Global capitalism has entered into a phase of consolidation of funds and exerting control over corporate governance which is not a good thing for the rest of us. One of the great myths of capitalism is everyone can get rich via investing, putting their money on assets like stocks, commodities, and bonds, and now cryptocurrencies. While people are getting rich doing just that, many are not, and in reality, some are in fact losing everything by investing in “get rich schemes” and reckless speculation.
To invest, one has to have resources to invest, use collateral or borrow the money to invest. When you borrow to pay for a stock, it is called margin. This can be risky if something goes awry not only do you lose, you are on the hook to the person you borrowed the money from to invest or speculate.
The best way for small investors to profit is through mutual funds or pooling your money and investing in a wider collection of commodities, stocks bonds, etc. There are firms that specialize in pooling money and investing. The latest fad is called Index Funds. “Index funds are a special type of mutual fund. A mutual fund is a financial vehicle that pools money from investors and invests it in securities such as stocks or bonds. The person in charge of making the buy-and-sell decisions for a mutual fund is called a fund manager. An index fund aims to track the returns of a designated stock market index. A market index is a hypothetical portfolio of securities that represents a segment of the market.” How Index Funds Work and Why They’re The Easiest Way to Invest by Adam Levy https://www.fool.com/investing/how-to-invest/index-funds/how-index-funds-work/
Index funds are popular because their fees are lower, their investment portfolios are more diverse, which lessens potential loss and increases returns. The downside is there are only a handful of Index Fund managers that dominate/control the whole investing spectrum, and their power is immense. Three companies Blackrock, Vanguard, and State Street lead the field. They are called The Big Three.
“Crucially, this large and growing industry is dominated by just three asset management firms: BlackRock, Vanguard, and State Street. In recent years they acquired significant shareholdings in thousands of publicly listed corporations, both in the United States and internationally. The rise of passive index funds is leading to a marked concentration of corporate ownership in the hands of the Big Three… ” Hidden Power of the Big Three? Passive index, re-concentration of corporate ownership and new financial risk by Jan Fichtner Eelke M. Heemskerk and Javier Garcia-Bernardo Cambridge University Press
Not only do the Big Three control trillions of dollars in assets, but they also control who sits on the various boards of the major corporations whose stocks they control. Plus as giant shareholders, they have proxy votes, which means they can, and do, influence corporate decisions and policy. “Although the Big Three are not fully similar, they have shared incentives as passive long-term investors. And together, they are a force to be reckoned with. For example, in 2015 activist investor Nelson Peltz rallied against DuPont’s CEO Ellen Kullman over whose slate of directors should be elected to DuPont’s board. The outcome of this high-profile proxy contest was determined when the Big Three disclosed that they were voting all their shares in favor of Kullman. The Big Three did not follow Institutional Shareholder Services (ISS) recommendations and as such voted against most of the regular short and medium-term oriented shareholders. This illustrates that the Big Three at times may have a conflict of interest with short-term-oriented investors. For this reason, they have an incentive to influence management to act in their interests.” Hidden Power of the Big Three? Passive index, re-concentration of corporate ownership and new financial risk by Jan Fichtner Eelke M. Heemskerk and Javier Garcia-Bernardo Cambridge University Press
When you think about this kind of power, the ability to control corporate boards, policy, and governance, you can see how this kind of clout could easily be used to dictate a national or international corporate response to a global crisis like COVID. The Big Three controls through stock ownership and asset management much of the corporate and digital media, most of Big Pharma, and has great sway over the governments via contributions to candidates and political parties! This is power.
This is exactly what happened during the “pandemic;” billionaires like Bill Gates, Warren Buffett, and institutions like the Big Three who have massive holdings in media; pharmaceuticals, academia, and the health care industries pushed the lockdowns and martial law that wrecked the global economies. Keep in mind none of the major corporations publicly opposed the lockdowns. Why? Why would titans of capitalism do something as seemingly counterproductive as this? I’ll explore and explain in futures articles.
