your first language and I will translate if easier for you.
@@mastrey Any other questions feel free to ask - English or your native language, whichever is easier. I am a bit fan of the channel and you will find me there to answer any questions you have on any of Harri's videos.
Despite the dip in crypto, I still thank you 🙏 for the level-headed financial advice. I started stock and crypto investment with $4,345 and since following you for few weeks now, I’ve gotten $18,539 in my portfolio Thanks so much Mrs Doris Clarke
its no possible cash out means some one should buy the stocks from stock market. Either common people or hedge fund should buy it also CEO has to pay 50 % tax for capital gain. No one is ready buy fully.
Making profitable trades isnt as hard as you think, I took the right steps as a beginner by investing with a reliable brokerge where all my trades are being handled by financial expert
Crypto investment has really changed my financially status positively, I got my first house the year I started investing and today network is over £1.2m😊
Delightful😁 i dont know who need to hear this but saving money wont make you a millionaire investing will, some take out so money and invest, but invest wisely
We found out being richer it is one of great you can paid off your needs & easily to get whatever your in need but if that unlawfully money please don’t forget us with your Dua Almighty Allah never ever dreamed giving us because no matter how much money we have we are not talking with us our last day May Almighty Allah bless us with clean money thank you everyone for sharing
and they don't want to cashing it all out means reducing their assets to $0 what they want to do is to increase their on paper net worth and borrow money against it so the more they earn the more money they can borrow
"CEOs and founder CEOs are by far the richest people in the world". This is why I unsubscribed to your channel... just too many errors. Majority fortune 500 CEOs won't even be close to the top 5000 richest people in the world...
This channel is as logical as the e Democratic People's Republic of Korea is democratic. It's just some guy's opinion. "Logically Answered" is so misleading
Bezos was replaceable. Tim Cook is replaceable and he replaced Steve Jobs. I don’t think Elon can be replaced. I think when he’s gone, his companies will have huge identity crisis.
@@LogicallyAnswered i worded my comment poorly yes, but I understood what u said and my point is that it's ridiculous to generalize this 1% - 10% because there could be a million different reasons why Tesla stock fell 10% when Elon sold 1% of his shares. It's so stupid, like maybe it was beta etc.etc.etc.............unbelievable
I wish more people paid more attention to the nuances of the financial headlines. Im happy you are out hear providing some insight
What happens when logically answered cash out
Hahaha 😂
@@LogicallyAnswered hey my bro 😘😘❤🫂😸
Bingo!
Nothing because it already happened...
Company vision becomes illogical..
Great video as always!! Touching on topics that haven’t been touched on before!! Always learning!!
Thank you as always Daniel!
So how do they pay these massive positions they take against company stock while it's still vesting? Do they use a loan to pay their loan and then refinance once the stock price rises?
Well, usually, they have enough cash reserves to pay the relatively small monthly payments. Another option is to take an interest only loan where you only have to pay the interest on the loan every month, and you don’t pay the principal till the end.
Lets just put it simply, rich take loans against their holdings to pay for life and interest, stacking the leftovers into their holdings which in return allows to them to take another loan. This repeats over and over as long as the interest can be paid.
They can name it however they wany but this is what they do in simple language
@@Tast3seeker lmfao land of the free home of the $9trillion debt
@@blanc18 29 trillion not 9
It's not debt in the same way one would view consumer debt. National debt refers to the amount of money a government has invested into its econony.
Much like CEO debt however, this loan can sit pretty as the value of the country -- the size of its economy and its ability to pursue revenue from it -- would increase.
Inflation due to reckless monetary policy happens only when the expected or real growth of the economy is disproportional to the amount of money a government spends to grow it.
Had this question for so long , even watched some videos on it but didn’t understand but after watching this vid I understood it completely. Keep up 💯❤️
Hopefully people realize these guys do not have all that money in liquid and that the rich lists like forbes just includes people who cannot hide it because they have a stake in publicly traded company. So they’re there because they have no choice.
So you're saying there are highly rich people that either don't want or don't get that attention?
@@Enja___ yes exactly, they have so much money its impossible to calculate an exact amount.
@@Enja___ ever heard of the saying people want to be rich not famous?
@@Dom-hi8lb which is why I said they might not want said "fame"
It's also possible for there the money to have been obtained through bad causes. Wether that be corruption or any other illegal ting
Meamwhile Arab princes and other countries royalties are having a field day.
I thought they could sell the shares whenever they wanted to. But seems like a tricky job perhaps. Thanks for the information!
This channel is very good. Please Continue
Thank you Carlos!
There are rules for control person's selling of shares. So most CEOs of public companies couldn't dump even if they wanted to.
thats in the video lol
@@dedotatedwam6001 I know! I just guess I more so meant that in addition to the compensation packages being delayed, & them crashing the stock, etc, the SEC also imposes their rules on control person’s.
@@silentsniperfx6849 good point
Your room has a huge echo.
Umm, it's Their company
Great video, thanks! Two more scenarios I wish you had covered: 1) When a company gets bought by another in an "all-cash" or part-cash part-parent-company-stock deal, and 2) When a startup goes for an IPO. How much of their stakes do founder CEOs typically cash out at these points? Do vesting schedules usually apply in such scenarios too?
this is a great channel and worth watching and SUBBING ... thanks for the share :)
Love learning new things from this channel! Keep it up☝️
I like Jaimie Diamonds compensation plan.. he takes a 1.5 Million salary per which of course is reviewed yearly and then stock payments as scheduled
I love this channel, keep up the great work brother
Thank you Siya!
Logically interesting as usual!!
Enjoyed it ♥️🔥
Good one
Thanks guys!
Well if you have majority of shares as owner you can just pay large dividend, so you don't have to sell
That hurts company financials, which is hard on high growth companies, and even can cause big companies to go into unnecessary debt. If you have a majority stake in a company, you probably invested your own money into the company, and you probably want to keep your holding to be profitable. Plus, share buybacks cost less per year.
awesome video like always; have one question why do big companies offer stocks to employees in their compensation? i recently joined one of the FAANG companies just needed a bit clarity on this
Oh, it’s supposed to increase motivation and loyalty. The idea is that employees with stakes in the company will care more about the future of the company. Thus, they will do better work. Also, if you need to wait 5 years for your compensation to vest, you’re less likely to jump around jobs.
@@LogicallyAnswered It also does not cost the company cash directly, they just issue more shares. At the expense of shareholder dilution.
@@LogicallyAnswered Most 4-year vesting plans with a 1-year cliff are actually 4 years total, not 5. The employee vests 25% of the options at the end of the first year and then vests a % of the rest every month for the next 3 years.
its like "printing" your own money too, its way less then giving CASH for labor...
It's a cost-effective way to pay people without increasing your payroll costs. When I started at Amazon, I'd get 5 or 6 shares a year, worth about $1500 total. Those shares 10Xed, so I technically got paid $15,000 more per year without impacting the company's payroll numbers. (It's the gift that keeps on giving, since I sold those shares years ago and bought 500 shares of AAPL).
I am a cofounder of a company worth 2 mili$+.on paper i m millionaire But obviously its not a private company can’t cash out and retire.
Another awesome vid!!!
Thank you Ranadeep!
Hello Logically Answered can you make a video on todays inflation.
Thanks for the suggestion John!
Here's my question, how do they avoid paying taxes when they cash out. Do they cash out through a company... like does Telsa just send $8.5 billion to your bank account and then you get taxed $6 billion. Like literally how do they cash out?
They don’t. They have to pay taxes when they sell their stock. That’s why most billionaires never sell more than they need. Now of course, they could write off other losses or something against these gains to reduce taxes, but that’s completely separate.
They sometimes pledge the stock as collateral to a bank in exchange for a line of credit and then use that to buy what they need. This way, they avoid selling the stock and paying taxes on it.
@@LogicallyAnswered hey there thanks for the reply. Great content by the way. As a follow up question in thr cade of Bill gates divesting from Microsoft did he really pay taxes on all those Microsoft shares he sold off over the 20 year period?
@@NeptuneDesign he paid capital gains tax on it
@@NeptuneDesign He had to pay capital gains taxes on it, but that's only 15%, was less than he'd pay in income tax. And consider that the 15% is a small fraction of what it's earned over time. My stake in Amazon went up 1000% before I sold it; even paying 15% in taxes on that, I'm still *way* ahead. And like Gates, if you invest the money in something else, you'll make that 15% back in no time.
Your video have helped me reach over $200,000 in stocks by age 24! Thanks . Keep the videos coming
Congrats ! I started right before Covid when the recession hit.I held those stocks and made a killing. I bought dividend stocks and made a lot during Covid.
Wow what an achievement! Best of luck for the rest of your future, I’m looking forward to being able to invest when I turn 21 in November!
When did you first start investing?
@@lucyben9173 When I was 20 but you need a finance pro to be successful.
@@azah336 Please how can I approach your finance pro? I will like to get intouch with them till I turns 21
Hi! could you do a video about huawei? I'm just curious what happened to them before and after the US ban. it might be interesting :)
Good luck to all yall future ceo's
You are absolutely right!!! Great!!!
Lol, I'd *LOVE* to have _"rich people problems."_ At the same time, "Lower-Upper Class" problems are far better than the "Middle-Lower Class"-"Lower-Middle Class" isues I went through from childhood through my early 30's,so I can't complain too much! Heck, right now it's just a relief to look at my balance sheet and see zero's next to my "Mortgages" and "Credit Card" balances, especially since at 30 I didn't think I'd ever be able to get 1 piee of property unless I inherited it. Amazing what a messy and soul crushing divorce can do if you can channel your disgust and anger at the Civil legal system in a positive way. So I can say with 100% assuredy, people trying to live on half of the median income for their area, especially if that area is already poor, have it extremely bad, and instead of catching a break from the systems in place, well if your a man expect the punches to keep coming from every angle as they want you as politically and socially impotent as possible.
What if CEOs and large shareholders hedged their positions at the time of sale, say like with a put or a credit spread? Then, they could sell and not be immediately hit with downside selling pressure.
This channel should not be free! Amazing content!!!
I was expecting the gif with the running bird and explosion in the background
Super interesting video!
could another way to be to sell in a merger as a cash out method that wont crash the market (thinking twitter going private here)
CEOs who get personally involved in the product or company are most likely to Not sale off their assets. Also, those CEOs who see value in the product, the company and also put in honest efforts in their role in the company would also want to keep a peace of the action. It is only in the event that the CEO has no bonding with the product, nor does he see value in it, would he want to liquidate.
Or in a fit of rage, like Kalinak and Jobs.
Are CEO's allowed to buy put options when they sell a large amount of stocks? 🤔🤔
nice video!
For curiosity they dont can swap their actions to others ceo or big inversors of others conpanies
?
It's publicly traded, and there are rules for shareholders of certain levels, so there's no way the transaction could be done secretly.
No, they cannot swap stocks they own themselves for stocks owned by another CEO / investor of another company. Is this what you mean? Reply using your first language and I will translate if easier for you.
@@scotstirling4946 Ok , you understand correctly
@@mastrey Any other questions feel free to ask - English or your native language, whichever is easier. I am a bit fan of the channel and you will find me there to answer any questions you have on any of Harri's videos.
This channel should be called logically answered university.
Hahaha, glad the content is educational!
Don’t they have to pay capital gains taxes every time they sell stock too?
Yep
Wich is why you use the stock as collateral instead of selling out
Despite the dip in crypto, I still thank you 🙏 for the level-headed financial advice. I started stock and crypto investment with $4,345 and since following you for few weeks now, I’ve gotten $18,539 in my portfolio
Thanks so much Mrs Doris Clarke
What a striking coincidence, I'm also making profits with her too
This lady right here I traded with her, she's inventive and I won't look awestricken you mention her.
@James WALKER You can communicate with her on telegam, with the username
Investwithdoris247
Damn, this is an interesting way to do promotions😂
its no possible cash out means some one should buy the stocks from stock market. Either common people or hedge fund should buy it also CEO has to pay 50 % tax for capital gain. No one is ready buy fully.
What about when GSX founders and PTON CEO cashing out their holdings at the top even when they know the company management is going down the toilet?
Very very informative video!
They don’t work for money. Think of it more like game points or gems for castles in the sky or Twitter.
Yep exactly
This is why jeff bezos don't sell all his Amazon shares and buy us treasury bonds.
2% of 100 billion is 2 billion
Yearly income
That's still a lot of money
uh. if us treasury bonds default? or hyper inflation? it all goes to zero
@@bzoned9808 That's a small risk
best way to sell big posisiions at a market cap is through selling call options
Making profitable trades isnt as hard as you think, I took the right steps as a beginner by investing with a reliable brokerge where all my trades are being handled by financial expert
The ability to continue investing and generating money even after retirement is such a fantastic goal
Crypto investment has really changed my financially status positively, I got my first house the year I started investing and today network is over £1.2m😊
Delightful😁 i dont know who need to hear this but saving money wont make you a millionaire investing will, some take out so money and invest, but invest wisely
Mrs Gabriella trading services are really great , her methods works like magic I keep on earning every single week with her new strategy
I'm from spain , I have been an investor in the crypto market for over 2 years
👏👏👏👏👏
We found out being richer it is one of great you can paid off your needs & easily to get whatever your in need but if that unlawfully money please don’t forget us with your Dua Almighty Allah never ever dreamed giving us because no matter how much money we have we are not talking with us our last day
May Almighty Allah bless us with clean money thank you everyone for sharing
and they don't want to cashing it all out means reducing their assets to $0 what they want to do is to increase their on paper net worth and borrow money against it so the more they earn the more money they can borrow
This Spanish is starting to sound more and more like English now... 😁😁 I don't feel so left out in the explanations anymore... 😌😌
😂
another option is find someone who can buy the whole company
Yep
@@LogicallyAnswered buffett style ;)
Seeing these stock market things I am more and more confused 😅
"CEOs and founder CEOs are by far the richest people in the world". This is why I unsubscribed to your channel... just too many errors. Majority fortune 500 CEOs won't even be close to the top 5000 richest people in the world...
K
Can I give more than one like to get multiple rich peoples problems?🙈
😂
This channel is as logical as the e Democratic People's Republic of Korea is democratic.
It's just some guy's opinion.
"Logically Answered" is so misleading
I’d love to have rich people problems! Give me $1billion worth of stock in any company, I’ll take it!
I would want to hold on to the company I founded as long as possible. But if I needed to, I would be like Bill Gates and do his method
Maybe I would do like bezoz yearly sell.
Logically is educating us because we are billionaires yo
don't worry amber can just pledge johnny the money.
Well, Putin is by far the richest person in the world, since you know…
excellent, the wolf always harvests the sheep skins, other persons money
I am a capitalist though I am against crony capitalism. Now steve ballmer has highest stake in Microsoft i.e 4%.
Tony Stark?
Cash out like Bill Gate
Bezos was replaceable. Tim Cook is replaceable and he replaced Steve Jobs. I don’t think Elon can be replaced. I think when he’s gone, his companies will have huge identity crisis.
His companies value would drop massively if he leaves.
@Captain SuckButt “Obviously someone like me” that statement alone makes me laugh at you, and am glad you appose my view. See you on the other side!
couldve just said they cashout by selling their stock slowly over a period of years. dude got an 11 minute video out of it
He’s making money off TH-cam doing it 🥴
Terra luna 😂
Rich people problems...are not real problems... Funny enough.
I know u won't pin this comment
Btw love your videos
You’re right, but I will heart it haha. Thanks for your support!
That'd be a terrible precedent.
Welcome
First
Jake Tran
Great guy!
@@LogicallyAnswered was
@@LogicallyAnswered🫡
Scam TH-camr 😂
You saying that a 1% sell off from a founder causes around 10% drop in stock price made me unsubscribe this channel.
No, a founder selling 1% of the company
@@LogicallyAnswered i worded my comment poorly yes, but I understood what u said and my point is that it's ridiculous to generalize this 1% - 10% because there could be a million different reasons why Tesla stock fell 10% when Elon sold 1% of his shares. It's so stupid, like maybe it was beta etc.etc.etc.............unbelievable
What happens when logically answered drive drunk.
I know you made this video in your bathroom 🪥🤣.
His Te-le-gr am ( @Dav_signals )
David Walter daily signal is 87% accurate from what have experience and highly recommended
This is a bot, dont trust this comment!
0:38 Thats literally Mcdonald order machine
The Ice cream machine is still broken.