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> And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tigh

> And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tightly than they usually do... They really don't, at least not in the case of index fund investors like Vanguard and BlackRock. Have you ever read about their operations? They run a very lean ship. The only reason you're able to invest in index funds with 0.005% fees is because they have essentially nobody on staff, at least compared with the number of companies they invest in. They definitely can't do the kind of investigation and policing you're talking about without radically changing their pricing (and if they did do that, a competitor would come in offering to skip the inspections and go back to 0.005% fees, the money would flow there in droves, and we'd be right back where we started. The fundamental issue here is that passive investors don't care and you can't make them care.)

bell-cot 2y ago
Neither Index funds nor ETF's are likely to do the research & oversight stuff themselves, true. But that is quite different that saying that the Indexes & ETF's would for-sure sit on the sidelines if some more-active large shareholders were pushing a credible plan to force better behavior down the throats of a major corporation's C-suite. And the Indexes & EFT's backing such a measure - which effectively costs them 0.00000% to do - would likely prove the critical thumb sign from the Imperial Box.
tardy_one 2y ago
Sure, but that is the consequence of no consequences. It would be silly to be a quality fund when not voting or selling on risk analysis can't possibly cost an index fund more than they save.
- unkulunkulu 2y ago
  > not voting or selling on risk analysis I would be grateful if you could elaborate on this. Is this a strategy for a fund to make money that I don’t understand?
sevensor 2y ago
>> They really don't, at least not in the case of index fund investors like Vanguard and BlackRock. Have you ever read about their operations? They run a very lean ship. > The only reason you're able to invest in index funds with 0.005% fees is because they have essentially nobody on staff, at least compared with the number of companies they invest in. They definitely can't do the kind of investigation and policing you're talking about without radically changing their pricing I think this is exactly what needs to happen. Why should passive investing pay off? The vast amount of 401k money that has poured into the stocks behind the S&P 500 with no strings attached has incentivized a lot of bad behavior and made just about every US citizen with a retierment account complicit. Bad corporate behavior _should_ hurt the bottom line of the owners; it _should_ cost more to invest; investors (all of us) _should_ worry about whether a mutual fund is protecting their investment by divesting from companies that engage in criminal recklessness; our government _should_ disincorporate companies that put lives at risk, especially when those companies are major defense contractors.
- Analemma_ 2y ago
  Sure, that's how it should work. But how do you intend to make that happen? A double-digit percentage of households has a double-digit percentage of their net worth in index funds. If you say to them, "we're suddenly going to increase your fund fees by a couple orders of magnitude so we can have better corporate governance", you're going to be torn apart by an angry mob (or at least, voted out and replaced with someone who will not do this).
  - sevensor 2y ago
    We are, unfortunately, in violent agreement. What's to be done? Tell the world about it, hope people wake up? It's better than nothing. I'm starting with people I see face to face, and the tiny corner of the internet I occupy.
    - Aerbil313 2y ago
      What about dismantling the stock market? These are systemic problems. Free market economy works just fine without stocks. I can't prove it, but I feel there would be plenty of funding organizations to fuel your tech unicorns if the collective wealth of the America wasn't being spent and stored in this house of cards.

bell-cot 2y ago

Neither Index funds nor ETF's are likely to do the research & oversight stuff themselves, true. But that is quite different that saying that the Indexes & ETF's would for-sure sit on the sidelines if some more-active large shareholders were pushing a credible plan to force better behavior down the throats of a major corporation's C-suite. And the Indexes & EFT's backing such a measure - which effectively costs them 0.00000% to do - would likely prove the critical thumb sign from the Imperial Box.

tardy_one 2y ago

Sure, but that is the consequence of no consequences. It would be silly to be a quality fund when not voting or selling on risk analysis can't possibly cost an index fund more than they save.

unkulunkulu 2y ago
> not voting or selling on risk analysis I would be grateful if you could elaborate on this. Is this a strategy for a fund to make money that I don’t understand?

sevensor 2y ago

>> They really don't, at least not in the case of index fund investors like Vanguard and BlackRock. Have you ever read about their operations? They run a very lean ship. > The only reason you're able to invest in index funds with 0.005% fees is because they have essentially nobody on staff, at least compared with the number of companies they invest in. They definitely can't do the kind of investigation and policing you're talking about without radically changing their pricing I think this is exactly what needs to happen. Why should passive investing pay off? The vast amount of 401k money that has poured into the stocks behind the S&P 500 with no strings attached has incentivized a lot of bad behavior and made just about every US citizen with a retierment account complicit. Bad corporate behavior _should_ hurt the bottom line of the owners; it _should_ cost more to invest; investors (all of us) _should_ worry about whether a mutual fund is protecting their investment by divesting from companies that engage in criminal recklessness; our government _should_ disincorporate companies that put lives at risk, especially when those companies are major defense contractors.

Analemma_ 2y ago
Sure, that's how it should work. But how do you intend to make that happen? A double-digit percentage of households has a double-digit percentage of their net worth in index funds. If you say to them, "we're suddenly going to increase your fund fees by a couple orders of magnitude so we can have better corporate governance", you're going to be torn apart by an angry mob (or at least, voted out and replaced with someone who will not do this).
- sevensor 2y ago
  We are, unfortunately, in violent agreement. What's to be done? Tell the world about it, hope people wake up? It's better than nothing. I'm starting with people I see face to face, and the tiny corner of the internet I occupy.
  - Aerbil313 2y ago
    What about dismantling the stock market? These are systemic problems. Free market economy works just fine without stocks. I can't prove it, but I feel there would be plenty of funding organizations to fuel your tech unicorns if the collective wealth of the America wasn't being spent and stored in this house of cards.