7 ms·

Well, they can sell the stock. If you don't believe in the CEO and can't fire him, you get out. Sounds like same shareholders are trying to stage a coup, good l

• TAForObvReasons 7y ago
  If you have a 401K or other retirement vehicle, you very likely own FB shares as part of your S&P500 exposure. There really isn't an "S&P499" that includes everything but FB EDIT: assumably the downvotes are from people who are unaware of the situation. https://us.spindices.com/indices/equity/sp-500 https://us.spindices.com/indices/equity/sp-500 FB is the 4th largest exposure. Also, in contrast to what some commenters believe, you cannot short FB from your retirement fund. https://www.irs.gov/publications/p590b https://www.irs.gov/publications/p590b is the relevant part from the IRS rules
  • arielweisberg 7y ago
    If you own an index fund does the fund actually vote? I wouldn't want my passive investment vehicle to be actively influencing the companies I am investing in.
    • mywittyname 7y ago
      I vote every time my fund manager allows me to.
    • deleted 7y ago
      [deleted]
    • TAForObvReasons 7y ago
      For most of us who have exposure to the company through our S&P500 exposure in retirement accounts, there's no real alternative that gives broad market exposure but doesn't have FB.
    • arielweisberg 7y ago
      Oh they do. Interesting. https://about.vanguard.com/investment-stewardship/how-our-funds-voted/ https://about.vanguard.com/investment-stewardship/how-our-fu... Not clear to me how they decided how to vote.
      • lightbyte 7y ago
        I only opened up the "500 Index Fund" PDF but it was interesting to note that they voted against almost every proposal that was brought by shareholders
        • scarletham 7y ago
          Yes, and they voted against the proposals mentioned in the article, except for equal share class voting rights.
      • scarletham 7y ago
        They have a department responsible for this, among other things. https://about.vanguard.com/investment-stewardship/perspectives-and-commentary/top-ten-questions.html https://about.vanguard.com/investment-stewardship/perspectiv...
      • londons_explore 7y ago
        They probably vote in the best interests of other people. They possibly even sell the votes... (Is that illegal?)
        • aussiegreenie 7y ago
          Yes, it is.
    • kolbe 7y ago
      They do, and it's arguably a big problem, since they aren't trained to make good managerial or investment decisions--just following a formula. And while no accusations have been laid directly, the economic consequences of the votes they have far outweigh their exposure to those decisions, so they're susceptible to corruption.
      • arielweisberg 7y ago
        Huh. That sounds bad. That sounds like power collecting where it shouldn't for the wrong reasons. Bad enough that maybe it needs a legal or regulatory solution.
        • scarletham 7y ago
          Why? How is Vanguard, an investment management firm which employees thousands of trained professionals, not qualified to cast votes on corporate governance? And in what sense is it "power collecting"? Yes, this is an issue that is largely debated, and there are some very interesting conflicts of interest - just curious why you specifically think it's so bad.
          • arielweisberg 7y ago
            My issue with it is that index funds don't compete on the quality of their contribution to governance. Many index funds are kind of fungible with similar low costs and performance relatively to the index they are supposed to track. So how much money (and by extension votes) these index funds wield is not connected to the quality of their contribution to governance. It also seems to me like there isn't much accountability and visibility into how they are voting from the perspective of people deciding which index fund to invest in. So you have people collecting massive amounts of clout, but no feedback loop ensuring that they lose that clout if they underperform at that particular task. Also one of the talking points of passive investing is that the trained professionals aren't as qualified or smart as they think they are. Active management risk is something to be avoided. As some of these funds grow in size they wield significant power and introduce active management risk. You just don't see it because the fund still tracks the index. I know that last bit is splitting hairs. Some active management always occurs otherwise how can companies function. One question is why should a passive fund be treated differently from an active fund in terms of how they contribute to governance? One difference is some of these index funds are absolutely massive and wield more power then a typical active fund.
    • Applejinx 7y ago
      Of course it is, if it can. This is a consequence of putting an investment vehicle in charge of what it's investing in. The only alternative is having the investment vehicle potentially own a company and not get to control it, I suppose because it's an investment vehicle and not capable of directing a company appropriately. Which makes sense to ME, but you can be sure your investment vehicle is actively directing everything you're investing in, towards whatever benefits the short-term value of whatever you think you're helping. Possibly excepting certain arrogant companies like I dunno, Amazon, Uber: stuff that is essentially ungovernable, especially when you can't get controlling interest of the thing.
    • AznHisoka 7y ago
      Someone has to vote as those shares are owned by someone. Since you are not actively investing in FB or any individual company, you can’t vote (since you passively invested in an index). Seems fair to me.
  • tylerhou 7y ago
    you can short the stock to reduce your exposure outside of your retirement fund
    • dragontamer 7y ago
      This right here. This is exactly why hedging options exist. If shorting isn't available, then you can make due with options short-call + long-put is roughly equivalent to a short stock. In any case, the point of a S&P500 fund is to get exposure to ALL companies, roughly in order of their size. Facebook is a big company, so any fund should have a chunk of it.
  • kolbe 7y ago
    Then don't buy the S&P 500. There are myriad investment options in this world.
  • mikestew 7y ago
    Also, in contrast to what some commenters believe, you cannot short FB from your retirement fund. One most certainly can, as most recently I sold calls from my Fidelity rollover IRA. Now can I literally short stocks from my IRA? I just tried it, and I'm not given the option (whereas I am on another account). Maybe that's a feature I don't have turned on, or maybe I can't literally do that from an IRA. But if I can trade options contracts, I could effectively do the same as shorting.
    • TAForObvReasons 7y ago
      You are not permitted to use retirement funds for any margin trading, including short-selling. That is why you cannot short from your account: https://www.irs.gov/publications/p590b https://www.irs.gov/publications/p590b > Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person. > The following are some examples of prohibited transactions with a traditional IRA. > - Using it as security for a loan. If your IRA let you sell calls, you likely own the underlying equity. Surprising how many people aren't familiar with the rules and just downvote
      • mikestew 7y ago
        You are not permitted to use retirement funds for any margin trading, including short-selling. Ah, of course, borrowing the shares and all. Hadn't given it a lot of thought, frankly; short trading stays away from the IRA. If your IRA let you sell calls, you likely own the underlying equity. For sure, trying to get rid of the underlying stock that I didn't want anymore. I'd be shocked if one were allowed to use their IRA to trade, say, naked puts. But without looking to see if I've done it, I'll assume one can buy puts (with a trade for the underlying stock) because I buy calls all the time using the IRA.
      • encoderer 7y ago
        You don’t need to own the underlying, you just need to define your risk by, for example, buying a far out of the money call. You would need to have funds to cover the buying power tied up but many options plays like this would be done over a short period so it can be viable.
  • neilv 7y ago
    Regarding S&P499: as soon as you exclude one company, you're probably going to want to exclude a whole lot more. Read down the list, and it's "this company set back technology and grew by consistently backstabbing partners and customers alike... this company set back the country by taking billions of dollars and then didn't build the infrastructure the fees were for... these companies grew by secretly mass-spying on everyone in ways that were already illegal in other modalities... this company killed all those people through arguably criminal negligence, and walked away..." (I'm a big proponent of passive index investing, and I don't mean to discourage it. Bogle-style US total-market or S&P 500, balanced with Barclay's US bond index. All the better that it's passive, so you're reminded less of how sausage is made, while you try to make sure you won't retire as a homeless street person.)
    • Agathos 7y ago
      For that reason I'd want a really simple rule, such as "allows unprivileged shareholders real voting control." Except the S&P 500 has actually been enforcing that rule since 2017. Google and Facebook are grandfathered in, though. https://www.dividend.com/news/2017/11/03/companies-multiple-share-class-structures-cannot-be-part-sp-500/ https://www.dividend.com/news/2017/11/03/companies-multiple-...
  • mrweasel 7y ago
    The retirement vehicles are interesting. The bank managing my pension won't investing my pension in weapons manufacturing, because that would be immoral. Let's ignore the fact that if I show up with a million dollars they would certainly help me buy Raytheon stock, but what if I don't want my pension invested in Facebook. I can't tell them no, they decide what's moral and what isn't.
  • SilasX 7y ago
    True, there isn't an S&P499. But: 1) There are mutual funds that do stick to "value" stocks i.e. low P/E ratios, which would exclude companies like FB. 2) If you really want to, you could take a short position that cancels the exposure to FB in an S&P index fund. (I don't know how legal that is in a retirement fund, but I know you can buy ETFs that have short positions in them, so it should be legal in principle.) 3) People hold actively managed funds in their 401ks (though I don't advise it myself), and those funds may decide against such stocks as FB. Fair point that large-cap index funds will have notable exposure though.
  • the_watcher 7y ago
    Sure, but the entire point of owning the S&P500 (and indexes like this in general) is to acknowledge that you may be wrong about an individual company, so you protect yourself with exposure to many.
  • HuShifang 7y ago
    I would note that some ESG ETFs in which I hold shares (i.e. where the portfolio make-up and allocations are informed, to some degree, by Environmental, Social, and Governance characteristics of the eligible corporations - basically a somewhat more ethical version of an S&P500 index fund) exclude Facebook while retaining stakes in Google and other major tech companies. (Can't recall with confidence but I think it's a BlackRock iShares fund)
  • mikeash 7y ago
    You also have no say in how any of those companies are run, so none of those people are the ones being talked about here.
• deleted 7y ago
  [deleted]
• all_blue_chucks 7y ago
  The whole point of owning stock is being able to vote on who runs the company.
  • travisjungroth 7y ago
    That's not the _whole_ point. You also can have financial benefits.
    • khalilravanna 7y ago
      I'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid dividends. That's what provides its inherent value which underpins a lot of how the stock market works (at least at a theoretical level).
      • the_watcher 7y ago
        Roughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)
        • iaabtpbtpnn 7y ago
          In theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
          • Gibbon1 7y ago
            I've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
• paxys 7y ago
  Investors can still voice their displeasure, and sometimes it works (see: Uber)