Addressing the Blackrock/Vanguard Situation

Some online are claiming that Blackrock, Vanguard, and other massive asset managers secretly run the world. Let's look at the evidence.

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).

[jr]

People always want to believe a crazy conspiracy, but the truth is often far more boring

[ggwpBC]

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.

[glensmith]

ESG is heavily driven by senior leadership's drive to have a check box management system.

[Kujowolf]

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.

[westvirginiaglutenfreepepp]

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

[KB-cwdw]

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.

[echtogammut]

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.

[timochka]

I can't believe that the plain bagel has been targeted by Blackrock and Vanguard and was forced to make this video 😢

[markjohnson]

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.

[h.ar.]

Thank you! You’re one of the few channels that actually explores the nuances of this subject.

[eduardobranco]

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

[mrt.]

STOP BEING SO REASONABLE ... you're dousing my outrage 😂😂😂

Good job as always 🤩

[DeyvsonMoutinhoCaliman]

They not only own companies, they also own the houses. I would like to know their impact on the housing crisis.

[bubba]

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.

[zamasu_]

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.

[MattCRHughes]

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.”

[AaronBurr]

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.

[lukin]

It takes a strange mix of naive and conspiracy theorist to believe this financial asset management companies have no influence. You have to believe at the same time that the only way to control is to give direct orders and threats, and also believe that money gives no power.

[GetJesse]

You seem to oversimplify ESG by just covering the E and ignoring the SG.

[shotnick]

I think you still downplayed everything by factor 2 or 3. Like ESG it's one thing to say "there is no standard" vs reality, where Tesla received much lover score than tobacco companies.