Economics teachers love to use the “Bill Gates analogy†to explain opportunity cost to glassy-eyed high school students. The Microsoft founder makes so much money every second that it if he saw a $100 bill lying on the street, it would be a poor use of his time to pick it up - at least if it distracted him from a more productive activity.
However, humans aren’t perfectly rational beings, which explains why Gates once admitted he would pick up the $100 bill anyway. Microsoft Stock Hits New All-Time High, Padding Bill Gates" Net Worth
Well, that decision now represents an even less efficient use of his time than it was yesterday, thanks to Microsoft stock’s Dow-leading 1.6% rally.
The move lifted MSFT shares to a new all-time high of $142.37, though they later edged down to $140.73. But don’t feel sorry for Bill Gates; the $2.21 per share increase added hundreds of millions of dollars to his net worth. Microsoft has a market cap of more than $1 trillion. | Source: Yahoo Finance
According to CNBC, Gates owns 103 million shares of Microsoft stock, which means today’s rally made him roughly $228 million richer.
Altogether, his Microsoft holdings are worth more than $14 billion and account for 1.4% of all outstanding MSFT shares.
Bill Gates’ net worth has jumped more than $16 billion in 2019, which is mostly a product of the stock market’s spectacular recovery. Unlike many older investors, he and his wife retain the majority of their investment portfolio (60%) in equities. Stock Buybacks Propel MSFT Into Trillion-Dollar Territory
As CCN reported, Microsoft’s share price surge followed the tech giant’s announcements that it would embark on a $40 billion stock buyback spree and raise its annual dividend by 11%.
Microsoft had already spent nearly $36 billion on share repurchases since 2017 and still has around $11 billion left on a stock buyback program authorized in 2016.
MSFT shares have gained nearly 39% in 2019, giving the 44-year-old company a market cap of nearly $1.1 trillion.
And according to the Wall Street Journal, most equities analysts believe the stock has plenty of more room to run. As of today, 26 of 32 research analysts have a "buy" rating on MSFT, compared to just one "sell" rating. This article was edited by Samburaj Das.