2022 Asset Return [OC]Submitted by rosetechnology t3_102o8fo in dataisbeautiful
pale_blue_dots t1_j2wuxeu wrote
Reply to comment by Eli_Renfro in 2022 Asset Return [OC] by rosetechnology
Not sure why you're talking about a conspiracy - what is laid out here is entirely factual. If there's anything you see that's not, please feel free to point it out and include a source.
If you/we are to buy index fund shares and keep them in a broker those shares are - unequivocally - not in your own name.
>Stocks held in street name may be loaned to short-sellers and resold to others. So, it is possible for more than one person to own shares held in street name.
>...stocks can be lent repeatedly, allowing three or four owners to cast votes based on holdings of the same shares.
>The Hazlet, New Jersey–based Securities Transfer Association, a trade group for stock transfer agents, reviewed 341 shareholder votes in corporate contests in 2005. It found evidence of overvoting—the submission of too many ballots—in all 341 cases.
... which is problematic, to say the least. :/
Edit: I don't know of any other business that functions like that. You "buy/purchase" something in full, but that thing is not, technically, yours - and furthermore can be "duplicated" numerous times and lent out without your knowledge.
Eli_Renfro t1_j2x1aea wrote
All conspiracy theorists are only stating facts, so you aren't alone there. That those facts are entirely irrelevant and taken out of context is immaterial.
People have been using brokers to buy shares since the stock market began. All brokers are regulated by FINRA and the SEC. You're heavily implying that these "things to be aware of" are material, when in fact they are not. Owning shares through a broker is just as safe as doing the work to buy them yourself. It's definitely not "problematic, to say the least". Your technicalities are immaterial and you're just spreading FUD. An example of your baseless FUD that you are claiming as "fact".
>Those shares, if not in your own name, are are, very, very, very, very likely, being used against you in convoluted schemes similar to 2008 Housing Derivative Meltdown
I'm sure you'll have some "brilliant" reply with a list of some more meaningless technicalities and baseless claims like the one above, but the crux of the matter is that none of your claims mean anything. You're just noise, like all of the pundits predicting the next crash. Good investors tune out noise. Which I will now do to you.
Anyone reading this can check out /r/bogleheads if you want examples of what good investing looks like and why it's wise to ignore this type of noise.
pale_blue_dots t1_j2x4ggb wrote
Ok, so you have nothing substantive to offer in a rebuttal. Just the general Trumpian-esque bullshit.
Again, this isn't "conspiracy" - at least in the way you're using it - it's all right there in Bloomberg Market articles and Investopedia entries. It's really not that difficult to understand. You simply do not own your shares if they're not directly registered with the transfer agent & company and, as such, they can be used in such a way as to harm your investment through myriad avenues, mostly from hedge fund algorithms and dubiously legal derivatives and swaps.
Seems to me Payment-for-Order-Flow being illegal in Canada, Europe, U.K, Australia, and Singapore - but legal in the U.S. - should be enough to tip someone off that something may be a little goofy, to say the least.
If anyone is interested in learning more about this in more depth, I'd recommend reading "Naked, Short, and Greedy" by S. Trimbath.
Edit: clarification
Edit2: it should be noted that FINRA (Financial Industry Regulatory Authority) and the NYSE are Self-Regulatory Organizations (SROs) - "We investigated ourselves and found no wrongdoing!. More importantly, though, the DTCC/Cede & Co. is also an SRO and it is impossible (for "regular people" - for non-executives of the DTCC) to tell the extent of the problem (namely Failure-to-Delivers, FTDs) throughout the system because they do not provide that information. This wouldn't be a problem if they just came clean - which can, unequivocally and certainly, be done in a safe and privacy-oriented way by publishing related raw numbers that can then be cross-referenced with public information and data.
Furthermore, the SEC has made it obvious, for whatever reason, that they only fine companies pennies compared to 100s of dollars in profits - meaning these companies just see it as a cost of business and nothing to really be worried about. The regulatory capture andor corruption is palpable.
When there's talk about "wealth inequality" this and that and "rich getting richer" and "CEO pay has risen X amount while workers' wages have remained flat" - these are some of the major, key mechanisms by which that is happening.
TrueBirch t1_j2yj9bw wrote
Sometimes I get letters in the mail saying there's an upcoming shareholder vote. They tell me which way management wants me to vote. Sometimes I log on to vote and sometimes I don't. There are plenty of small-dollar investors who will ignore all of those letters if they hold stock in their own name, which means there's no practical difference for them to own stock outright. Telling people "Don't spend beyond your means and put the excess money in a tax-preferred index fund" is still generally good advice.
pale_blue_dots t1_j2z9wa8 wrote
I'm not arguing against that necessarily. Sure, that is good to do and know as an option. It's also good to be aware of the other mechanisms and functions that may be at play.
At the bottom of this comment is a research paper that speaks to the importance of having a robust, honest, factual, accurate corporate voting system if you're interested. If we don't have that, then (as you can read from that paper), companies can be entirely destroyed or "forced" to do things that the majority do not want done/performed. It goes against the very foundation of democracy and voting.
TrueBirch t1_j32zfjo wrote
That was an interesting article. From a corporate governance perspective, it's very bad. I look at things like Apple's multi-billion dollar headquarters and wonder why they didn't shave a billion off the cost and issue a dividend instead.
For typical people with a few grand in the bank, using a broker and an index fund remains good advice. Especially when you can get a tax benefit (401k, HSA, 529, etc).
pale_blue_dots t1_j3347uz wrote
In some ways, maybe, sure. But people need to understand that shares held with a broker means you don't really own them - they don't have your name on them and, subsequently, they can (and, statistically, will) be used in convoluted schemes by the army of quants/greedy psychos/"kids"/algorithms/naïve/etc... working at hedge funds, investment banks, and the like - such that value is lost and consolidated in fewer and fewer hands.
When there's talk about "wealth inequality" this and that and "rich getting richer" and "CEO pay has risen X amount while workers' wages have remained flat" - these are some of the major, key mechanisms by which that is happening.
The problem with "phantom shares" born of lending, shorting, and failure-to-delivers isn't only relegated to corporate governance and voting as you may/are thinking. It means companies can be destroyed or dubiously changed -- that means lives, livelihoods, families, pensions, retirements, and more are destroyed, changed, malformed, and so on.
Average shareholders think their company has XYZ shares, but really there are XYZ10 shares - as such the value has been unjustly (and sometimes illegally) degraded.
If you didn't see it already, this speaks to the issue, as does this, and here, too which is a little more specific, but laid out in pretty easy to understand terms.
TrueBirch t1_j334r8g wrote
The real question is how people can invest who would otherwise keep extra cash in their savings account. An index fund exacerbates some bad behaviors, but it preserves value better than keeping cash, which is how most people are taught to save when they start working.
pale_blue_dots t1_j33eteu wrote
You mean enticing people to invest that otherwise would not / who are just putting it in savings?
Aside from that, yeah, I don't disagree that index funds are good in many respects.
Within context of this discussion, they would be performing better for individuals and the pensions and so on without all the legal and illegal lobbied-for loopholes that result in skimming and manipulation. It could be effectively argued through the links here and a few others (and, for example, a book titled Naked, Short, and Greedy that lays a lot of this or very clearly, in both data and abstractly) that the middle and lower classes have been... robbed... of billions and billions and billions (and billions) of dollars over the past decade alone.
AftyOfTheUK t1_j2xja5k wrote
> It's really not that difficult to understand.
He has understand it. I have. We have.
There is no substantial benefit to using direct registration. There is also no substantial risk or negative impact to not using it.
It's just a meme at this point paraded around by the sad remnants of the WSB crowds who want to be revered by other people for their knowledge.
But that knowledge has little to no real value, which is why the GP suggested it is noise, and why anyone reasonable should tune it out.
pale_blue_dots t1_j2xmq48 wrote
I want to know my vote counts in the quarterly voting.
You don't find it odd that there's too many votes in almost all corporate elections/votes? And there needs to be a reduction of votes made in an arbitrary way? The entire course of a company's trajectory can be changed that way.
I don't want my shares lent out multiple times in various schemes.
I guess you don't. Ok, that's really naive and short-sighted - and counter to competent due diligence and wise investing, in my opinion, but that's on you.
>But that knowledge has little to no real value
That's not your decision to make for people and it's folly and ridiculously idiotic for you to assert otherwise. Apparently lots of people find it valuable.
This is financial education and information that should be common-knowledge and it isn't.
People always complain about no one having enough financial knowledge/education - well here's some.
AftyOfTheUK t1_j2z1tpe wrote
>You don't find it odd that there's too many votes in almost all corporate elections/votes?
It would be odd if it was unusual. It's not unusual though, so no it's not odd.
The question you should be asking is "does it matter". That is to say, "is this of real consequence in my life".
>counter to competent due diligence and wise investing
What's counter to wise investing is spending huge amounts of time on fringe issues that don't have a significant detrimental effect on you.
>That's not your decision to make for people
Oh? But it's yours?
>This is financial education and information that should be common-knowledge and it isn't.
It isn't because nobody fucking cares. Because it doesn't fucking matter.
If, suddenly, a company with 100 million shares has 100 trillion votes turn up, I'll start to get worried about the future of our financial system. But when a company with 100 million shares has 101 million shares turn up, I'm not going to get my panties in a twist.
pale_blue_dots t1_j2z8zys wrote
> It would be odd if it was unusual. It's not unusual though, so no it's not odd
The fact more votes come in than shares is odd and counter to every principle democracy and voting is founded upon.
>What's counter to wise investing is spending huge amounts of time on fringe issues that don't have a significant detrimental effect on you.
It's not a fringe issue, though. What are you talking about? The fact shares held in a brokerage aren't actually owned by the person purchasing them - and are lent out without people's knowledge - multiple times - is NOT a fringe issue. That word doesn't mean what you think it means.
>Oh? But it's yours?
What is here is educational information with reputable sources. You have nothing of the sort. In fact, you have emotion and subjective knee-jerk hand-waving bullshit.
>It isn't because nobody fucking cares. Because it doesn't fucking matter.
Huh? That's patently false on the face of it and just as much when learning more about it.
>But when a company with 100 million shares has 101 million shares turn up, I'm not going to get my panties in a twist.
>The New Vote Buying: Empty Voting and Hidden (Morphable) Ownership; As published in Southern California Law Review, Vol. 79, pp. 811-908, 2006; University of Texas Law, Law and Econ Research Paper No. 53
>Corporate law generally makes voting power proportional to economic ownership. This serves several goals. Economic ownership gives shareholders an incentive to exercise voting power well. The coupling of votes and shares makes possible the market for corporate control. The power of economic owners to elect directors is also a core basis for the legitimacy of managerial authority. Both theory and evidence generally support the importance of linking votes to economic interest. Yet the derivatives revolution and other capital markets developments now allow both outside investors and insiders to readily decouple economic ownership of shares from voting rights. This decoupling, which we call the new vote buying, has emerged as a worldwide issue in the past several years. It is largely hidden from public view and mostly untouched by current regulation.
>Hedge funds have been especially creative in decoupling voting rights from economic ownership. Sometimes they hold more votes than economic ownership - a pattern we call empty voting. In an extreme situation, a vote holder can have a negative economic interest and, thus, an incentive to vote in ways that reduce the company's share price. Sometimes investors hold more economic ownership than votes, though often with morphable voting rights - the de facto ability to acquire the votes if needed. We call this situation hidden (morphable) ownership because the economic ownership and (de facto) voting ownership are often not disclosed.
You're free to provide some sourced commentary andor rebuttals from professionals in the industry about any of this at any time rather than the hand-waiving bullshittery you're making a habit of.
The fact of the matter is you don't really care for democratic foundation and principles - which is made obvious by your comments here. Just admit it. Just fucking admit it already, geez. <smh> lol
AftyOfTheUK t1_j31864q wrote
>The fact shares held in a brokerage aren't actually owned by the person purchasing them - and are lent out without people's knowledge -
>
>multiple times - is NOT a fringe issue
It's a fringe issue, because it doesn't matter. If you think it matters, please explain what serious consequences have happened to all these people (because it's just about everyone, right?) as a result?
>You're free to provide some sourced commentary andor rebuttals from professionals in the industry about any of this
I don't need to provide any sources because I'm not debating you by claiming that what you said is untrue, inaccurate, misleading or false. I am telling you that it doesn't fucking matter. It's an irrelevance, a curiosity, something that is interesting only as a piece of a trivia on a London City pub quiz for banking toffs.
It doesn't matter because the outcome of what you're saying exists (which does exist) doesn't affect anyone - negatively or positively - in any meaningful degree.
pale_blue_dots t1_j335mvz wrote
Well, you'd be wrong to think it doesn't matter or make a difference "in any meaningful degree."
To start, the fact there are "phantom shares" aka synthetic shares through stock lending, short-selling ("naked" or otherwise), and indefinite failure-to-delivers (FTDs) results in severe degradation of a company's overall value. If someone is making and selling counterfeits of something - then that harms multiple parties - in this context, often including shareholders, customers, the company itself, and employees.
The problem isn't a one off thing - it's a common practice in the Mitt Romney-esque Bain Capital firms of the world. You can read more about the specifics in this.
As well, there are serious tax implications related to the whole thing for both individual investors and states. You can read more here (I tried to get the pages oriented in easy to read format, but when uploading they reverted; I tried to fix it a couple ways, but it wouldn't; nonetheless you can turn your head or save them to your comp and then do it yourself): page 1, page 2, page 3, page 4, page 5. As can be seen there, individual investors are paying far more in taxes than they should be - while states are getting far less (to the tune of hundreds and hundreds and hundreds of millions) every single year than they should be. The problem has only gotten worse in the past decade, so those estimates/numbers are now low.
When companies and individual investors fall into the sights of the larger hedge funds and banks, etc... it must be remembered that we're talking about people's livelihoods, families enjoying income and fruits of labor, standards of living maintained, pensions, retirements, and more. When we're talking about mechanisms and reasons for wealth inequality and the problems that arise and come from that, these are some of those major, key mechanisms.
AftyOfTheUK t1_j33iwqc wrote
>Well, you'd be wrong to think it doesn't matter or make a difference "in any meaningful degree."
Can you give me examples of people who have been harmed by these votes, and the events which caused the harm?
The links you sent appear not to be related to a problem around phantom shares and their voting rights, but instead relate to how companies handle the tax implications of FTDs. I don't know what percentage of the FTDs are caused by the phantom share issue you are talking about, but the entire problem the author highlights is that brokers are failing to keep track of which revenue is taxable versus which is not.
[deleted] t1_j34c3up wrote
[deleted]
pale_blue_dots t1_j34ci8c wrote
Let's back up a moment and make sure anyone reading (including yourself) that per your own statements, you ignore andor don't value the principles of basic democracy and voting. Perhaps you misspoke or didn't think things through and would like to change your mind, which I encourage you to do on all accounts and wouldn't fault you for.
>But when a company with 100 million shares has 101 million shares turn up, I'm not going to get my panties in a twist.
According to your feelings here, 1% of the vote isn't anything to get worried about andor to twist any knickers about or whack the ol' knob in an angry fashion about. It's well-known that many an election has come down to 1% of the vote - both politically and corporate-ly. Life and death, literally and figuratively and business-ly and socially and psychologically, hangs in that balance very often.
Furthermore, the votes associated with phantom shares and overvoting (via lending, shorting, and FTDs) have been found to be commonly far more than 1%. Again, out of 341 elections studied, all 341 found to have more votes than there should have been (see previous source here). Even if the issue were relegated to "only 1%" - it would be "only 1%" of nearly, possibly ALL elections happening now.
(Edited addendum): the whole "only 1%" thing is a red herring of sorts when viewed through Hu and Black's research (and a few others) - considering the relative ease associated with fixing elections through phantom shares; indeed, deceptive parties would naturally not want to create too big of a difference / waves in an election, as to make the charade appear plausible.
I see from your comment and post history that you're an avid "free market" advocate and big-time golfer and, likely, a conservative of sorts. You definitely don't like healthcare in the form of "universality" or "government sanctioned." That's fine - <shrug> - it's just somewhat (read: extremely) hypocritical and suspect that you find the dilution of company shares via phantom shares, both in a voting context, as well as a principled "free market," market efficiency, market equity, and fairness context, as nothing to worry about. That tells me you A) don't value the fundamentals of democracy & voting andor B) you're making money off the current cheating and deception (that's what it is at the end of the day, is cheating and deception) and are biased to the point of blindness and a troll-like, sea-lioning, gaslighting mindset andor C) you're misunderstanding the entirety of the situation and breadth of the problems.
With that said, if you haven't changed your mind on that position, then our values are wildly different - and your values are wildly different from almost the entirety of academia across the world, as well as politics, as well as within the average Joe and Jane world (of which is the vast, vast majority of the population on the planet), along with much of modern, reasonable, rational civilization. As such, there isn't much to talk about if your position hasn't changed.
Edit: addendum
pale_blue_dots t1_j34clxy wrote
The rest of this here is for anyone else who may be reading. (AftyoftheUK: if you haven't changed your mind on the above, don't worry about reading or responding to any of this!)
>but the entire problem the author highlights is that brokers are failing to keep track of which revenue is taxable versus which is not.
That's not the only implication related to that chapter and is a misunderstanding with relation it to the subject at hand. (If someone comes away with that then it needs to be re-read andor read the link below this paragraph as a clarification and suuplement.) The fact of the matter is you and your family and myself and family and a vast majority of people pay more in taxes than they should - while those responsible pay less. Furthermore, as already stated, individual states and associated citizens are losing due revenue year after year after year. See here for primary research on the subject. This equates to standard of living, health, education, well-being, and innumerable other issues.
>Further, investors incur economic damages when they are denied the use of funds between trade date and actual delivery date. Using publicly available data on FTDs in NYSE and NASDAQ "threshold securities" alone, I calculate that loss to have been $762 million in 2007. This is not a one-time loss, but an ongoing monetary loss to investors that will not diminish as long as the system tolerates FTDs.
(my emphasis; see here for source; "page 5")
>Can you give me examples of people who have been harmed by these votes, and the events which caused the harm?
The examples have already been given in the form of the links throughout the previous comments. This is like asking "Can you give any examples of the damage lead in gasoline AND the municipal water system has caused?" There are countless people harmed and countless lives destroyed.
For more reading someone can hunt through the shitshow that is "naked short selling" when searching. There's a lot to sift through; not all is accurate, but a lot is. As well, reading Naked, Short, and Greedy by S. Trimbath will give numerous examples (as an aside, if AftyoftheUK is reading (naughty chap, isn't he? Aren't you?): I will donate $40 to a charity of your choice and in your name if you order and prove you have the book - you don't even have to read it, but you should if you're intellectually honest and someone grandparents and grandchildren can respect and not be ashamed of).
There's also a documentary that came out in 2012 called "The Wall Street Conspiracy" which can be watched here for free. In it a numerous credible people including Robert Shapiro of Georgetown University (He holds a Ph.D. from Harvard University, a M.Sc. from the London School of Economics and Political Science, and an A.B. from the University of Chicago. He also has been a Fellow of the National Bureau of Economic Research, the Brookings Institution, and Harvard University.) and Wes Christian, a longtime "whistleblower" and attorney - both of which spoke relatively highly of the documentary. The movie The Big Short and Inside Job are also worth a watch which give some context and history. See here for more documentaries on the broader housing and derivative subject).
To end: it should be noted that FINRA (Financial Industry Regulatory Authority) and the NYSE are Self-Regulatory Organizations (SROs) - "We investigated ourselves and found no wrongdoing!. More importantly, though, the DTCC/Cede & Co. is also an SRO and it is impossible (for "regular people" - for non-executives of the DTCC) to tell the extent to which FTDs are laced throughout the system because they do not provide that information. This wouldn't be a problem if they just came clean - which can be done in a safe and privacy-oriented way by publishing related raw numbers that can then be cross-referenced with public information and data.
AftyOfTheUK t1_j36ohhr wrote
Just to confirm, after claiming that the issue of phantom shares/votes were a huge issue, and me pointing out that it's not a huge issue and asking you for examples of who has been harmed by this huge issue, I just wanted to confirm for anyone reading that:
you ignored all of my points, and my question, and tried to change the subject to talk about tax revenues - which I pointed out have nothing to do with your original point, and the problem you highlight is one related to proper recording of income, and not to phantom shares.
pale_blue_dots t1_j37klqx wrote
Booo lol .. you can't even say you agree with the basic tenets and foundations of democracy and voting Booo <smh> lol
I already told you, there are numerous examples in Naked, Short, and Greedy and I'll donate $40 to the charity of your choice if you order and prove you have the book - you don't even have you read it. As well, you can find numerous examples searching for "naked short selling."
The fact of the matter is...
You're a true disgrace and are intellectually dishonest and deceptive. Your grandparents would be ashamed of what you've become - and your grandchildren, if they knew the real you, would want nothing to do with you.
Booo go back to whatever grimy shithole you slithered out of.
... you can't even say you agree with the basic tenets and foundations of democracy and voting.
Edit: ... truly, go back to whatever grimy shithole you slithered out of....
... really. Just go away.
AftyOfTheUK t1_j3lotm6 wrote
So still trying to ignore my questions which you couldn't answer.
Got it.
pale_blue_dots t1_j3ml0lo wrote
It was answered you numbskull.
The fact of the matter is your position on democracy and voting is inconsistent with the near entirety of the civilized and educated world. As such, there's no point even talking any longer. You're a disgrace to everything a "good" andor "virtuous" person is and will be.
AftyOfTheUK t1_j3n637q wrote
>It was answered you numbskull.
It wasn't. You haven't given me any examples of people harmed by the things you're claiming is very very serious and very very bad.
>The fact of the matter is your position on democracy and voting is inconsistent with the near entirety of the civilized and educated world
I haven't expressed any position on that. I'm not sure who you've mistaken for me from another comment.
pale_blue_dots t1_j3n8u91 wrote
You're a liar.
AftyOfTheUK t1_j3o2fyc wrote
This is a public comment thread. Literally anyone can read it and see that I'm not lying.
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