I'm going to bring up a point here that no one else is making because they mistakenly believe this to be about taxation.
So firstly I use this strategy. I am not anywhere near $300M in net worth but anyone can do this with a few hundred K in stock and a margins account at IBKR.
Anyway, the reason has nothing to do with tax and everything to do with cash. Cash is dangerous. Once you have cash, the value can decline. On the other hand equity in actual companies is always going to have value. Companies like coca cola, Johnson Johnson, etc provide necessary things. They will always have cash flow regardless of how the dollar is doing. Equity is a huge inflation hedge. For me personally I was unaffected by inflation because stock prices inflated as revenues increase anyway. Cash is dangerous.
If you sell equity, it can be difficult to buy back in. Instead it's better to borrow. The equity will eventually go up and you can borrow more. Also, borrowing is instant, whereas selling is volatile as huge dumps of shares can easily manipulate the price on the open market.
Either way, you de-risk not being exposed to equity, which is a valuable store of income. Cash is an extremely dangerous way to store value, in my view, and I'm guessing many of these people.
So firstly I use this strategy. I am not anywhere near $300M in net worth but anyone can do this with a few hundred K in stock and a margins account at IBKR.
Anyway, the reason has nothing to do with tax and everything to do with cash. Cash is dangerous. Once you have cash, the value can decline. On the other hand equity in actual companies is always going to have value. Companies like coca cola, Johnson Johnson, etc provide necessary things. They will always have cash flow regardless of how the dollar is doing. Equity is a huge inflation hedge. For me personally I was unaffected by inflation because stock prices inflated as revenues increase anyway. Cash is dangerous.
If you sell equity, it can be difficult to buy back in. Instead it's better to borrow. The equity will eventually go up and you can borrow more. Also, borrowing is instant, whereas selling is volatile as huge dumps of shares can easily manipulate the price on the open market.
Either way, you de-risk not being exposed to equity, which is a valuable store of income. Cash is an extremely dangerous way to store value, in my view, and I'm guessing many of these people.