QuestionerLet's go to this question from Matt Feigal. His question is related to the growth of passive investing through index funds and ETFs. He says, passive investment vehicles now control upwards of 50% of the United States stock market. The actual owners of these passive investment vehicles decided passive investing makes the most sense for them. Yet in doing so, passive investors have empowered the large index funds to become the biggest activists in the market. These passive managers now enjoy enormous, and I would argue, undue influence over corporate governance. Do Warren or Charlie see any benefit or logic to a rule that would prohibit passive investment vehicle managers from voting the shares they control for their passive investment clients?
WarrenWell, I'll take that. I think the guy's right. I think the thing is out of control and counterproductive. And I don't think it's good for the country to have, three passive investors with bright young men from Harvard or what all, telling them what proper governance of corporations is. It's not a good development. And it is, and I think indexing, if it gets to 90%, then it won't work very well at all. But at the moment, it's worth fine.
CharlieYeah, well, the one thing you can count on, too, is that if it does look like it's going to, uh, if, if the public opinion shifts over to the idea that, it really is a good idea to let three people decide the fate of every company in corporate America. The three people, and they won't collaborate or do anything. They're not of their evil people at least. I mean, they're just doing what you and I would do. They would figure, we don't care that much about voting. What we do care about is keeping my assets under management. So we'll figure out something that ends up reflecting public opinion, and then politicians won't get badass. And our only threat really is that politicians get badass and regular, in some ways, so we'll head it off. And I would predict fairly confidently that if American public doesn't like the idea of three people controlling things, the three people end their organizations and everything. But what they want to do is they want to get bigger. And they wouldn't be where they are in life if they hadn't wanted to get bigger. Those things don't happen by accident. And it doesn't mean it's the only thing they want. They want their investors to get good results and everything. But they are certainly not going to follow a policy which is going to cause a backlash, but causes them to be a lot smaller there. They can figure out their self-interest, I mean, and it's, and it just so happens that in this case, it would achieve the right result, which is that they would not control America. But they'll do what's good for themselves. And what they have to do what's good for themselves. politically acceptable.