Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I suppose the reference is self serving in the sense that an oft-quoted statement is self-serving: "What's good for GM is good for the country." The actual statement was "What's good for our country was good for General Motors and vice versa." (Source courtesy of Wikipedia)
We're all in this together, whether "this" is economic interests as with the former GM CEO or "this" is public health as with Vanguard here.
As to Vanguard's preference to work behind the scenes, it could have some validity but is somewhat suspect for a few reasons.
When countries boycotted South Africa in the 1980s, a major company that continued to do business there was Coke. Another I recall was IBM, that said it was helping blacks economically with good jobs. No pun intended, but the question of how to address apartheid was not black and white. (The link is a pretty good presentation of the issues as seen at UCLA.)
A difference there was that what these companies that remained in South Africa were doing was visible and publicized. In contrast, Vanguard claims to be effective by working in secret.
Sometimes, perhaps too often, rational entreaties are dismissed unless there is a threat of force behind them. A case can be made that MLK was more effective because people saw Malcolm X as the alternative.
Vanguard, along with the mutual fund industry, is the 800 pound gorilla - that has the power to compel corporate changes. It may not be necessary for Vanguard to vote changes (though it would be nice, once in a while), but if they don't show that they are willing to use their ownership constructively, all their nice letter writing may go for naught.
I got through most of it, the article that is, and I think EVERYONE has their own AXE to Grind, also called self-interest, Me I wish Vanguard would put pressure on GM (I'm sure their funds hold lots of GM) to make better Cars, or on JNJ to make cheaper drugs for old people, they hold lots of JNJ, Truth is they can't/ won't..no matter how good you think your "cause" is, I guess your only recourse is Don't do business with Vanguard, Although I have a GM car, and buy JNJ drugs, I'm still investing in Vanguard's fine assortment of Profitable Funds, all in MY Self interest....
@John Chisum: "I actually do not want Vanguard or any fund company to be active shareholders. They are in the business of investing." Right On ! If the freelance writer, who started this thread, believes where he lives is harming his wife's health there is a simple answer MOVE ! Regards, Ted
I guess there may be a need for a large fund company with clout like Vanguard that is concerned with social investing, to override the individuals who don't care about social issues when it is investment related.
Although I don't see how one can compartmentalize the two - unless you really don't care at all about social issues. anything goes if I invested vs. if I am not invested I am all for "whatever issue" - seems a bit of a tricky dichotomy. and perhaps counter productive if the issue is of any concern. I always chuckle when people say the investment trumps any other concern, no matter what harm it does (environmental, health or whatever).
OTOH, if you don't believe in an issue you are not going to care either way what happens or what the consequences, as long as you make your buck and the problem is in someone else's back yard.
So, I guess everything is self-interest. Not too many altruists out there when it comes to amassing wealth. Until you amass so much, it becomes unimportant to amass more, and the greed factor has diminished, or amassing wealth was not your main concern in the first place.
@Accipiter, I understand your viewpoint. My thinking all along has been that one should separate their investment strategy from their social activism. Activities or causes you believe in should be funded from personal money rather than forcing a fund company or a brokerage to do it for you. By giving money to the cause, you are investing directly.
I can feel concern for Mr. Braham's wife, but something tells me that the amount of research into the area they moved to was not enough to show the location of the coke mill and the issue of wood burning stoves in the wintertime. Asthma is a tricky thing though. One could move to the wide open country but pollen and weeds could exacerbate symptoms there as well.
>JohnChisum said: My thinking all along has been that one should separate their investment strategy from their social activism
I am not putting a value on your viewpoint. But BIG money makes a bigger impact on issues, then a thousand people shouting from a "society of Whatever cause". Hence my opinion that if you separate the two you diminish the impact upon the issue if you let your "investment vehicles" trump your beliefs.
to each his own belief system.
regarding
I can feel concern for Mr. Braham's wife, but something tells me that the amount of research into the area they moved to was not enough to show the location of the coke mill and the issue of wood burning stoves in the wintertime. Asthma is a tricky thing though. One could move to the wide open country but pollen and weeds could exacerbate symptoms there as well.
all well and good. however, just because it existed before you arrived, doesn't mean you don't want a stake in improving things, even though you may have had a choice, if you did, to put yourself in the situation where you now find yourself. and i believe he is trying to make it known. Posting his article seems fair to me, since the the first part was anecdotal, but the theme concerned bigger issues. I think if he had substituted poor "Joe six pack" as the vulnerable one, it wouldn't have been met with the "self-serving critique " unleashed upon him in this forum.
A good civil discussion. By "big money" in this case you mean other people's money and that includes those who disagree with the cause for whatever reason. If I knew that a fund company was funding things I didn't believe in then I would transfer my funds out to another company and let them know why.
A good civil discussion. By "big money" in this case you mean other people's money and that includes those who disagree with the cause for whatever reason. If I knew that a fund company was funding things I didn't believe in then I would transfer my funds out to another company and let them know why.
I've know a few people who have, and that might be the first step Lewis might consider, if the issue was of such importance. It might not have an impact on Vanguard (his withdrawing any investments there, if any). But as they say if people walk the walk... (or however that goes).
I actually do not want Vanguard or any fund company to be active shareholders. They are in the business of investing.
There's the rub.
Surely Mr. Braham is self interested. But there is a larger more nuanced point. Vanguard is the largest retail money manager in America. They also claim to be both socially responsible and that part of their founding mythos is that they are themselves a social good. Neither does self interest preclude acting for the common good. Game theory and evolutionary psychology both support that human altruism, for instance, is rooted in self interest. We are nice to others to improve social standing or receive future favors.
Similarly in investing, self interested proxy voting can increase returns. Mr. Braham quotes environmental research, but consider also that boards voting themselves raises means less equity in a corporation, which means lower returns for shareholders. I believe GMO's Montier recently wrote a white paper on just that. In any case, voting shareholder interests does not necessarily descrease returns.
Surely Mr. Braham's larger point is that Vanguard should use its clout to stand behind its words and image. That surely is far more effective than any action individual retail shareholders coild take. If Vanguard realy were concerned about maximizing returns rather than gathering assets, trying to change improper board behavior strikes me as a really good way to increase shareholder value.
We rapidly forget that ownership both reflects on us AND entails responsibility in our search for profit. The nuanced point here is that both those things actually encourage personal profits.
The bigger point to Vanguard's lackluster stance on environmental issues and how it affects all fund shareholders is already in the story:
"Institutional investors often scoff at such proposals as irrelevant to shareholders. But there’s ample evidence environmental behavior affects financial prospects. In June 2012, Deutsche Bank published a report analyzing the results of some 100 academic studies and 56 research papers on sustainable investing. In 89 percent of the studies, companies rated highly on environmental, social and governance factors beat the stock market.
Companies with bad environmental records can face regulatory fines, reputation damage and class-action lawsuits. Right now, DTE’s Shenango infractions are a minor cost of doing business. But as etiological science improves and attitudes toward coal change, one day a serious lawsuit may stick."
Simply stating you think I am self-interested is a distraction from the basic fact that being a bad steward of the environment is actually bad for business and bad for fund shareholders who invest in companies long-term. And Vanguard as an index fund shop is the ultimate long-term investor as it holds stocks in the market forever. A sensible investor would want greater transparency and greater accountability on the executive level regarding companies environmental policies, especially at a utility facing increasing regulation and public scrutiny on such issues.
And quite frankly coal is about the dirtiest resource on the planet. The idea that a long-term shareholder like DiNapoli might question the long-term viability of coal as a line of business at DTE and ask for some sort of timeline as to when DTE might phase out its use isn't just being some sort of granola environmentalist. It's being a smart investor concerned about the liability of such a resource.
COAL kept me alive as a kid in Indiana, the only source of heat our home had (Dirt and all), MY biggest concern is so called power of the pen where a do-gooder has an audience in some media source, and a certain % of the under informed believe in their writings, because you know "it appeared in the newspaper, WSJ or the Post Gazette (what ever that is),it must be true you know"....sorry wrong conclusion folks You along with everyone have a "right of opinion", requesting the same of others with a pen instead of a tambourine at an Airport is where it goes to absurd..... tampabay
I think Vanguard and Fidelity don't concern themselves at all with corporate executives, BODs, pay packages, etc. As top shareholders in the country, their customers should expect them to be some what interested, if not exactly Carl Icahnish about their role.
Occidental Petroleum ex CEO carved out nearly $1Billion before institutional shareholders requested a modest reduction. (Was Vanguard going to wait till he got $2B, or "its not our concern"??
Wharton Professor Jeremy Siegel suggests that many tech companies give out too many stock options to their employees, diluting shares for common shareholders. Is Vanguard just supposed to say not my business, they still made money?
Michael F. Price at Mutual shares in the 90's would actually request that corporations do right by shareholders. Is that too much to ask? Looks like Mike made a nice donation to AE School of Medicine. Pretty self-serving with his name on the center/building.
There's a lot to say about this topic, but I'll limit myself to trying to help explain Lewis's broad point with a reference that's purely about investment process. The guys who run PRBLX, one of the best U.S. stock funds there is, use an approach that combines "responsible" and return-oriented investing, as explained in this Barron's piece.
Money quotes from the article:
'Allen uses ESG ** "to identify risk that others may have missed." If a company demonstrates any bad behavior -- such as a health-care company that hawks its products in an unethical way -- Ahlsten often will nix it from the portfolio. The theory behind the high ground: Paying close attention to ESG issues beforehand means fewer unpleasant surprises in the morning paper and the company's stock price in the future.'
'Call it socially responsible, but Allen says his strategy is just due diligence. "It's not just about feeling good about yourself in the morning," he says. "When we're looking at two similarly valued energy companies, and one has a good track record for worker safety and one doesn't, which do we invest in? That's a no-brainer.'
** ESG = environment, social, and governance characteristics.
Comments
We're all in this together, whether "this" is economic interests as with the former GM CEO or "this" is public health as with Vanguard here.
As to Vanguard's preference to work behind the scenes, it could have some validity but is somewhat suspect for a few reasons.
When countries boycotted South Africa in the 1980s, a major company that continued to do business there was Coke. Another I recall was IBM, that said it was helping blacks economically with good jobs. No pun intended, but the question of how to address apartheid was not black and white. (The link is a pretty good presentation of the issues as seen at UCLA.)
A difference there was that what these companies that remained in South Africa were doing was visible and publicized. In contrast, Vanguard claims to be effective by working in secret.
Sometimes, perhaps too often, rational entreaties are dismissed unless there is a threat of force behind them. A case can be made that MLK was more effective because people saw Malcolm X as the alternative.
Vanguard, along with the mutual fund industry, is the 800 pound gorilla - that has the power to compel corporate changes. It may not be necessary for Vanguard to vote changes (though it would be nice, once in a while), but if they don't show that they are willing to use their ownership constructively, all their nice letter writing may go for naught.
I actually do not want Vanguard or any fund company to be active shareholders. They are in the business of investing.
"I actually do not want Vanguard or any fund company to be active shareholders. They are in the business of investing." Right On ! If the freelance writer, who started this thread, believes where he lives is harming his wife's health there is a simple answer MOVE !
Regards,
Ted
Although I don't see how one can compartmentalize the two - unless you really don't care at all about social issues. anything goes if I invested vs. if I am not invested I am all for "whatever issue" - seems a bit of a tricky dichotomy. and perhaps counter productive if the issue is of any concern. I always chuckle when people say the investment trumps any other concern, no matter what harm it does (environmental, health or whatever).
OTOH, if you don't believe in an issue you are not going to care either way what happens or what the consequences, as long as you make your buck and the problem is in someone else's back yard.
So, I guess everything is self-interest. Not too many altruists out there when it comes to amassing wealth. Until you amass so much, it becomes unimportant to amass more, and the greed factor has diminished, or amassing wealth was not your main concern in the first place.
I can feel concern for Mr. Braham's wife, but something tells me that the amount of research into the area they moved to was not enough to show the location of the coke mill and the issue of wood burning stoves in the wintertime. Asthma is a tricky thing though. One could move to the wide open country but pollen and weeds could exacerbate symptoms there as well.
Hence my opinion that if you separate the two you diminish the impact upon the issue if you let your "investment vehicles" trump your beliefs.
to each his own belief system.
regarding all well and good. however, just because it existed before you arrived, doesn't mean you don't want a stake in improving things, even though you may have had a choice, if you did, to put yourself in the situation where you now find yourself. and i believe he is trying to make it known. Posting his article seems fair to me, since the the first part was anecdotal, but the theme concerned bigger issues. I think if he had substituted poor "Joe six pack" as the vulnerable one, it wouldn't have been met with the "self-serving critique " unleashed upon him in this forum.
Surely Mr. Braham is self interested. But there is a larger more nuanced point. Vanguard is the largest retail money manager in America. They also claim to be both socially responsible and that part of their founding mythos is that they are themselves a social good. Neither does self interest preclude acting for the common good. Game theory and evolutionary psychology both support that human altruism, for instance, is rooted in self interest. We are nice to others to improve social standing or receive future favors.
Similarly in investing, self interested proxy voting can increase returns. Mr. Braham quotes environmental research, but consider also that boards voting themselves raises means less equity in a corporation, which means lower returns for shareholders. I believe GMO's Montier recently wrote a white paper on just that. In any case, voting shareholder interests does not necessarily descrease returns.
Surely Mr. Braham's larger point is that Vanguard should use its clout to stand behind its words and image. That surely is far more effective than any action individual retail shareholders coild take. If Vanguard realy were concerned about maximizing returns rather than gathering assets, trying to change improper board behavior strikes me as a really good way to increase shareholder value.
We rapidly forget that ownership both reflects on us AND entails responsibility in our search for profit. The nuanced point here is that both those things actually encourage personal profits.
"Institutional investors often scoff at such proposals as irrelevant to shareholders. But there’s ample evidence environmental behavior affects financial prospects. In June 2012, Deutsche Bank published a report analyzing the results of some 100 academic studies and 56 research papers on sustainable investing. In 89 percent of the studies, companies rated highly on environmental, social and governance factors beat the stock market.
Companies with bad environmental records can face regulatory fines, reputation damage and class-action lawsuits. Right now, DTE’s Shenango infractions are a minor cost of doing business. But as etiological science improves and attitudes toward coal change, one day a serious lawsuit may stick."
I suggest you read this study: https://institutional.deutscheawm.com/content/_media/Sustainable_Investing_2012.pdf
Simply stating you think I am self-interested is a distraction from the basic fact that being a bad steward of the environment is actually bad for business and bad for fund shareholders who invest in companies long-term. And Vanguard as an index fund shop is the ultimate long-term investor as it holds stocks in the market forever. A sensible investor would want greater transparency and greater accountability on the executive level regarding companies environmental policies, especially at a utility facing increasing regulation and public scrutiny on such issues.
And quite frankly coal is about the dirtiest resource on the planet. The idea that a long-term shareholder like DiNapoli might question the long-term viability of coal as a line of business at DTE and ask for some sort of timeline as to when DTE might phase out its use isn't just being some sort of granola environmentalist. It's being a smart investor concerned about the liability of such a resource.
MY biggest concern is so called power of the pen where a do-gooder has an audience in some media source, and a certain % of the under informed believe in their writings, because you know "it appeared in the newspaper, WSJ or the Post Gazette (what ever that is),it must be true you know"....sorry wrong conclusion folks
You along with everyone have a "right of opinion", requesting the same of others with a pen instead of a tambourine at an Airport is where it goes to absurd.....
tampabay
Occidental Petroleum ex CEO carved out nearly $1Billion before institutional shareholders requested a modest reduction. (Was Vanguard going to wait till he got $2B, or "its not our concern"??
Wharton Professor Jeremy Siegel suggests that many tech companies give out too many stock options to their employees, diluting shares for common shareholders. Is Vanguard just supposed to say not my business, they still made money?
Michael F. Price at Mutual shares in the 90's would actually request that corporations do right by shareholders. Is that too much to ask? Looks like Mike made a nice donation to AE School of Medicine. Pretty self-serving with his name on the center/building.
http://www.einstein.yu.edu/about/price-center.asp
Money quotes from the article:
'Allen uses ESG ** "to identify risk that others may have missed." If a company demonstrates any bad behavior -- such as a health-care company that hawks its products in an unethical way -- Ahlsten often will nix it from the portfolio. The theory behind the high ground: Paying close attention to ESG issues beforehand means fewer unpleasant surprises in the morning paper and the company's stock price in the future.'
'Call it socially responsible, but Allen says his strategy is just due diligence. "It's not just about feeling good about yourself in the morning," he says. "When we're looking at two similarly valued energy companies, and one has a good track record for worker safety and one doesn't, which do we invest in? That's a no-brainer.'
** ESG = environment, social, and governance characteristics.