It looks coherent with internalization of negative externalities but actually proving that is an econometrics mindfuck.
Lawsuit against Meta invokes modern portfolio theory to protect shareholders
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Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#32This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own. The consequences of that line of thinking are scary. I'm sure the vast majority of shareholders of most US companies own ICE cars. If a company decides to put a lot of effort into, for example, cheaper batte…
This is where capitalism naturally goes. Growth is the most important thing. We start to codify the expectation of growth into board responsibilities. Then we all accept that as normal. Once we've built the mental model there, it's not really that far to say they shouldn't hurt other companies if it costs them nothing.
Except, we should want companies to compete with each other and eat each other's profits. Wars between companies are good for consumers.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#33I'm just a two-bit software engineer and not a lawyer but I'll go against the general flow of the rest of the posts here and say "this is interesting." Whether or not it will work is another question, but it seems like they are trying to establish some precedent that companies need to consider the downstream impacts of the things they do. I see posters here brushing off talk about mental health and political impacts…
The thing is it is hardly measurable
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#34Anyone who invested in Facebook directly (rather than via a managed or exchange-traded fund of some sort) did so with the expected awareness that all the voting stock was controlled by Zuckerberg personally. Effectively, FB is a corporate dictatorship and it's hard to have sympathy for people who put money into it during the good times and are now surprised to discover that they made a bad investment decision. https:…
Might be a good time to go back to one share one vote corporate structure.
The CEO is still the chief executive. Share voting rights do not control day to day business decisions or even strategy.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#35Interesting and disturbing. They are making an argument that Facebook/Meta is harmful to the global economy because it cant do [impossible task] of moderating its 3.5 billion users to stifle [unwanted behavior]. And because of that, their decisions are negatively impacting the modern investors distributed portfolios. Because Mark Z. is not diversified (wealth is in Meta) and has total control over the company, his de…
It's fighting pursuit pursuit of benefits that negatively impact the global economy.
Nothing directly about monopolistic behavior here, though true monopolies end up harming global economy in their pursuit of benefits. Which is why they are regularly broken up, or merge prohibited I suppose.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#36I'm just a two-bit software engineer and not a lawyer but I'll go against the general flow of the rest of the posts here and say "this is interesting." Whether or not it will work is another question, but it seems like they are trying to establish some precedent that companies need to consider the downstream impacts of the things they do. I see posters here brushing off talk about mental health and political impacts…
The problem is that this creates an open ended obligation of companies to whatever common shareholders want in their dreams about Society, and are responsible for doing so.
Externalities are perhaps worse.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#37While I like the idea that a company has a duty to the wider marketplace, the construction using diversified portfolios is more creative than convincing. Problem is, that we can easily construct portfolios that react in a specific way to actions. In the example with promotion of mental health issues we may wonder how the bottom line of clinics of chocolate manufacturers is impacted by trying to avoid mental health issues.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#38Earlier quoted context omitted.
> This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own. This is my thinking as well. If I own stock of Coca Cola and Pepsi. Coca Cola comes up with a great product that eats a huge amount of market from Pepsi. According to this I sue Coca Cola for my losses on…
I don't think this lawsuit has much merit, but the lawsuit is arguing against damages to an overall portfolio. If a diversified portfolio consisting of Coca Cola and Pepsi was on the whole damaged due to the actions of Coca Cola against Pepsi, then the plaintiffs argue that Coca Cola would be liable for some part of that damage. If, however, Coca Cola's actions harmed Pepsi specifically but benefited the overall port…
That’s insane! Imagine if a small company invented a cure for cancer. Would they be liable for the losses of all the pharmaceutical companies?
It would be the end of innovation.
Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders
#39Interesting and disturbing. They are making an argument that Facebook/Meta is harmful to the global economy because it cant do [impossible task] of moderating its 3.5 billion users to stifle [unwanted behavior]. And because of that, their decisions are negatively impacting the modern investors distributed portfolios. Because Mark Z. is not diversified (wealth is in Meta) and has total control over the company, his de…
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