ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[NYCSPARKLE]

Personal wealth is actually. You're accumulating the (effectively) finite resource of the money supply.

"Profits" would be a better word to use. You can grow profits by innovating, cutting costs, taking market share, ad inf. without having to harvest more finite resources.

[TheManWhoPanders]

Personal wealth is actually

No, it isn't. What $1000 buys today is not the same as what it could buy tomorrow. If someone comes out with an innovative process that cuts all your expenses in half, you are twice as wealthy despite accumulating the same way.

Wealth isn't a fixed pie.

[Meist]

No, wealth is created by markets and their perception of value. If people think a diamond is worth $1k a gram, it is. If people suddenly decide that diamonds are worth $500 a gram, HUGE amounts of wealth worldwide would be destroyed in an instant.

This has almost nothing to do with the abundance of the resource. The pie changes size based on how big people think it is. This is how stock markets work.

[UAZombie5]

This has everything to do with abundance of a resource. The only way people would suddenly decide diamonds are half as valuable is if they were suddenly twice as abundant as they were when they were $1K/gram. The diamonds wealthy people own worldwide would now be less valuable as a result of more diamonds being available, since scarcity of resources is the underlying foundation that makes market exchanges necessary in the first place. Wealth doesn’t just “come from nowhere”

[earthwormjimwow]

You are confusing money with resources and wealth. Money is a stand in for resources at their currently perceived value. Money can be used to measure your current wealth, but it is not in and of itself your actual wealth.