Addressing the Blackrock/Vanguard Situation
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- čas přidán 14. 09. 2023
- Some online are claiming that Blackrock, Vanguard, and other massive asset managers secretly run the world. Let's look at the evidence.
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DISCLAIMER:
Richard does not have a position in Blackrock or Vanguard.
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).
People always want to believe a crazy conspiracy, but the truth is often far more boring
That pesky pattern seeking brain, trying to operate in vastly complex systems.
It's like a saying I heard a while ago: "Everything is a conspiracy when you don't know how anything works."
It's just the natural extension of the fact that the rich truly have more power than the rest
That won’t get you on the jo Rogan show or views
its not a conspiracy , they openly tell u what u think and want u can and cant do . dho
My problem with ESG is that it's essentially a corporate virtue signal in order to avoid government regulation. Like hey guys, trust us we can govern ourselves. You don't need to intervene with any sort of government regulation
Still better than literally no fear of government regulation which is what conservatives want. If there is literally no pressure they don't even have to pretend.
internal policies that prevent and offset emissions are a lot easier to implement and more effective than things like the EPA trying to clean up after entities that just externalize their environmental footprint and lobby for the idea that they didn’t cause it or it doesn’t exist. litigation takes the place of mitigation, and then when the mitigation and cleanup measures finally come, they tend to be more expensive- not only financially, but materially, because the ecological damage is already done by the time courts hold companies liable and allow them to proceed. The domain-specific operational changes are cheaper, they’re just harder to manage and enforce because there aren’t any one size fits all solutions, and the best way to mitigate the effects of your operations depends on how you operate. that problem presents itself whether you’re Blackrock or the federal government, and i’m not sure that the way to handle this is to try to codify every possible contingency so that it can be enshrined in law, because that kind of rigidity historically just allows companies to argue in court that antiquated laws simply shouldn’t apply to them.
Which is ironic that it's Republicans that are complaining about it since they're the ones who wants a "small government", ie less governmental regulations.
to be clear i’m also not sure the Blackrock approach is better because it seems patently absurd to me to try to develop a single instrumental framework for measuring how green every company is, that just seems like you’re _begging_ for proprietors to try to maximize those metrics without actually offsetting the material cost of what they’re doing
I don’t know what the hell the point of these stupid numbers is supposed to be if they’re unitless and can’t be compared across industries or even across competitors in the same sector
but somehow i doubt that any regulator serious about modernizing this kind of thing is going to care what Blackrock says it’s doing beyond Blackrock claiming that it’s been defrauded by people misrepresenting how sustainable they are
@@flight_risk I think you are talking past my point to another issue altogether. I mean, good defense of your perspective, but my one and only point is that ESG is a fig leaf for deeper systemic issues.
ESG is heavily driven by senior leadership's drive to have a check box management system.
Why'd they rebrand it as DEI regulations
@@alwayshere6956People are pushing back, but divide and conquer tactics would enable them to dismiss critics as "evil racists / sexists."
If I have a problem with companies that are going green, but not with diversity, now they've cut the dissenting voices down by probably half.
@@Excalibur2 Carbon emissions are a lie
@@alwayshere6956 They didn't. DEI has a completely different focus from ESG. DEI is about respecting people, ESG is about respecting the environment. The only real overlap is that ruining the environment tends to harm poor people the most, and minorities are disproportionately represented among the poor.
Different programs, different goals. Fox News may be equally hateful of both minorities and the planet, but that doesn't mean everything they hate is all one singular ideology. "Woke" is just a bogeyman word used to scare you, it doesn't actually mean anything (to be more specific: It has a meaning, but Fox and similar propagandists have intentionally stripped it of its original meaning so that they can apply it to anything they want you to fear and hate without questioning).
@@altrag ESG stands for economic SOCIAL governmence. I'm not sure just how God damn uneducated you think people are. If you are paying any mind to the world economic forum, if you're paying any mind to the Uniparty, then you're vastly unconcerned with what mainstream media has to say, be it CNN or Fox news. They are trying to make out the vaccines as a bioweapon when in reality the covid was a bioweapon. FAANG tech companies are complicit in government censorship, Twitter/X is hardly out of the forest yet.
It's important to point out that a 5% concentration can be extremely powerful depending on how pulverized voting is/shares are. BlackRock and Vanguard also have another effect which is passive influence: investors look at what they are doing to make their decisions, so they also have a lot of marginal sway that isn't directly under their control but moves with them in a wave-like effect.
It's wrong to say they control the world, but we also have to be careful to not understate their influence. And I don't mean this as ESG or any other policy specifically. It's simply a worse outcome for the whole world to have this much capital concentrated.
This factor out the factor of founders rigging the voting rights 😂
Buddy, Blackrock literally convinced Disney, a family focus company, to go pro-lgbt and lose money. How can you still think they don't hold any power?
Pulverized, lol
This happens all the time in the market, especially if you're an efficient market theorist. Look at any stock explosion or implosion AMC/GME/BBY/literally thousands of examples and they're moved by a small minority of actors which the masses mindlessly follow. Don't discredit the amount of power that 5% is when everyone else is fractions of that.
Just say you didn’t watch the video.
STOP BEING SO REASONABLE ... you're dousing my outrage 😂😂😂
Good job as always 🤩
Just wait till Crypto Season starts again.
@@johnsmithe4656 True - I'll fan the flames quietly until then 🤣
Thank you! You’re one of the few channels that actually explores the nuances of this subject.
Most people can’t do/handle nuance.
Some people are counting on that deficiency
There are no nuances, fiat owning socialists have us all under their thumbs consuming products that are ruining society.
💯
@@chowsquid I feel like Patrick Bet David is counting on that deficiency.
There is no nuance, ESG induces capital loss to the shareholder which is the liability of the fiduciary of those indices (vanguard/blackrock). Plain Bagel is a proponent of ETFs and indices, which as it turns out are not as passive an investment as previously purported.
You missed one point in this, Direct Lending. Blackrock and Vanguard control a substatial portion of institutional direct lending. Their seats and the board, combined to controlling access to the lending businesses need, means they have an oversized influence on companies. Regardless of how a person feels about the initial Budweiser situation, that was a direct result the company needing to maintain compliance in order to maintain access. to lending. This falls back to the need to reimplement the Glass-Steagll Act to remove banking type operations from investment firms.
Anecdotally, I've yet to meet a person who actually knows what ESG values are. As someone who has studied their market and regulatory framework, it is not surprising that most people are incorrect in the assumptions about what ESG is. That Globescan paper survey, was useless because it did not ask people about what ESG states as their goals, but about people's desire for environmental responsibility in companies. Just peruse the top rated ESG companies and the majority are not environmentally responsible, in fact many have outstanding litigation against them for environmental issues.
You’re correct, I think he got paid to make this video.
He is just another Canadian. Very sheepish. Goes along with what he is told, etc.
Thank god you were able to say it so eloquently
Direct lending is only for private companies though? All others are owned via equity, not debt - and any fixed income security also has to report the same metrics equity securities do, too
Also, no such thing as ESG values, only non-financial investment materiality. The news has brainwashed everyone into thinking it’s the same as values-based investing, which is something completely different
BlackRock CEO Larry Fink’s statement in 2017 during an event where the executive admitted that the firm was trying to “force change” in companies.
“Well, behaviors are going to have to change, and this is one thing we’re asking companies. You have to force behaviors. And at BlackRock, we are forcing behaviors,” Fink said.
“We added four more points in terms of diverse employment this year. What we’re doing internally is, if you don’t achieve these levels of impact, your compensation could be impacted. ... You have to force behaviors. And if you don’t force behaviors-whether it’s gender or race, or just any way you want to say the composition of your team-you’re going to be impacted. ... We’re going to have to force change.”
Eugenist robber barons.
This video: “Blackrock clearly isn’t trying to force ESG”
CEO of Blackrock: “We’re forcing ESG”
He is in the industry, of course he have to defend the big bosses.
Fink is a jew too.
This dude struck me as a spineless bootlicker, then I thought otherwise, and _then_ he dropped this...
I would like to see you talk about that image with a few corporations like coca-cola, unilever etc and how they "have all the brands" to see if they really own everything
Their case is really just diversifying making sure they have multiple faucets since at some point their markets become stagnant for there is a limit as to how much consumers would consume their products.
@@chrisc5991 true, but there is a criticism on how only a few companies own everything. Would be interesting to see how true that is
" like coca-cola, unilever etc" - those trade names should be capitalized... just sayin', unless you have a hidden agenda. ;)
@@raylopez99 hah, i didnt, but good point
It would be interesting to see how they present the illusion of choice. Is it a smart marketing strategy to have more brand names with the same parent?
I will often try new products from brands I don't recognize and when they're indistinguishable I am just as likely to choose one over the other. In that case, the company with the most brands wins because of a higher random chance.
The music mix on this video was fantastic. Especially the little 3-note stab after “If you own a Vanguard fund . . . congrats, you’re one of the puppeteers.”
for sure
these company do not dictate the board room but having substantial/sizeable share by single entity/thought process will govern the direction
What is concerning to me, is that they are en-masse buying large quantities of properties (especially single family homes). They are a large part of why we are currently in a housing crises. If they continue to buy at the current rate they’re buying properties right now, within the next 10 years will own over half of all single family homes in the country. That is scary for me.
Didn’t you listen? There is nothing to worry about, everything is fine
Yeah, I'm kind of surprised that this topic isn't even covered in this video. The housing market is absolutely hosed...
You're probably thinking of BlackSTONE, not BlackROCK. These are two distinct and separate entities, despite the fact that they have similar names.
@@yaitskov1 and who says black stone isnt owned by BlackRock
Welcome to capitalism
Really appreciate you coming back to this in long form. Too nuanced for a short, getting into the nuance in an approachable way is really your wheelhouse.
There is no nuance, ESG induces capital loss to the shareholder which is the liability of the fiduciary of those indices (vanguard/blackrock). Plain Bagel is a proponent of ETFs and indices, which as it turns out are not as passive an investment as previously purported.
A long bagel is just a baguette
@@lephtovermeetthis is the hottest take 😂 😂😂
I think the issue is what Blackrock etc. do with the voting power from clients money, and how they actively influence companies on matters like ESG that you mentioned. It’s a real issue but perhaps overstated by some & ignored by others.
Yup. A complicated issue that's completely overblown in areas it doesn't need to be and overlooked in areas where the issues usually originate. It's all the media game though. Anything that resembles fixing requires effort and persistence, it's not fun and exciting it's audits and compliance checks as usual lol
Especially given that they assume the political persuasion of the people money they have been entrusted with
@@Sam-ir2te Good point
There’s a real issue of using their vote to get a company to take an action that another Blackrock holding can exploit. Say retailers dump their real estate holdings for liquidity for shareholders and then an Blackrock company buys up that real estate and rents it back to the retailer. Moving as much money as possible back to the 1%.
That’s what I think is likely their real Machiavellian machination.
It's not an issue whatsoever
ESG is almost entirely government manipulation. I work in a private equity firm and we are forced to incorporate ESG policy because some of our largest investors are state pension funds, Union funds, etc. it’s a backhanded way for government to control businesses and thus control consumers. Also, the threat government regulation over businesses not considered ESG compliant shapes the way we invest.
Bingo
Yep.
The intentions of ESG are noble, but the effect is that the people controlling ESG incentivize agendas they like and punish agendas they don’t. The problem is that ESG scores are inherently reductive and in many cases incentivize behaviors that are bad for the environment, society, or governance. As an example, ESG’s preference for low-density energy sources like wind and solar over nuclear power belies the reality that nuclear is far better for the environment than any other practical source of baseline electrical grid power. As another example, GMOs are penalized vs organic crops, even though GMOs are in many cases equivalent or objectively superior to organic crops environmentally.
Diversity quotas in boards are another example; incentivizing companies to select board members for their immutable traits is creepy and wrong.
Great video! I really enjoy how you explain these situations.
Great coverage. Happy to see more light being shed on this subject. Too many opinions floating around that are just kinda silly.
BLACKROCK
It's not great coverage. Just because a video is long and filled with financial jargon doesn't mean it is nuanced. Considering that the premise of this video is the handwaving away of Blackrock's influence in the world, side-stepping their role in in the bond markets is lying by omission. During the housing bubble crash of 2007 the Federal Reserve was panicking and turned to Fink (a lowly hedge fund manager with a measly 7 trillion dollar fund at the time) to create the Maiden Lane investment vehicles which resulted in defunct Wall St giants like AIG and Bear Stearns' assets being effectively placed under the control of Fink and co.
Fast forward to the 2020 crash. The Fed is in panic mode again because the corporate bond market was on the verge of collapse as no one was willing to buy up the debt of zombie corporations (Exxon Mobil, Boeing, Delta etc). If this bond market was allowed to fail these corporations would would not be able to fund themselves except by issuing more stock which would further devalue equities and create a death spiral. Fink once again saved the day by buying up this worthless debt and in turn the Fed would buy his ETF to subsidize him. So Blackrock is now effectively receiving newly "printed" US dollars buying his ETF making them so integral to the US financial system that Bloomberg called them the "Fourth Branch of the US Government".
This doesn't even get into the Blackrock's Aladdin system and how it's used by practically every single major financial institution and their fund managers.
It's also incredibly dishonest to misrepresent Blackrock's role in directing these companies to enact their political bidding. They may not have direct control over day to day operations but their controlling interest of 88% of S&P companies directly led to the mass implementation of their "woke" DEI policies. They single-handedly institutionalized blatant anti-white discrimination in their hiring practices. The result? Since 2020, 94% of new hires at S&P firms went to non-whites according to Bloomberg. Bagelboy is conveniently ignoring the numerous public statements Fink and his co-conspirators at Blackrock have made regarding their goals in disenfranchising whites in corporate America. He must be historically illiterate as well if he doesn't understand why Fink and his tribe might be motivated to do this.
Yea silly lol...
What I like is that you cover where I situation is placed right now, in the moment. You don't spin out much of a future. Sometimes we can follow things to their logical conclusions but you opted to let the audience think for themselves as much as possible. You're also upfront about where a lack of nuance is in your own content. I think that's fantastic.
My problem with Blackrock is more on the side of them trying to trendset. The thing I've found that is a massive blackhole in investment. The Dot Com bubble and how it was taken advantage of, Enron, and even Theranos.
If you make something appear popular to an investor or investment group, they will chase the cash cow for all eternity. That's their job. The flaw is that, even if the Public at large is not interested, it then makes it appear that they're pushing an agenda. They are, but it's for M O N E Y. They don't always care about these values at the top even if they hire so called "activists" or "ideologues."
Many big companies started taking the opinions of Twitter and thought that was a reflection of reality. That may turn into some very self destructive actions in the not too distant future. SVB, we salute your terrible outreach.
Fink is trying to do the same with ESGs and his marketing and methods are terrible when outsiders look in. It is utterly out of touch and godawful. I cringe watching it.
So shadowy intentions or not.... it might turn into a big problem, very quickly.
The messaging is bad, but the political risks are not huge and this is very different than SVB.
Thank you for making a longer video about this. This covered the main concerns about this topic. I saw the short and was really disappointed.
The truth is often boring, and unfulfilling to those who feel they've lost a grasp on their life...not saying that there arent powerful people in this world, but more often than not peoples actions are just a result of their self interest (ego, greed, jealosy, etc.).
Thanks again Plain Bagel for simplifying difficult subjects!!
@@chelseachelseafcsuperfan7220 You're wasting your time to trying to convince anyone here. These people are weak. They don't want to believe evil exists because if they accepted that evil exists, then naturally they'd get that feeling that they have to do something about it, right? Well the problem is that they're incapable of doing anything, they're completely useless. So they'd just feel super guilty about it. So instead of feeling that guilt, because that would be SO painful, they just deny reality.
@@chelseachelseafcsuperfan7220You’re a genuine moron.
@@tinymike318 or maybe you are brainwashed.
@@shaunsensei6948 Nah you’re upset because I hit a nerve.
Wait, you're telling me the average tiktoker doesn't know how complex financial schemes work ? Color me shocked ! 😂
Even if they did, the real money’s in right leaning conspiracies. Juicy lies sale !!
Funny how she acts like it's some secret bit of info when you'd know how kuch reach Blackrock has if you just trolled through Wikipedia pages for suffering major businesses and looked at "owners", "investors", or "shareholders".
@@arthas640 well the thing it is secret knowledge for tik tok user because well they don't do anything other than scrolling the whole day.
16:36 "Substantial claims require substantial evidence"
The internet: We don't do that here
I appreciate your ability to break down these large economic news headlines and explain what each peice really means, as someone not well versed in economics it makes it very easy to follow along and understand.
You seem to oversimplify ESG by just covering the E and ignoring the SG.
The G is related to corporate governance not actual political government lol. And the S is usually related to health & safety standards, labor standards, community impact, etc. they’re not going to force your kids to be gay or tell the government to ban straight men like so many people think the SG is related to lol.
So every company just went full nuts and started acting trans for no reason?
@@caseyvidrine3189when conversation in contemporary culture explodes and makes topics unavoidable, companies have to pick a side, and they’ll always pick the side that makes them look more virtuous.
No, they did that because their ESG score is what lending is based off of. They’re forced to pick the freak show side because if they don’t, they can’t get financing. That’s why they’re powerful.
@@caseyvidrine3189what exactly does “acting trans” even mean? Are you even old enough to work at these types of companies? I happen to have a white collar job in consulting, and people don’t “act trans”. A simple acknowledgment that trans people exist and should be treated as human beings isn’t some radical idea. You know how much that effects my day to day work? Exactly zero percent. The lot of you need to grow up, it’s exhausting.
Thanks for picking this topic, Richard, some very helpful clarifications! I learned more than I expected LOL. Always great content on this channel... Long live The Plain Bagel! 😃
As an aspiring CPA and CFE, Richard is one of two financial CZcamsrs that I pay serious attention to (the other being Patrick Boyle).
A very, very smart man!
I can't believe that the plain bagel has been targeted by Blackrock and Vanguard and was forced to make this video 😢
Lol oh no they are controlling small CZcamsrs now…
What makes you think they were forced? They're backing the winning side.
@@itscrispy4469 Of course they are. 800k subscribers isn't small and pushing propaganda through television isn't effective anymore.
@@domsanchez148or maybe he’s telling the truth and you guys suck at seeing how boring reality is
im in your walls
@@domsanchez148
This video glosses over three things:
What exactly esg scorec are determined by: The Social part (aka pushing lghdtv+ things) gives much more and also faster points than taking care of the environmental issues, causing things like the budlight thing. Or tesla having a lower esg score than cigarett companies.
2. Aladdin: Blackrocks stock rating system, that is also used by outsiders and with ~21trillion under the softwares management. It uses the esg score in the price determination so a bad score imideatly reflects on the stock price of a companie.
3. Blackrock and vanguard issuing recomendations for who is to be hired as executive to increase the esg score. This brings the idiology much deeper and mote direct into the companies than stockprices ever could.
Why do you losers love losing money? Who gives a shit about the "whoke" agenda ,inclusivity is clearly profitable lol. inb4 'but what about target and bud light!!!1!" my brother in christ you boycotted one of their brands and just chose to skyrocket the other
Man, these comments are about to get absolutely terrible
Burning hell hole
*under construction*
He addressed the ownership, the voting, the agenda and its power and potential yet you hear it over and over again.
Wait until they start pointing out the obvious to which so many are oblivious.
@@thebarkingsnail pointing at the obvious usually gets you flagged for hate speech...
@@assortedsubscriptions4012 Or… maybe what you think is ‘obvious’ is actually just factually incorrect hate speech.
@@Threecharacterhandel the ADL has labeled you a "good goy" - wear it with pride!
Here is my problem with ESG..How the hell are cigarette and oil companies allowed in the ESG fund and not company’s that have influenced entire industries to become more environmentally conscious?!? If there is a company out there where their sole goal is “to advance the worlds transition to sustainable energy” and they are not added to the ESG fund it shows they are just a fluffed up name and in my opinion fraudulent.
Yes im talking about Tesla and I know they were added May 1st 2023 but why did it take so long? How many times was ESG publicly called out on this before they added it? How minuscule is their position compared to what they do? Why are oil and cigarette companies still in ESG?
@@clam_baked Also what right do they have essentially extorting CEOs for certain "behaviors" with our 401k Pension money. I dont see this being addressed. The problem is they have easy passive low margin ETFs because they are so big. These companies need to be broken up. This is EXACTLY what anti trust laws are for.
Cigarettes is fucking bs but oil could be allowed because of the amount of money they have meant they could transition to other form of energies. We actually already see efforts of them diversifying toward renewables. They potentially have more impact for more sustainable energy than some poor companies that try to grandstand without any capabilities
ESG is the epitome of green-wash virtue signalling.
unfortunately yes, that is how most companies use it.@@ninakore
The problem with ESG is it is a basket of totally unrelated concepts some good and others absolutely not good all thrown into the same basket and used to try to generate some kind of social credit score for businesses. People have a much bigger problem with the DEI component of ESG than the environmental stuff. And almost nobody has a problem with the much more reasonable governance stuff.
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I'm assuming the move towards ESG is also due to new EU sustainable finance regulations that require banks, funds etc. to e.g. make sure that customers are explicitly asked about wanting ESG-focused solutions first, before offering anything else. The move might therefore be in anticipation of this regulation becoming standard around the world in the future. If you are looking into a video topic, do consider taking a closer look at the EU Sustainable Finance framework and the EU taxonomy for sustainable activities.
Indeed
What the heck is going on…? I’m losing my mind. The point is *not* ESG, are you people high??
The point is that wealth is insanely concentrated in the hands of a handful of individuals!!! It literally doesn’t matter what their investment philosophy is, they have an absurd and unprecedented amount of power!
The systemic societal risk due to the potential for bad decision-making by unelected bureaucrats and corporate executives *is the problem.*
The throne is built, it hardly matters what conspiracy-of-the-month portfolio they operate.
Hasn't the EU had enough of falling behind the global growth curve yet?
@@IFRYRCEis growth everything? Where has that gotten all the countries to have most recently topped the growth charts? Many have come crashing down or are teetering on crisis for neglecting other priorities in the name of growth statistics.
ESG is financial wokism. Won’t solve anything but will put unaccountable entities in control of how companies are run
Cut to shadowy character in an S&P meeting room, "It sure would be a shame if you got dropped from the S&P 500 index, wouldn't it?"
The multiple layers of obfuscation exist by design. At the end of the day they have influence and more influence than a private group should have over such a large proportion of the economic liquidity.
If you bother to look into the percentages of which they own companies, it is often 5% or less.
Not to mention this assumes 1:1 voting rights, which often isn’t the case as often the founders of the company deliberately stack the voting rights towards themselves far over the percentage of which they own the company.
Not his fault you are financially illiterate.
your favourite Fox News, owned by the Murdoch family, have 39.4% of the voting power despite owning only 14% of the shares 🤫🤣
If you want a master class in voting power obfuscation, look up the Lee family’s control of Samsung. Absolute art if it wasn’t so dystopian and late stage capitalism.
How robot Zucc has rigged it for himself is pretty funny too if it wasn’t so dystopian either.
Blackrock and Vanguard don’t control shit.
Good, let's go socialist and nacionalize everything then!
@@lubu2960"got a bad cut on my leg, better chop the whole thing off instead of using a bandage!"
@@lubu2960 what are you, 13?
I would need to read those ESG studies, but my gut feeling is they are probably highly suspect. Just from what you presented, none of them seem to be directly referencing ESG, nor the most controversial part of ESG (forced diversity at the expense of merit). We have to remember these kinds of surveys are easily manipulated by the wording of the questions, or even the order in which the questions were asked.
Note that he boils down the entirety of ESG to ‘environmentalism’ and ‘sustainability.’
Almost like he’s trying to sneak past the rest of it.
@@blaneb8879 ‘environmentalism’ and ‘sustainability’, the ones where actual short-term sacrifices have to be made for long-term sustainability, rather than paying for some diversity hires or czars and sensitivity training, which is really just a way out without taking actual responsibility for sustainability.
Nail on the head.
The great thing about ESG is it's so fuzzy. What does it mean? E or S or G and in what proportion? Who gets to decide?
just enough for you to taste it all, but not so much it's all that you taste
Nobody, and everybody. ESG is probably better seen as a statement of general intent rather than a hard and fast set of rules that someone's going to follow. And, of course, to make things even fuzzier, not everyone making that statement of intent actually intends to do what they say they will. :P
A lot of people see the whole 'you decide what ESG means, there are not hard and fast rules' thing as a bug (and in the sense that it allows for greenwashing, it absolutely is a problem), but I think on the whole, it's a feature. The finance industry as a whole seems to be very, very good at twisting the rules so that they can follow them by the letter while ignoring what those rules were intended to accomplish. On something like this, where actual legislation would give little to no benefit, it might be better to take away their ability to point to rules and say 'See? We're following them!'.
Excellent and balanced perspective. Loved it
When focusing on conspiratorial idea, focus is taken away from the very real problems that large investment companies cause. Companies like BlackRock have been buying up property in many European cities and raising the rent significantly. This affects real people directly. In Denmark we used to have laws regulating who and how one could own homes. These conveniently changed and the new investors have been raking in cash since.
Investment companies have a strong incentive to to change markets to their advantage and changed laws in Europe often seem to favour their interests.
BlackRock doesn’t need strong leverage to influence CEOs or companies. Just a little bit. A little inconvenience in the fast paced world of C suite is more costly to decision makers than simply complying. Same principle applies to minority ownership. It doesn’t matter that BlackRock has a minority stake because it’s large enough concentrated in one entity.
The proposition that a company with tiny shares (most of which are passive investments on behalf of their clients) in a bunch of companies can somehow concentrate those hodgepodge of shares into decisive influence - all simultaneously and without being watered down by the millions of other factors and shareowners- to influence the economy or world is ludicrous. You're assuming that somehow Blackrock is this illuminati legion of doom that has the intelligence and administrative power greater than any AI or government in human history, rather than thinking that maybe, just maybe, the people telling you they rule the world are full of sh*t and are taking advantage of your gullibility for views
Thanks! It still does appear that State Street and BlackRock have more of a bias for ESG - while Vanguard and Fidelity seem to have less. I read somewhere that an officer at Vanguard said that they're only duty is to its investors, and has since adopted much fewer ESG initiatives. So, if Vanguard can do it, and they're seeing the same risks in the market, then that shows me that BR and SS are still using their influence to an extent. Granted, it's probably less than the hype, as you've pointed out, but it does appear to be one of their priorities.
All they really need to do is cater to their customers.
The people want ESG flavored funds, make some ESG flavor funds.
If people want non-gmo organic guns and ammo makers that like square dancing,
then make a non-gmo organic guns and ammo makers that like square dancing fund.
Vanguard and Blackrock we know what's up. Vanguard is Jack Bogle's company and he hates what he sees as predatory fees. Blackrock is run by Larry Fink and he thinks his investors can change company behavior to the better.
Seems like that's more just difference in how they view risk. BR and SS also pretty clearly state that their only duty is to investors. They are just taking the position that there is more risk to mitigate with ESG measures.
Maybe Bogle's soul hates predatory fees, but his body in stone cold.@@samsonsoturian6013
Great explanation. My main concern would be the possibility that, if either firm ever had a major accounting fraud scandal, the results would be far larger due to how much of the market they manage. I haven't seen anything that suggests accounting issues for either company, but after so many previously assumed to be honest corporations running into audit and compliance issues, it makes me wonder if any one entity should manage such a large portion of the market. How many books could a rogue Blackrock or Vanguard manager cook if managers did cook books?
Not fraud, but I have questioned if having an obligation to buy from a certain basket of stocks has created a feedback loop that pumps a certain basket of stock.
It feels like the argument is 'The investors could stop them, so they're not really controlling anything." here. People's approval for the idea or even specifics of ESG may easily come from them being unaware of aspects of it. Neither of these seem to address the negative claims made about ESG and don't prove that Blackrock and Vanguard aren't pushing an agenda.
did you really watch the whole video lol?
@@TheInfectous Yes. So you can tell me what I've missed.
@@TheInfectous逃げんなや
Thanks for this much more unbiased approach to explaining the matter
When I first started getting into finance & investing I was watching so much YT content on the subject as I was excited to learn and get into this new space. Over time my consumption of financial content has decreased significantly, but I always come back to your channel. You've easily become my favorite finance channel, especially when it comes to big stories people are freaking out about since you do such a good job of yes highlighting the very real reasons people may freak out but also pouring some cold water over the height of those fears and explaining why it's not as bad as we think 99% of the time. Keep up the amazing work!
Wouldn’t trust those studies on support for ESG. 9/10 of people will always choose a higher account balance at the end of the day than to knowingly invest in underperforming invests that call themselves “green”
This is by far your best video.
Have an upvote sir!
This video is on point. I used to work from BlackRock and he makes a great point: these asset managers act as agents on behalf of their clients. Their clients are making the decisions to invest in countries, indexes, markets, themes, sectors, factors, etc. Also, a huge amount of assets are managed on behalf of big institutional investors like pension funds, insurance companies, etc. They don’t control them - that’s just nonsense.
It's kind of like how individuals have voting power with the government. I don't get to choose how the gov spends money (say money towards various forms of welfare), but I do get voting power that determines if the money is spent on homelessness or food for struggling, for example
This is why we need pass-through proxy voting for funds. It probably doesn’t make sense to allow fine-grained voting, like voting your Google shares within a broad-market fund. But you could select from preference classes, perhaps offered by third parties who post a transparent slate of votes.
Thank you for this video. Could you also discuss BIS and WEF in your future videos?
Always love the plain, cold and objective financial truth. As a CFA candidate, this is very well made
Here is something to think about. This guy works for a company that black rock most likely has stake in . This guy if black rock offered him a position he will take it . There s no way he will speak the truth. For example ESG is bullshit. Telsa has lower ESG score than all the oil companies. Explain that logic .lmao😂
There isn't any certainty when money manage can go bankrupt in a snap 🫰
So you don't hold a CFA....."CFA candidate" is such a cringe label to give yourself lol
@@DevinRitroskyTechnicaly he's correct. I'm an actual investment licensed Financial Advisor and CFA candidate is what it's litteraly called when you are in a professional designation program. It's not some cringe name he decided to call himself contrary to what you just said.
@@Lazaven using "CFA candidate" is just saying you have the credibility of a student. There are many CFA candidates, few CFA holders.
This is the first content I've heard about this issue that makes sense. Thanks very much!
You explain this all VERY well, great effort!
While I am a fan and appreciate your Be Calm attitude toward hysterical financial news, your thorough-going, all-encompassing, anti-conspiracy stance and tendency to downplay even true conspiracies is in itself a form of naivety. Power and Money are proven to corrupt both institutions, including churches and governments, and individuals virtually every day. Common Sense dictates that ordinary folks with their severely limited information and influence should be eternally skeptical and vigilant.
That was really well done. You addressed all the points I had to argue against the premise. I was worried that you had been comprised.
They are the main shareholders in every major company in every sector on the planet.
One of jack Vogel's last pieces of advice before he died was beware of vanguard, blackrock, and state street. Index funds were his gift to the middle class but the influence these companies have because of those funds cannot be denied.
they dont own your share ownership in the companies tho.... people just like conspiracy. if blackrock goes bankrupt tomorrow you still got your shares. we live in a populist world.
@@ricardodelacrvz1400 all that money in assets? You don't think that translates to massive influence? Warren buffet was on an interview on cnbc and said he wasn't a fan of taco bell, their parent company yum brands fell 3% a few seconds later.
Guess Blackrock now owns Plain Bagel
What's plain bagel's ethnicity? Anyone able to find out?
Sadly, you probably really believe that.
Is ESG a gimmick used by Larry Fink to increase Blackrock's MER?
Yup
Thanks for this video. Keep hearing from people around me who don't invest talk about stuff like this.
Monopoly busting time??
Theodore Roosevelt is rolling in his grave with thse modern monopolies.
Today's episode is brought to you by...Blackrock.
Everything I dont like is propaganda too!
More than 5% is considered a Majority, not minority shareholder legally. But you're right that their influence on Company's decision is limited to the number of Board Seats they hold and able to influence. In reality, most Executives will be pandering nervously around to their wants and needs, just ask any of their employees.
I appreciate the analysis, but I don't think he really acknowledges how much influence having 3 directors on a board, can provide. Take a look at what has happened at Disney, who the largest shareholders are and the cause of the decline in that company and its share price. At no point do they seem to want to change their policies to focus on the shareholders and customers. It is criminal.
I am glad to found your video and speaking on the technicalities... However, we all know that there is a difference between what can be done and what people or companies actually do
Any time you watch the CEO of these three companies they talk about forcing the hand of other corporations for ESG goals. I will believe their words like that when they come out of their mouth
"I will believe the CEO when he says something that aligns with my narrative"
Why would you trust the CEO of an investment firm bragging about how much influence his firm has? He is very obviously playing this up to appeal to potential investors in his own company by going "hey look if you give your money to me I'll get the companies to do what you want".
@@hedgehog3180 when they lay their plans bare like that, its hard to not take it seriously. Anything else they say though take with a grain of salt.
Because thats not what people want. It runs directly against the majority, which does not in fact want forced diversity and inclusion pumped into the comapnies theyve invested in@hedgehog3180
@@kagakai7729 You are quite literally rejecting "coming from the horse's mouth" because you don't want to believe it LOL
Thank you so much for this incredibly informative video! I just don't have the financial knowledge to be able to discern these sorts of things, so having someone break this down in a very clear, reasonable and evidence-based way is extremely helpful, and I hope will help me navigate content which contains this sort of misinformation around Vanguard/BlackRock a little easier. I also learned a useful new word today - ESG. Thanks so much!
Evidence based way? This guy downplays the power and danger Blackrock holds lol
Thank you for this video. My one friend always has the doom and conspiracy theory to these sorts of things and I never know where he's coming from, but you explained it very well at the start
It's a silly conspiracy theory until 20 years later it turns out to be true.
Financial noobz: **today's economics is dumb and outdated, their models don't consider social, environmental and other factors**
Blackrock and Vanguard: *implements modern day measures to include external factors involving customers as well*
Financial noobz: **WOKE CONSPIRACY!!!!**
But in all seriousness: thank you very much for covering this topic with plain (I see what you did there!), straightforward and professional explanation through research.
It's one thing that the vast majority of the population is still financially illiterate, vut having these loonies spreading false information based on feelings and assumptions is very alarming.
I hope this channel gets more traction. Such a valuable asset in keeping people calm.
Is actually funny how little you know. Vanguard just bought, gutted and irreversibly destroyed the quality of the six figure product that we build. They are so cheap that they sold the metal fixtures in the bathrooms where showers were and we have to bring outer own toilet paper. I'm not from Boeing. Though they just bought them and since planes are losing doors. But keep thinking they have no real influence.
The title makes it sound like Bagel is making a CZcams apology
While I view all massive institutions with suspicion, I always want to find the pieces of banality that are hidden in the conspiracies. Thanks for providing that for me. At least I can count on the Bagel.
Who controls the world then? Food for thought. Don't marry any source. Don't trust anyone. Collect and compare.
True power lies in who votes on the board of directors for the CEO.
The CEO can do all sorts of legal but morally dubious conflict of interest bs and get away with it under the law.
Kinda like we work.
The director votes that index fund managers have is valuable- and is often exercised in discreet ways not known to the ultimate beneficial owners of the stocks.
There are companies who commit multi-billion dollar frauds over many years, with "highly qualified and competent" board and committee members. Boards are questionable as protectors of investors who dont sit in the board.
True, but the real powers lies within the capitalism system itself.
thank you for this video, I had no clue about how these asset managers operate!
Thank you so much for this video. I actually tapped into this topic a little bit. A lot of articles/videos are quite conspiratory so i appreciate the insight from somebody trustworthy in the investing space.
yeah conspiratorial. cool term
It's a silly conspiracy theory until 20 years later it turns out to be true.
ESG is the organic label of investing. Guns, Oil, bad...labor exploitation? A-OK!
ethical labour practices is almost always the first thing mentioned when talking about the S in esg
@@_blueeyes lol, have you seen ESG prospectuses?
"Secret puppet masters" and in the next sentence: "If you look up the top shareholder for that company". So not that secret.
It's how you know it's bullshit
@theplainbagel what software do you use to make the graphics of your video?
Yup, clarified! Always appreciate your videos
Well, yes -6 T may be in index funds. That still leaves over 2T which is bigger than the gdp of nearly all countries in the world. Also, when you control that amount of money, it comes with insane power and a ticket to the boys club. There absolutely are major issues here and they’re tied to the corruption problem we see in politics and elsewhere.
Yes, but even the actively managed funds are hard to use as leverage. An actively managed fund will often times invest in a sector of the economy, like for example tech, or healthcare, etc. The same fund manager will usually have both an actively managed and a passively managed fund in the same sector competing against each other. So in this example your actively managed tech fund should theoretically have a higher rate of return because the fund manager is buying and selling assets frequently to try to beat the market, but it will also have a higher operating cost because you need analysts to anticipate the market and more staff to execute trades, etc. and therefore the actively managed fund has a higher expense ratio that is passed on to the client who invested in it. If you try to use your actively managed fund as leverage, its rate of return will drop because you are not investing to maximize returns and now the passively managed fund that has a lower operating cost will also outperform your actively managed fund and investors will just switch to the passive fund for higher returns and lower costs. As money flows out of the active fund you lose your leverage. All the tech company being targeted would have to do to resist the actively managed fund manipulation is wait, and the leverage against them would evaporate as investors went into the passively managed fund.
Basically, it's really hard to use other people's money as leverage especially when you're legally obligated not to. The biggest problem with these fund managers is that they currently retain most of the share voting rights, but if they pass those rights on to the individual investors instead, then there really won't be much leverage at all.
Hmm very good points.
If the policies Blackrock's CEO is (in his own words) forcing on these companies, don't work at the end of the day, then investors will just switch to passive funds.
Well, unless the cost of managing the active funds are in some part minimized by the Blackrock itself and their size.
I would like to know, are you in any way concerned about the ESG score? Or do you think that none of it could feasibly be a problem?
@@Chronically_ChiII I’m very concerned with ESG score. I think even before getting into the societal problems it is causing (and will cause in the future), it’s creating all kinds of market inefficiencies. It’s literally made companies act in their own WORST interests, so shareholders and more importantly consumers are hurt. All economic theory and modeling goes out the window if you suddenly have companies acting against their profit maximizing decisions. And I don’t want to understate what I think the societal impacts will be - long term I think this is more damaging.
@@Chronically_ChiII Blackrock's CEO's obsession with ESG is a problem, but not because he can somehow leverage the money his company manages to push that agenda.
It's a problem because he is personally wealthy and influential and he will utilize his personal wealth and influence to further this ridiculous agenda.
ESG is a problem not because of companies like Blackrock, but because of groups like the World Economic Forum who share this ESG goal and install plants in governments around the world to further the ESG agenda, among other insane policies, and I have no doubt the Blackrock CEO helps fund or influence people to make that happen on a personal level with the wealth he has made from his company.
Basically this dude is a bad dude and a problem, but his influence is less widespread than people think and done through other means, although that doesn't make him harmless by any stretch of the imagination.
The only problem that Blackrock the company is directly responsible for is the creation of these stupid ESG funds which are mutual funds or ETFs that are created specifically to push ESG and trick gullible people into thinking they are investing in things that will save the world. Those funds are actual political pet projects sold as investments to unsuspecting people.
I feel like you're really downplaying influence of those institutions. Their managers can vote trillions of dollars of shares however they want:
-ETFs are designed to be a passive long-term investment, for people who won't bother to track how their fund is voting
-they also won't hold managers responsible for their returns, as indexes are viewed as reflection of the economy or particular sector, thus it's government to blame if they go down
-fiduciary duty is a fiction - unless there's a really extreme negligence, managers can claim they have acted the way they have considered best for their clients, and it will be impossible to prove otherwise
To prevent undue influence I think either ETF managers should be forbidden from voting their shares, or forced to create a system for their clients to vote shares they proportionally own (and abstain from voting shares for which there are no instructions)
You have an informed opinion on 10,000 different stocks and have read each proposal?
You as the customer with the funds hold them responsible for returns - you can withdraw your money at any time via selling the ETF shares you own.
@@derek8315 No, I can vote on proposals I'm interested in, and abstain on others and let more active shareholders make the decisions. There's no reason to give significant voting power to random fund managers who don't actually own any stock, and their only job is to follow given index - voting shouldn't be a part of it.
@@ChineseKiwi Right, but vast majority of ETF clients don't care about how their fund votes, and just want to have their investment follow given index. If the same people owned shares directly it's safe assumption they wouldn't vote at all, and let more involved shareholders make decisions, so ETFs should do that as well.
Excellent explanation that is much needed.
Superb analysis. Thank you.
I have a genuine question tho,
Even if they are only "holding" the shares of the thousands of people investing in stocks, don't they get a certain control over the running / decisions made within the boards of these companies?
The issue isn't what they own on paper - it's what they CONTROL due to the ability they have to invest or withhold investment. The difference between money and power; look at the most powerful families in the world, that list doesn't overlap the richest individuals in the world the way most people would expect.
Like he said, for most of their assets under management, they have to track an index so they don't have control, and they only hold a minority stake in most of the companies they invest in so they don't have that much voting power, and they have recently started passing their voting power on to their investors.
I feel like this video potentially dismisses the power of Blackrock through primarily math. He doesnt seem to account for influence. That influence could very easily lead to Dominos effects that leads to the kind of power and control he claims they dont have already.
some circularity or feedback comes from pension funds that largely are for government workers, where the government's interest determines whether to stay with the fund or not, opening the opportunity for political influence on these firms' influence.
Is there a way that an index fund could be setup so that voting rights are still retained by the shares of the fund? It seems a little complicated, but in theory it should be possible, right?
Vanguard (and I believe Blackrock) are working on proxy voting choice.
This kind of clearly spoken, level-headed explanation of a complex concept is why I think this is THE BEST finance channel on youtube.
This channel is transparent neo-liberal propaganda. He did an entire video on the housing market in Canada without address the demand side of the equation because it's politically inconvenient.
I’m glad there are people like you to explain these things
Richard, I think the latter half of your video (where you focus on shareholder voting rights) is disingenuous because you do not mention
i) shareholder voting turnout in board elections and other decisions, where 5-10% float 'turnout' is of outsize influence
ii) the abrogation of shareholder rights inherent in any nonmonetary priorities of a proxy--it is reasonable to expect that share owners want to maximize their market returns, and it is in this spirit that the laws allowing Blackrock / Vanguard / etc. to exercise voting rights on behalf of the fund owners were written (consider Milton Friedman's famous op-ed). It is NOT reasonable to expect that shareholders prioritize nebulously defined 'ESG' criteria, given the agenda's unpopularity among the population at large.
iii) why should Larry Fink be allowed to impose unpopular corporate governance mandates by fiat when these measures fail to pass through the popularly elected legislature, by leveraging the voting rights of shares that are not even his?
Overall this is a disappointing video, and not because of your perspective--rather, because you made no honest effort to understand why this is all so controversial.
I'd love to see more about ESG and the emerging forces involved in those environmental and social issues, with what historically has been a 'tragedy of the commons' without any market incentives under capitalism.
🎯
Oh, you sweet summer child. This has NOTHING to do with actually fixing any social or environmental issues, this is a profit center and political correctness run amuck, pure and simple. They won't actually be fixing anything, they will just be jumping through hoops to get a check box, and once we know the criteria, then figuring out how to scam it will be the first thing these companies do. Also, having a certain sex part or skin color on a board does NOTHING to improve 'governance', its purely for show, in fact, it might even make governance worse for shareholders, if the board are a bunch of diversity hire yes men and women, just there to get a check for very little actual work, who also might not know what to do in a crisis.
Same. ESG has become a political talking point. And most of those talking about it don't know what they're talking about, or in some cases, are blatantly lying. It would be good to dispel the smoke and mirrors and learn more about this dynamic.
Dupont is going to get top marks and tout their ESG score all while continuing to pollute the ever loving shit out of wherever they're based.
ESG is nothing more than the next buzzword political tool that government "regulators" and public corp execs will use to pull the wool over our eyes. The current level of regulation has been so abused that we're at a point where the little guy can no longer ever hope to compete, and the big guys will always be "too big to fail." This is proto-fascist economics
@johnsmithe4656 except it has been a net negative outside of a few very edge cases....
They're who's telling Disney whom to pander to.
I feel like one of the main assumptions that these funds have no say on how money is allocated is similar to how corporations had no agency over bond ratings from Moodys, S&P, etc in 2008. I'm paranoid!
Well a tick and subscribe has to be automatic after an educational/video of this quality is posted. But I'm already subscribed, as in long long ago: so I just ticked :) A brilliant video, I just don't know how I got this far without this character of powerful/basic insight
They not only own companies, they also own the houses. I would like to know their impact on the housing crisis.
czcams.com/video/Q6pu9Ixqqxo/video.html
@@ThePlainBagelBlackrock's clients don't seem to have a say on its meddling of a land that's known for being Europe's "breadbasket" which is coincidentally in a WAR. 🤔
this video sponsored by BlackRock and Vanguard 😂
Yea I just lost a ton of respect for this dude lol
This brings up my only complaint about ETFs. As an owner of ETFs, it is the asset managers that control the votes for the shares held inside that ETF. I don’t have any say, which I feel I should since I own the ETF.
Own all the shares in the holdings and micromanage them yourself then…Oh don’t want to? Then don’t complain.
Hey, good video. I was wondering if you could have done a section on what influence these companies DO have? You mentioned several times that the power and influence these companies have is often misrepresented and exaggerated, but also still not negligible. Also that breaking up the companies might still be a good idea? And any company that has a close relationship to the Whitehouse (as Blackrock seems to) just reeks of ... issues...
I'm glad you put this out. It was driving me insane to explain to people that aum is not the same thing as ownership in the traditional sense (owning shares in a company). I wish people would educate themselves with this video before they spew nonsense
Who controls the world then? Food for thought. Don't marry any source. Don't trust anyone. Collect and compare.