How does Big Money work? (i.e. stocks, Enron, net worth)
1)  You ignore dividends. You can hold your 10 million shares and never sell them and still get cash to live on if the security pays dividends. McDonalds stock pays 3% in dividends (a year). If you owned 10 million shares of McDonalds you would get 75,000 every three months. I am sure you could live on 25,000 a month.  2)  Enron was an energy company. They sold energy and made a profit (or rather were supposed to). Enron didn't make their money by selling stock. McDonalds makes their money by selling hamburgers (and other food). The income of a company comes from their customers, not from selling stock.  3)  IF you sold all of your 10 million shares within a short time frame it, likely, would drive the price of the stock down. But you do not need a billion dollars to live on. If you sold 1000 shares each month you would have plenty for buying cars and pizza. Selling 1000 shares may drive the price of the stock down for a minute or two. But the rest of the transactions, for that security made the same day, would quickly obscure the effect you had on the stock.  4)  When you buy stock your money does not (usualy) go to the company. If I were to buy 100 shares of McDonalds, McDonalds would not get $11670.That money is (usually) paid to a 'Market Maker' who, in turn, will use the cash to buy MCD from other individual shareholders (presumably for less than 116.70 a share).
Depending on the country, nothing.  For example, the US has about $1.3 trillion dollars of cash in circulation.  Which means that if you were to burn a million dollars of it, that would be 0.000077% of  the circulating cash.  But cash is a small portion of the actual money in the US.  Only about 8% of all money is in cash, the rest is in other forms of value, which means that you'd only be destroying 0.0000062% of the US's money if you burned a full $1,000,000. 10k in taser stock at $1.00 per share made those who held into the hundreds per share made millions.  But think about the likelihood of you owning a $1 stock and holding it past $10.00. They (taser millionaires) were both crazy and lucky.  A direct answer, better off buying a lottery ticket. Stocks are for growing wealth not gaining wealth imho. Of course there are outliers though.  To the point in the other answer, if it was repeatable the people teaching the tricks (if they worked) would make much more if they followed their own advice if it worked.  Also, if everyone tells you how good gold is to buy that just means they are selling to get out. If it was that good they would be buying and not saying anything about it. Most of the information we get about how a company is running its business, in any market, comes from the company. If the information is related to financial statements, it is checked by an external audit, and then provided to the public through official channels. All of these controls are meant to make it very unlikely for a firm to commit fraud or to cook its books. In that sense the controls are successful, very few firms provide fraudulent information to the public compared with the thousands of companies that list in stock markets around the world.  Now, there is still a handful of firms that have committed fraud, and it is probable that a few firms are committing fraud right now. But, these companies go to great lengths to keep information about their fraud hidden from both the public and the authorities. All of these factors contribute to such frauds being black swan events to the outside observer.  A black swan event is an event that is highly improbable, impossible to foresee with the information available before the event (it can only be analyzed in retrospect), and it has very large impact. The classification of an event as a black swan depends on your perspective. E.g. the Enron collapse was not as unexpected to the Enron executives as it was to its investors.  You cannot foresee black swan events, but there are a few strategies that allow you to insure yourself against them. One such strategy is buying out of the money puts in the stocks where you have an investment, the idea being that in the event of a crash - due to fraud or whatever other reason - the profits in your puts would offset the loses on the stock. This strategy however suffers from time and loses a little money every day that the black swan doesn't show up, thanks to theta decay.  So while it is not possible to detect fraud before investing, or at least not feasible with the resources and information available to the average investor, it is possible to obtain some degree of protection against it, at a cost. Whether that cost is too high or not, is the million dollar question. Since I'm missing the shortest and simplest answer, I'll add it: A car also doesn't offer dividends, yet it's still worth money. A $100 bill doesn't offer dividends, yet people are willing to offer services, or goods, or other currencies, to own that $100 bill. It's the same with a stock. If other people are willing to buy it off you for a price X, it's worth at least close to price X to you. In theory the price X depends on the value of the assets of the company, including unknown values like expected future profits or losses. Speaking from experience as a trader, in practice it's very often really just price X because others pay price X. Many CEOs I have heard of earn a lot more than 200k. In fact a lot earn more than 1M and then get bonuses as well. Many wealthy people increase there wealth by investing in property, the stock market, businesses and other assets that will produce them good capital growth. Oh yeh, and luck usually has very little to do with their success. This has never really adequately explained it for me, and I've tried reading up on it all over the place. For a long time I thought that in a trade, the market maker pockets the spread *for that trade*, but that's not the case.  The only sensible explanation I've found (which I'm not going to give in full...) is that the market maker will provide liquidity by buying and selling trades they have no actual view on (short or long), and if the spread is higher, that contributes directly to the amount they make over time when they open and close positions they've made.  It would be great to see a single definitive example somewhere that shows how a market maker makes money. "I believe Tom Au answered your key question. Let me just add in response to, ""What if someone was just simply rich to buy > 50%, but does not know how to handle the company?"" This happens all the time. Bob Senior is a brilliant business man, he starts a company, it is wildly successful, then he dies and Bob Junior inherits the company. (If it's a privately owned company he may inherit it directly; if it's a corporation he inherits a controlling interest in the stock.) Bob Junior knows nothing about how to run a business. And so he mismanages the company, runs it into the ground, and eventually it goes bankrupt. Stock holders lose their investment, employees lose their jobs, and in general everyone is very unhappy. I suppose it also happens that someone gets rich doing thing A and then decides that he's going to buy a business that does thing B. He has no idea how to run a business doing thing B and he destroys the company. I can't think of any specific examples of this off the top of my head, but I've heard of it happening with people who make a ton of money as actors or professional athletes and then decide to start a business." There are several problems with your reasoning: if I buy one share of GOOGLE now for $830, I could have $860 within the end of tonight -- totally possible and maybe even likely. You can do the same thing with 1,000,000 shares of google, and it's just as likely to go down as go up.   if I were to invest $1,000.00 in gold to have $1,000.00 worth of gold, it's no different than keeping $1,000.00 in cash It's VERY different.  Gold can be just as volatile as stocks, so it certainly is different as just keeping it in cash. Benefits of a larger portfolio: "Consider this thought experiment: Take 10 million people and give them each $3,000. Every day they each   purchase a random stock with all of their money. The next day they   flip a coin and if it's heads they do nothing, and if it's tails they   sell it and purchase another random stock. Repeat everyday for 5   years. After 5 years, you'll probably have many people that lost all of their money due to the fees they paid for each trade they made. A lot of people will have lost a little or won a little. Some people will have doubled or tripled their money, or even better. A very small number of people will have made ""millions"". Some of those small number of people that made millions will likely go on to write books and sell seminars on how to make money in the stock market." An oxymoron is something that contradicts itself. Inside trading is sharing information that isn't public. How the fuck do you think these hedge funds and investment banks can offer almost 50% returns during these times in our economy??? Oh yea it's called inside trading. Reason why it's an oxymoron is because trading information is considered ilegal yet that what everyone does on the market, rules are made to give off fear but past that it's all open roads and deep pockets.    And if you really don't believe that stock market isn't rigged then there is no reason for me to explain myself on that because it would be like taking to a wall. And I thank you for being one of those people that thinks it's not rigged because you help my portfolio look good from your dumb investments. This is exactly what happened with Enron.  The 401k was mostly invested in company stock, so when the company went bankrupt the employees lost both their jobs and savings.  The plan administrator was also faulted by the government for continuing to allow new purchases of stock even as the stock price (and hence the perceived fortunes of the company) tumbled.  http://money.cnn.com/2001/11/26/401k/q_retire_enron_re/  http://www.investopedia.com/articles/analyst/011802.asp TL;DR: Income is how much you make, net worth is the value of all your assets: cash, real estate, stocks, etc.  With the case of Buffett: Berkshire Hathaway's - Buffett's company - market capitalisation is ~$460 Billion. Buffett controls 18% of shares. $460B x 18%: ~$80 Billion.  So we can estimate that a large part of his net worth is tied up in BH stock (obviously this isn't perfect either as there are other factors at play here).  BUT this is only on paper. Ie yes he's worth that, but he doesn't really have $80 Billion somewhere in a bank. He gets the money to live from other personal investments and business means. "Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, ""Sell, sell!!!!""? That's how), now every decent broker has an online trading platform. If you don't want to have ""additional value"" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says ""BUY"". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called ""pink sheets"", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well." Very wealthy people usually have an investment manager who is constantly moving money between investments and accounts. They hold cash (or cash equivalent) accounts for use in a near-term buying opportunity, for example if they believe certain stocks will go down in price soon. This amount can vary from under 1% (for a money manager with no intention of any short-term trading) to over 20% (for a market pessimist who expects a huge price reduction shortly).  In rare cases they will also hold significant cash because of a planned large purchase, but there's almost never a reason for that to exceed 1% of their net worth. Enron did a wide range of dodgy financial accounting, using tricks to severely mis-represent their financial situation. They then used these doctored accounts to fool lenders and stock-buyers that the company had more money, and fewer debts or problems, than it really had. Eventually they ran out of money and went bankrupt, leaving the lenders and stock-buyers with nothing.