These have become some of the most valuable companies on Earth. The idea that there are lapses in governance in these companies is insane. Any shareholder is buying in fully aware of the governance structure. Many because of it! Shareholders’ rights are clearly enumerated.
I agree many buy because of the governance structure and founders retaining control, but there is a lot of dumb money out there.
From Claude via stockanalysis.com: META — institutions 67.51%, insiders 13.49%, float 2.19B of 2.54B shares outstanding. That leaves roughly 19% as retail/other.
SPCX — institutions 5.95%, insiders 46.47%, float only 638.65M of 13.17B shares. Residual is ~47.6%, but that is not retail.
> Any shareholder is buying in fully aware of the governance structure.
This is laughable. Many shareholders don’t even know they own stock in these companies.
That’s an indictment on them. You should know where you’re putting your money and why. If you delegate this to a professional or influencer, you do not get to blame them. After all, you could just buy something you think you understand better like real estate or keep it in cash.
You don't get much of a say in how your retirement fund is invested.
How true is that these days? Sure, old-school pension funds are managed without any input from the future pensioners, but most 401ks (and similar) these days have a variety of investment options that the employee can choose from. Yes, there are some that have extremely limited options, but I'm not sure how common those are.
And once you've left the company and roll those 401ks over into IRAs, you can put them at whatever financial institution you want, many of which have more or less unlimited flexibility (within legality) with regard to what you can invest in.
Now, I know many employees just sort of adopt an "autopilot" attitude and don't pay much attention to their retirement account investments, but that's on them for ignoring this stuff. (The lack of general financial literacy, in the US at least, continues to disappoint me.)
So: yes, there are some people who don't have much of a say in how their retirement fund is invested, but my feeling is that those people are a small minority. I do think a large number (perhaps even a majority) of people do have the ability to direct their retirement investments, but either don't know they can do it, or can't be bothered. Again, though, that's on them for not educating themselves and playing a more active role in their financial future.
Exactly. If nothing else, you should know who you're supporting.
Many people wouldn't support SpaceX and Tesla if they knew more about Musk. Conversely, some other people who don't know much about him might want to support his companies.
The typical "investor" is an ETF these days.
Your standard SPY or VTI investor doesn't know jack diddly squat about shareholder rights, nor do they ever plan to invoke them.
Willful ignorance is not an excuse. If you buy into an ETF, you are delegating responsibility to the people who run the ETF (or the people who maintain the index that the ETF tracks), and you've decided you're ok with that, and are ok with whatever companies are in the index/ETF.
You can always decide to pick an ETF that doesn't invest in the companies you don't like, or invest in individual stocks if you have the time and stomach for it.
I'm not saying I like this turn of events.
I'm saying it's how the world works. The majority of pension funds (public or private) and 401k plans are simply passive index funds with nearly no direct voting rights (and at best very limited, indirect voting rights).
> The majority of pension funds (public or private) and 401k plans are simply passive index funds
That’s completely wrong.
Most 401k plans have by far more active fund options than passive fund options. However, more and more dollars are tiling towards the passive index funds, i.e. through consumer choice.
Where do you get your information from?
you should have a look at proxy firms. you would be surprised
Could you explain to me how an investor owning SPY shares gets to control the proxy vote?
Oh, don't worry. I already know the answer. I'm asking if YOU can tell me the answer.
You can buy IVV instead and get the same exposure but this time you get to vote. Or you could just not own spy and buy the shares individually.
What 401k program do you or your peers have that allows you to buy funds outside of the few, selected by the 401k manager?
I certainly can't buy individual shares in my 401k program. And very, very few programs I'm aware of ever offered that as an option.
they typically offer a brokerage option. fidelity and vanguard both offered this when I had them. if that wasn't on the table I'd roll it into something that gave me flexibility.
In the case of Spacex that's literally not the case, when private investors bought shares the company was already a decade old and had a single class of shares. It's only since the IPO that the company switched to a dual structure, multiple years after private investors bought in. And class-B shares have only been given to Elon and a few of his friends.
The private investors were free to sue or arbitrage, as it is a private matter.
There were disputes around SpaceX secondary market/special purpose vehicle shares before the listing, but they were all settled out of court, AFAIK.