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"Most large investors vote alongside Glass Lewis and ISS recommendations, the two most prominent proxy solutions for investors. Most GL/ISS recommendations tend

"Most large investors vote alongside Glass Lewis and ISS recommendations, the two most prominent proxy solutions for investors. Most GL/ISS recommendations tend to vote with the board and don’t change much unless something drastic happens. If you’re a passive investor, you vote in line with the two proxy powerhouses." - The Death of Intel: When Boards Fail https://www.fabricatedknowledge.com/p/the-death-of-intel-when-boards-fail https://www.fabricatedknowledge.com/p/the-death-of-intel-whe...

Dalewyn 2y ago
>If you’re a passive investor, you vote in line with the two proxy powerhouses. As a passive investor in SWPPX, an S&P 500 index mutual fund from Charles Schwab, "my" Intel stock votes are whatever Charles Schwab deems appropriate.
- highwaylights 2y ago
  This is the correct answer. People still don't realise just how much power over virtually every public company in America (and therefore the economy) is concentrated in the hands of a handful of people at Vanguard you've never heard of, for example.
  - fireflash38 2y ago
    It's been a concern that I've had for a bit - if everyone recommends index funds, then you lose a lot of the underlying "value" behind them. You have fewer people making decisions about what stocks to buy. You get this really top heavy system.
    - Dalewyn 2y ago
      It's not like most of the people making those decisions are doing any better than just throwing dice at a wall and seeing what sticks. In the immortal words of Warren Buffett and Jack Bogle respectively: "The stock market is a device for transferring money from the impatient to the patient." and "The daily machinations of the stock market are like a tale told by an idiot, full of sound and fury, signifying nothing." You can either gamble and blame yourself or ride the market (invest in index funds) and excuse yourself from losses. If you're just interested in making some money using some disposable cash, it makes even more sense to just ride the market.
    - lotsofpulp 2y ago
      Broad market index funds are the inflation protected asset due to US federal government bailout. Your savings account is not going to keep up with inflation, nor are TIPS or US treasuries (not for land/healthcare/education), but an SP500 fund will do a better job over the course of decades.
      - Dalewyn 2y ago
        TIPS are literally designed to track inflation, Treasury I-Bonds are also designed to track and surpass inflation. The US total stock market (ex-US stock market is a crapshoot) and its subset the S&P 500 index will generally do a better job than any bonds given a long enough timeframe, but that doesn't mean appropriate bonds can't do the job either.
        lotsofpulp 2y ago
        That is why I specified land/healthcare/education. I guess I should have specified that it matters more for metropolitan areas, especially high cost of living regions. TIPS won’t come close to making one be able to compete with other buyers in those markets for the non mass produced/imported resources. If someone invested their money in TIPS over the last 30 or 40 years thinking they will be able to buy real estate because TIPS protected them from inflation, they would have been sorely disappointed for pretty much all non Midwest/interior northeast metros. This is a demographic/political issue for all developed countries, they must reduce the purchasing power of their currency as a tax to be able to deliver the benefits expected by the more populous, older voting populace.
        ac29 2y ago
        > If someone invested their money in TIPS over the last 30 or 40 years thinking they will be able to buy real estate because TIPS protected them from inflation TIPS have been available less than 30 years.
        lotsofpulp 2y ago
  - DebtDeflation 2y ago
    For those who may not be aware of what you are talking about: 3 fund companies (BlackRock, State Street, Vanguard) are the largest shareholder in over 80% of SP500 companies and collectively own around 28% of the SP500 market cap.
    - Cumpiler69 2y ago
      Doesn't that level of influence over large parts of the economy make those enterprises a bit dangerous? Also, how did Blackrock get so wealthy so fast? They've only been around since 1988.
      - sofixa 2y ago
        Yes. If they collectively decide stock price matters more than anything else (sustainability, the planet, long term viability of the business), they get it, whatever the short or long term costs. There was a comparison between Amundi (France based) and BlackRock, and their voting patterns, and BlackRock was consistently voting against any ESG or in any way ecology related proposals. Anything that isn't directly about making more money is just not their thing. Contrast that with Amundi who overwhelmingly voted for ESG or similar measures.
        Cumpiler69 2y ago
        >If they collectively decide stock price matters more than anything else So an oligopoly that presents the illusion of free market?
        throwaway48476 2y ago
        A market has buyers and sellers. Corporate decisions are driven by politcs where market terms don't apply.
        hnfong 2y ago
        Matt Levine has recently written a humorous-yet-thorough article on this exact issue: https://www.bloomberg.com/opinion/articles/2024-12-02/texas-asks-if-index-funds-are-illegal https://www.bloomberg.com/opinion/articles/2024-12-02/texas-...
  - throwaway48476 2y ago
    People in the ESG space are stating to notice. Incompetent suits is an even bigger problem though.
  - imglorp 2y ago
    Ok fair enough. But please explain like you might to a child, since these fund managers are exercising their power and since they are picking short term focused, parasitic, extractive boards like the Boeing/Intel ones, what impact are they trying to have on their funds? What fruit will the Vanguard 3030 fund reap when Intel and Boeing tank, say, maybe this year?
    - parsimo2010 2y ago
      A fund manager can throw their weight behind short term gains, and when those gains dry up they can sell their Intel stake and put it in the next company to be sucked dry. They don’t have to care about long term success.
      - Dalewyn 2y ago
        Fund managers are obligated to act according to their fund's prospectus[1], of which the specifics will vary with each fund. For a TDF (Target Date Fund), because that was brought up (Vanguard 2030): Both actively and passively managed ones must generally be managed such that shareholders can start withdrawing adequate funds (selling shares) upon and after reaching the "target date". For an S&P 500 index fund like the one I mentioned and hold (SWPPX), the fund manager is required to imitate the actual S&P 500 index as much as reasonably possible. In short, "don't have to care about long term success" is not a generally usable argument for fund management. [1]: https://www.investopedia.com/terms/p/prospectus.asp https://www.investopedia.com/terms/p/prospectus.asp
        parsimo2010 2y ago
        If the prospectus says "follow the S&P 500" the fund manager is also not interested in long term success, they are interested in tracking the index. But the fund managers tracking an index are not the main problem, they are just putting a lot of passive votes behind the funds that are actively working on electing board members in the interest of short term growth/profit (which brings more people to invest in their funds and gets them big bonuses).
      - 2y ago
johnnyanmac 2y ago
I guess that just throw as the question down the hall. Why is Glass Lewis and ISS choosing to keep the same board?

Dalewyn 2y ago

>If you’re a passive investor, you vote in line with the two proxy powerhouses. As a passive investor in SWPPX, an S&P 500 index mutual fund from Charles Schwab, "my" Intel stock votes are whatever Charles Schwab deems appropriate.

highwaylights 2y ago
This is the correct answer. People still don't realise just how much power over virtually every public company in America (and therefore the economy) is concentrated in the hands of a handful of people at Vanguard you've never heard of, for example.
- fireflash38 2y ago
  It's been a concern that I've had for a bit - if everyone recommends index funds, then you lose a lot of the underlying "value" behind them. You have fewer people making decisions about what stocks to buy. You get this really top heavy system.
  - Dalewyn 2y ago
    It's not like most of the people making those decisions are doing any better than just throwing dice at a wall and seeing what sticks. In the immortal words of Warren Buffett and Jack Bogle respectively: "The stock market is a device for transferring money from the impatient to the patient." and "The daily machinations of the stock market are like a tale told by an idiot, full of sound and fury, signifying nothing." You can either gamble and blame yourself or ride the market (invest in index funds) and excuse yourself from losses. If you're just interested in making some money using some disposable cash, it makes even more sense to just ride the market.
  - lotsofpulp 2y ago
    Broad market index funds are the inflation protected asset due to US federal government bailout. Your savings account is not going to keep up with inflation, nor are TIPS or US treasuries (not for land/healthcare/education), but an SP500 fund will do a better job over the course of decades.
    - Dalewyn 2y ago
      TIPS are literally designed to track inflation, Treasury I-Bonds are also designed to track and surpass inflation. The US total stock market (ex-US stock market is a crapshoot) and its subset the S&P 500 index will generally do a better job than any bonds given a long enough timeframe, but that doesn't mean appropriate bonds can't do the job either.
      - lotsofpulp 2y ago
        That is why I specified land/healthcare/education. I guess I should have specified that it matters more for metropolitan areas, especially high cost of living regions. TIPS won’t come close to making one be able to compete with other buyers in those markets for the non mass produced/imported resources. If someone invested their money in TIPS over the last 30 or 40 years thinking they will be able to buy real estate because TIPS protected them from inflation, they would have been sorely disappointed for pretty much all non Midwest/interior northeast metros. This is a demographic/political issue for all developed countries, they must reduce the purchasing power of their currency as a tax to be able to deliver the benefits expected by the more populous, older voting populace.
        ac29 2y ago
        > If someone invested their money in TIPS over the last 30 or 40 years thinking they will be able to buy real estate because TIPS protected them from inflation TIPS have been available less than 30 years.
        lotsofpulp 2y ago
- DebtDeflation 2y ago
  For those who may not be aware of what you are talking about: 3 fund companies (BlackRock, State Street, Vanguard) are the largest shareholder in over 80% of SP500 companies and collectively own around 28% of the SP500 market cap.
  - Cumpiler69 2y ago
    Doesn't that level of influence over large parts of the economy make those enterprises a bit dangerous? Also, how did Blackrock get so wealthy so fast? They've only been around since 1988.
    - sofixa 2y ago
      Yes. If they collectively decide stock price matters more than anything else (sustainability, the planet, long term viability of the business), they get it, whatever the short or long term costs. There was a comparison between Amundi (France based) and BlackRock, and their voting patterns, and BlackRock was consistently voting against any ESG or in any way ecology related proposals. Anything that isn't directly about making more money is just not their thing. Contrast that with Amundi who overwhelmingly voted for ESG or similar measures.
      - Cumpiler69 2y ago
        >If they collectively decide stock price matters more than anything else So an oligopoly that presents the illusion of free market?
        throwaway48476 2y ago
        A market has buyers and sellers. Corporate decisions are driven by politcs where market terms don't apply.
        hnfong 2y ago
        Matt Levine has recently written a humorous-yet-thorough article on this exact issue: https://www.bloomberg.com/opinion/articles/2024-12-02/texas-asks-if-index-funds-are-illegal https://www.bloomberg.com/opinion/articles/2024-12-02/texas-...
- throwaway48476 2y ago
  People in the ESG space are stating to notice. Incompetent suits is an even bigger problem though.
- imglorp 2y ago
  Ok fair enough. But please explain like you might to a child, since these fund managers are exercising their power and since they are picking short term focused, parasitic, extractive boards like the Boeing/Intel ones, what impact are they trying to have on their funds? What fruit will the Vanguard 3030 fund reap when Intel and Boeing tank, say, maybe this year?
  - parsimo2010 2y ago
    A fund manager can throw their weight behind short term gains, and when those gains dry up they can sell their Intel stake and put it in the next company to be sucked dry. They don’t have to care about long term success.
    - Dalewyn 2y ago
      Fund managers are obligated to act according to their fund's prospectus[1], of which the specifics will vary with each fund. For a TDF (Target Date Fund), because that was brought up (Vanguard 2030): Both actively and passively managed ones must generally be managed such that shareholders can start withdrawing adequate funds (selling shares) upon and after reaching the "target date". For an S&P 500 index fund like the one I mentioned and hold (SWPPX), the fund manager is required to imitate the actual S&P 500 index as much as reasonably possible. In short, "don't have to care about long term success" is not a generally usable argument for fund management. [1]: https://www.investopedia.com/terms/p/prospectus.asp https://www.investopedia.com/terms/p/prospectus.asp
      - parsimo2010 2y ago
        If the prospectus says "follow the S&P 500" the fund manager is also not interested in long term success, they are interested in tracking the index. But the fund managers tracking an index are not the main problem, they are just putting a lot of passive votes behind the funds that are actively working on electing board members in the interest of short term growth/profit (which brings more people to invest in their funds and gets them big bonuses).
    - 2y ago

johnnyanmac 2y ago

I guess that just throw as the question down the hall. Why is Glass Lewis and ISS choosing to keep the same board?