Shhhh.
Don’t let anyone know. This is a secret. Make sure you don’t tell anyone, and for God’s sake, don’t publish it in a blog! Let’s everyone whisper…
As a Financial Advisor, I have a unique view into the Wealth Redistribution debate. Liberals want to even things out, while Conservatives call wealth redistribution “Socialism”. So I’ve argued with Conservatives over the last two days on their blogs, and indeed, it has been enlightening, and above all, good, clean fun. There is nothing I love more than taking an opponent’s own ideas, bringing them all the way around, full circle, twisting them into a hangman’s knot, until I can hang him with it.
There is a little known secret on Wall Street, one that they do not want anyone to know. FA’s (Financial Advisors) are finally getting fed up, though, because you see, it’s our money being stolen, too.
Wait! Did you say, “stolen”? What this? What’s going on? Huh? Who dat? Who dere?
You read it correctly. FA’s are getting fed up, because it’s our money being stolen, too. When Conservatives (read, “Republicans”) get all “Oh no you don’t! You don’t go there!” on wealth redistribution, and give the old palms-out-circle-jerk, their intent is to shout loudly so that you will back off, before they really get on a roll and start calling you a Commie. Large Corporations and their Execs play the same game. But they play another game, too, and they’ve done it for decades. Shhhhhhh. Don’t repeat this.
It’s called the Corporate Wealth Redistribution Game.
Huh? Wha?
That’s right. They play the game, and they play it well. Only, they don’t really call it wealth redistribution. Instead, they call it things like bonus, or Golden Umbrella, Executive Pension, or stock “options”.
For decades, our largest corporations and banks have scalped their profits, kept them, and redistributed them among a small group of Executives. But we already know that!
What you didn’t realize, though, was that those bonuses, Golden Umbrellas, and stock options all have to come from somewhere. There is no such thing as free money. Someone always pays for a bonus, or a plush office, or a fleet of corporate jets. If you are an investor, a retirement saver, or a Mutual Fund buyer, you are the one who has paid for it, literally, for ages. Further, those same Corporate Execs have been using your shareholder proxy vote to steal from you.
Oh, don’t act all ignorant. We all get those flimsy little prospectuses every year, and along with it, we sometimes get a “proxy” vote, where the Execs have drafted a 50 page explanation of what the issues are, and all you have to do is what Americans love to do; nothing. They then cast your vote for you, and presto! You just said “okay” to being robbed. See? Wasn’t that easy?
And so painless.
Until, like me, you come to realize that every time they cast your vote, they are forcing you to vote against your self-interests. Now how much would you pay for that proxy vote? But wait! That’s not all!
They then use your willingness to do nothing to justify their fat bonuses, telling the media that if Americans didn’t like the bonuses, they could vote against them. Wouldn’t you be willing to pay twice as much for the same fucking as you were right before you started reading this long, horrible article about how you are getting screwed?
Still with me? Please allow me to explain how this works. Let’s use a bank as our example. As you know, banks pay dividends, which are nothing more than a return on money invested with them, only that “dividend” is cleared profit. Banks determine the dividend by VOTING to pay it, and they also vote on how much to pay out. When they use your proxy vote, they are voting FOR you, and they are always going to vote in agreement with the “consensus”, which means they will vote “yes” to whatever the board recommends. That same board will also vote on corporate officers, as well as operating issues such as whether to issue more stock, or buy more stock back. But I digress.
Did you know that in most American public companies, things like pay and bonuses are not voted on by shareholders? (despite Corporate Execs repeatedly saying shareholders have a vote) Corporate executives can decide their own pay, their own bonuses, and you, the shareholder, cannot protest. Except you can, and we’ll discuss how a bit later.
The basic thrust of it all is this: Rather than reporting extra profit and sharing it with shareholders, for decades now, Executives have instead chosen to line their own pockets, and the pockets of their peers. Rather than rewarding you, the investor, for your faith in the company, Executives have stolen from you. You own the company; what else could it be called when a small group of people pay themselves exorbitant fees from the shareholders’ coffers? It’s thievery, you cannot justify it in any way.
But it’s also wealth redistribution. Those executives are taking the wealth you have put into that company, and robbing it, not just once, but for decades. That kind of thievery cuts right into profit, and shareholders share in profit. But their share is getting smaller and smaller every year. And let’s not forget that every 5.263 years, a bear market comes along and steals the rest of your earnings. (19 bear markets in the last 100 years)
I know many investors who claim that since 1986, they have not actually “earned” a profit on any of their money. Sure, they’ve gained, but then they’ve lost. They tell me that all they have left is most of their original investments. That’s twenty-three years of investing the way they were taught, doing it right, and having nothing to show for it. Twenty-three years of Corporate executives stealing from them, cutting into their profits, and redistributing their wealth into the hands of a few. That’s wealth that belongs to you, the shareholder, being now in the hands of the very few.
So, when you hear a Republican whine about wealth redistribution, please understand that he’s all for it. He just thinks that it ought to be concentrated in the hands of a very few people. It’s called plutocracy. It’s what’s for breakfast in America. Look it up. You won’t like it.
But please, don’t tell anyone. Be Vewwwwy kwiet about this. It’s our little secret.
ps: Remember when I told you how you could protest in other ways? The simple answer is, protest with your feet. The Huffington Post promoted Moving Your Money…from large, bailed out banks, to small community banks. Let’s take that thought one step further, and move your investments, too. How?
First, get rid of your Mutual Funds. Unless you know the name and morals of every company owned in that Mutual Fund, you cannot possibly be in control of your own investment, and once you’ve lost control of your own investment, you’ve made it easier for Executives to steal it. If you need to own a Mutual Fund, try one of the many Index Funds available, but stick to an Index where you can track every single company in it. Then, research your own investments, or, enlist the help of an advisor. And when you enlist the help of that advisor, FORCE him to explain everything to you like you don’t speak English, and don’t let him off the hook until you understand it. Stay away from Exchange Traded Funds (ETF’s). They are building a huge bubble right now, and we all know what happens to bubbles, don’t we?
Buy stock only in companies that agree with your morals. Did you know that most Mutual Funds invest in major oil corporations, as well as in Banks Too Big To Fail, and Tobacco? There is no shortage to companies available that agree with your morals. Be sure they don’t pay huge bonuses. Track their dividends, and track their debt. A company with a lot of debt spends a lot of money paying interest that otherwise could be part of a shareholder’s dividend, or helping that company to grow. Remember that when you invest, IT REALLY IS ALL ABOUT YOU, AND IT REALLY IS ALL YOUR MONEY. Sure, your money helps companies to grow and hire people, but in the end, the only thing that matters is what your money did for you.
