Discussion about "The Case Against Shareholder Rights - Wall Street Journal (blog)"

The Case Against Shareholder Rights - Wall Street Journal (blog)

By Jason Zweig

In response to my Intelligent Investor column last weekend on the potential for small investors to shake up corporate management, UCLA law professor Stephen Bainbridge put up a fascinating post in which he argues that shareholders don’t, in any meaningful sense, own the companies they invest in.

Prof. Bainbridge also mentions that because investing in index funds
is an “incredibly superior choice” for small investors, the typical
person shouldn’t own any individual stocks at all and, therefore, has no
business trying to assert any control over the management at a given
company.

I’m the first to agree that index funds are the optimal choice for
most investors, having advocated them steadily for nearly 20 years.

But surely what matters is not whether people should pick their own stocks, but whether they do pick their own stocks.

What about the folks who inherited 10,000 shares of AT&T from
Aunt Gertrude? Or the people who invested in a handful of stocks before
they saw the light and started indexing? Or the many mid-level managers
who have accumulated a large number of shares as part of their executive
compensation? What about the countless investors who haven’t yet gotten
religion on index funds and, thus, persist in owning individual stocks?

Even Burton Malkiel, the intellectual godfather of the index fund, has told me
that he fancies himself a stock-picker; he keeps at least a quarter of
his portfolio in individual stocks and actively-managed funds because
trying to beat the market is “fun.”

Should all these people dump every share of stock they own and just go away?  more at link above...