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I'm generally against concentrated market power, so I'm definitely sympathetic to the point and I think it's good to be aware of this concentration of ownership

I'm generally against concentrated market power, so I'm definitely sympathetic to the point and I think it's good to be aware of this concentration of ownership. I'm not sure this is totally fair, though: > We found that the Big Three, taken together, have become the largest shareholder in 40% of all publicly listed firms in the United States. > Together, the Big Three are the largest single shareholder in almost 90% of S&P 500 firms > The Big Three – seen together – are virtually always the largest shareholder in the few competitors that remain in these sectors. They're aggregating these owners together, then saying that the aggregation is larger than the non-aggregated other owners. That's not too surprising, right? Taken together, the vowels cover more of the alphabet than any other single letter. Undoubtedly true, but what does that really tell us? If the big three tend to vote with management, that sounds potentially concerning. But are they just not voting for wacky shareholder proposals? What proportion of those votes actually tip the outcome? The section on the potential impact of this ownership concentration has a lot of "could have" and "may be" in it. We should definitely be doing that research, but at this stage the story isn't super compelling.

empath75 9y ago
I feel like they should delegate their votes somehow to the people they are actually buying shares for. I don't know what the right mechanism is, but it seems wrong that by investing in a passive fund, I've also given up the right to vote with my shares.
- kasey_junk 9y ago
  You are specifically doing that by investing in a fund. You can build the underlying basket yourself if you want the voting rights.
lotsofpulp 9y ago
The analysis leaves much to be desired, namely what has been and will be the effect of pooling all this money in passive investment funds, but I guess it's still newsworthy to note of this change in the investing environment (if true). Personal opinion is all this consolidation into 2 or 3 companies dominating various fields will not bode well in the long term. Once you have enough people invested in something, it's tough to let it fail (politically), so you have a situation like 2008 where the people that made bad decisions were bailed out creating bad incentives and moral hazard going forward just because enough voters were negatively affected because everyone was invested in the same things. Of course, 2008 wasn't the first time that happened, and it won't be the last, but I assume the cycle will continue until we reach a breaking point and the game is reset.

empath75 9y ago

I feel like they should delegate their votes somehow to the people they are actually buying shares for. I don't know what the right mechanism is, but it seems wrong that by investing in a passive fund, I've also given up the right to vote with my shares.

kasey_junk 9y ago
You are specifically doing that by investing in a fund. You can build the underlying basket yourself if you want the voting rights.

lotsofpulp 9y ago

The analysis leaves much to be desired, namely what has been and will be the effect of pooling all this money in passive investment funds, but I guess it's still newsworthy to note of this change in the investing environment (if true). Personal opinion is all this consolidation into 2 or 3 companies dominating various fields will not bode well in the long term. Once you have enough people invested in something, it's tough to let it fail (politically), so you have a situation like 2008 where the people that made bad decisions were bailed out creating bad incentives and moral hazard going forward just because enough voters were negatively affected because everyone was invested in the same things. Of course, 2008 wasn't the first time that happened, and it won't be the last, but I assume the cycle will continue until we reach a breaking point and the game is reset.