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Isn't it obvious? Diversification leads to monopolization which leads to surveillance, which leads to propaganda and censorship and loss of civil liberties. Un

Isn't it obvious? Diversification leads to monopolization which leads to surveillance, which leads to propaganda and censorship and loss of civil liberties. Until we understand the root causes, we are headed towards either mass censorship or revolution. My comment could not be more useful or relevant. If most people think like this and don't see the obvious link, then we are surely headed for disaster.

cryptica 6y ago
The great irony of this is that even people who think that they're on the winning side of this trend and who are benefiting from monopolization right now are going to be in for a big shock when they realize that they no longer have the freedom to sell their own company shares or use their own money as they please. The employee and the passive shareholder will always get screwed over in the end. Always. Surveillance and control will extend to absolutely everyone. Even the top 1%. Freedom and control will be in the hands of a tiny number of people. You can already see signs of this today. Now they manipulate people through thought leadership and the media, but once people have given up their basic freedoms, corporations will be able to coerce people at will. It will not be your shares or your money anymore because what you will be able to do with them will be severely restricted. It will all be done in the name of financial stability and safety.
- meekmind 6y ago
  This is a great analysis. I'm not sure why you're being downvoted. Warren Buffet is known for an investment strategy that diminished diversification and instead encouraged investing in businesses that you actually understand. The argument is essentially that diversification is an investment tool for the ignorant who lack the time or inclination to research what it is they are actually investing in. Combining that investment strategy with your argument: selective and informed investing is not only the safe bet but also the ethical one.
  - cryptica 6y ago
    Essentially all of my comments get downvoted on HN these days. It is a form of incentivized censorship which actually illustrates my point very well since I'm probably upper-middle class and the current trend has mostly benefited me. Opportunities for free speech seem to be running out so I'm trying to make the most of it. The scary thing is that diversification is done on auto-pilot these days. Superannuation funds, 401K funds and other pension funds take a share of each person's income and diversify it into a number of large corporate monopolies/stocks by default without their knowledge. So the system is turning people's own money against them.
    - meekmind 6y ago
      I'm probably preaching to the choir here but personally I find the act of downvoting a legitimate argument as opposed to providing a counter-argument distasteful. Downvoting ought to be limited to a particular subset of comments that does not include simply ones you disagree with. It honestly does smell like censorship. I read some of your other comments, and I don't even agree with all of them, but they didn't strike me as worthy of minimization. Back on topic, the institutional investors having a diversification default also occurred to me when I read your comments. It raised a lot of questions in my mind that I don't have the answers to. What percentage of the market is represented by institutional investment versus non-institutional investment where at least the investors have the option of selective investment over diversification? Can institutional investors break from the diversification strategy without being seen as picking winners, anti-competitive, or gambling with the money? More fundamentally, how do you take a system which operates on 0% information and transform it into something that has at least 1% or 2% information? Anyway, I don't expect you to answer those questions. Thanks for the food for thought.
dredmorbius 6y ago
Stock ownership is already sufficiently concentrated among the ultra-wealthy that diversification --- a highly-effective risk-management strategy --- likely has limited further effect. "84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households" (https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...), and the top 1% of households represent 50% of household stock ownership (by Goldman Sachs, see https://financialpost.com/investing/how-americas-1-came-to-dominate-stock-ownership https://financialpost.com/investing/how-americas-1-came-to-d...). Though I'm somewhat familiar with arguments concerningcorporate ownership and proxy votes, see e.g., https://corpgov.law.harvard.edu/2019/07/16/conflicted-mutual-fund-voting-in-corporate-law/ https://corpgov.law.harvard.edu/2019/07/16/conflicted-mutual... At the same time, some of the most effective shareholder activism has come precisely from pooled investors, notably CalPERS and TIAA-CREF. See e.g., https://papers.ssrn.com/sol3/papers.cfm?abstract_id=890321 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=890321 There are numerous other issues in corporate governance, ranging from the disastrous policy of "shareholder value" to vampirous corpprate raiders, to concentration and cross interests among boards of directors, to cross-ownership cartels as with South Korea's chaebol and Japan's keiretsu. A small part of the problem, possibly, but not the principle cause.

cryptica 6y ago

The great irony of this is that even people who think that they're on the winning side of this trend and who are benefiting from monopolization right now are going to be in for a big shock when they realize that they no longer have the freedom to sell their own company shares or use their own money as they please. The employee and the passive shareholder will always get screwed over in the end. Always. Surveillance and control will extend to absolutely everyone. Even the top 1%. Freedom and control will be in the hands of a tiny number of people. You can already see signs of this today. Now they manipulate people through thought leadership and the media, but once people have given up their basic freedoms, corporations will be able to coerce people at will. It will not be your shares or your money anymore because what you will be able to do with them will be severely restricted. It will all be done in the name of financial stability and safety.

meekmind 6y ago
This is a great analysis. I'm not sure why you're being downvoted. Warren Buffet is known for an investment strategy that diminished diversification and instead encouraged investing in businesses that you actually understand. The argument is essentially that diversification is an investment tool for the ignorant who lack the time or inclination to research what it is they are actually investing in. Combining that investment strategy with your argument: selective and informed investing is not only the safe bet but also the ethical one.
- cryptica 6y ago
  Essentially all of my comments get downvoted on HN these days. It is a form of incentivized censorship which actually illustrates my point very well since I'm probably upper-middle class and the current trend has mostly benefited me. Opportunities for free speech seem to be running out so I'm trying to make the most of it. The scary thing is that diversification is done on auto-pilot these days. Superannuation funds, 401K funds and other pension funds take a share of each person's income and diversify it into a number of large corporate monopolies/stocks by default without their knowledge. So the system is turning people's own money against them.
  - meekmind 6y ago
    I'm probably preaching to the choir here but personally I find the act of downvoting a legitimate argument as opposed to providing a counter-argument distasteful. Downvoting ought to be limited to a particular subset of comments that does not include simply ones you disagree with. It honestly does smell like censorship. I read some of your other comments, and I don't even agree with all of them, but they didn't strike me as worthy of minimization. Back on topic, the institutional investors having a diversification default also occurred to me when I read your comments. It raised a lot of questions in my mind that I don't have the answers to. What percentage of the market is represented by institutional investment versus non-institutional investment where at least the investors have the option of selective investment over diversification? Can institutional investors break from the diversification strategy without being seen as picking winners, anti-competitive, or gambling with the money? More fundamentally, how do you take a system which operates on 0% information and transform it into something that has at least 1% or 2% information? Anyway, I don't expect you to answer those questions. Thanks for the food for thought.

dredmorbius 6y ago

Stock ownership is already sufficiently concentrated among the ultra-wealthy that diversification --- a highly-effective risk-management strategy --- likely has limited further effect. "84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households" (https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...), and the top 1% of households represent 50% of household stock ownership (by Goldman Sachs, see https://financialpost.com/investing/how-americas-1-came-to-dominate-stock-ownership https://financialpost.com/investing/how-americas-1-came-to-d...). Though I'm somewhat familiar with arguments concerningcorporate ownership and proxy votes, see e.g., https://corpgov.law.harvard.edu/2019/07/16/conflicted-mutual-fund-voting-in-corporate-law/ https://corpgov.law.harvard.edu/2019/07/16/conflicted-mutual... At the same time, some of the most effective shareholder activism has come precisely from pooled investors, notably CalPERS and TIAA-CREF. See e.g., https://papers.ssrn.com/sol3/papers.cfm?abstract_id=890321 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=890321 There are numerous other issues in corporate governance, ranging from the disastrous policy of "shareholder value" to vampirous corpprate raiders, to concentration and cross interests among boards of directors, to cross-ownership cartels as with South Korea's chaebol and Japan's keiretsu. A small part of the problem, possibly, but not the principle cause.