Booming Stock Market Provides Budget Surplus in California

In the early days of the pandemic, no one would have turned to the stock market for their escape. From February to the end of March last year, the S&P 500 suffered one of its most severe crashes on record, dropping nearly 34%. But once the federal government started pumping money into the markets and the economy through bond buying programs and stimulus packages, the market started to rebound.

And professional fund managers have continued to buy stocks. Amateur investors, stuck at home, piled up in the market and pushed up stock prices further. After hitting a low in March 2020, the S&P 500 is up nearly 90%, creating nearly $ 17 trillion in gains on paper.

Much of this value has been created by Californian companies. The market value of Apple, based in Cupertino, Calif., Has grown by more than $ 1 trillion in the past year. Alphabet and Facebook’s earnings, combined, created another $ 1 trillion in value. Tesla, based in Palo Alto, Calif., Added more than $ 500 billion.

The surge in market value has created tremendous wealth for executives and workers, including in the tech sector. Executives of large companies usually have pre-set stock sales programs that consistently convert some of their stocks to cash. As they have sold in a rising market over the past year, these gains have been particularly large; in August, Apple chief executive Tim Cook sold more than $ 130 million of its stock.

“When the stock market is doing well, it does very well,” said David Hitchcock, senior analyst on California for bond rating firm S&P Global, of the state’s Wealthy Residents. “And in fact, it’s not just the stock market, but the initial public offerings. Because with Silicon Valley, when entrepreneurs get grants of shares that they exercise or stock options, California does very well. “

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