How to Beat the 3 Giants: Blackrock, State Street, Vanguard

3 companies control more than half of all the shares in the S&P 500. These 3 companies have a combined value of over $30 trillion. That's larger than most countries have in assets. And it's just from 3 private companies. Now, these are not just in the stock market. These companies also are buying up single-family homes, apartment complexes. They're buying up farmland. They're actually taking over news and media networks. These 3 companies could, over the next decade, shape entire life as we know it. And if we don't stop them and/or figure out how to play their own game, we may be slaves to these 3 companies over the next few decades. So in this video, I want to break down what these 3 companies are, how they're put together, ultimately how we can come and fight against them. But first off, I want to teach you guys about what these funds are, how they work, and how they affect economies just from a small and/or big scale. So for a quick overview on funds, all a fund is is a pool of money investors put money into that pool. Smart money managers can actually draw from that pool. They go and make investments. When those investments make money, the money represented in green here, the money flows back to that pool and gets split between the investors and the managers. Seems like a simple concept. This has happened for thousands of years, but this has created some of the wealthiest managers in the world. If you look at the Forbes 100 list, it is riddled with money managers making hundreds of millions and billions of dollars a year managing huge pools of money from investors that dump that pool in. And this works for pretty much every field in the entire world. This works if you're buying real estate, you're buying businesses, you're buying stocks, you're buying futures, you're buying crypto, you're issuing debt and loans, you're buying mortgage pools, you're buying houses, you're buying almond farms for crying out loud. Like you can do this for pretty much every industry on earth and it's created more wealth than any other vehicle Ever, and again, we have plenty of videos on our channel to talk more about how to build and launch one of these funds. Now, these three companies we mentioned earlier used this fund model to scale to incredible heights. Those three companies are BlackRock, State Street, and Vanguard, which combined they don't manage millions of dollars or even billions of dollars; they manage trillions of dollars, which is for me sometimes hard to comprehend. People throw around numbers like billions and trillions like they mean nothing. So for another different example, if I gave you a dollar a second. Every second of the day ongoing, how many seconds or days or months or years would it take to get to a billion seconds or a billion dollars? That'd be like me paying you $86,000 a day, every single day. How long would it take you to become a billionaire? The answer is over 31 years. Billion dollars is a lot of money. Now, if you take that from a billion to a trillion, it would be 32,000 years. Thousand years. Needless to say, these are very, very large numbers. But now, these 3 big investment funds didn't just appear out of thin air. They were strategically built over time. These early founders saw the vision of a fund as an amazing vehicle to grow and ultimately take control over some major industries. So now let's dive into each one of these 3 big firms, how they started, how they grew, and what they control now. So let's dive into the first company here, BlackRock. BlackRock grew from humble beginnings, starting with only $5 million to manage, to over $8 billion in just under 5 years. And today they manage over $9 trillion, making Larry Fink, the co-founder and CEO, one of the most powerful men in the world. Now, Larry Fink's initial focus was on risk management and fixed income strategies. However, soon after they launched, they pivoted into a new asset class called ETFs, or exchange-traded funds. This was largely made popular by the internet and personal computer, and they launched their first ETF, iShares, in 1995. Now, this move proved brilliant for BlackRock because ETFs became the cornerstone of a lot of major institutions as a financial instrument around the globe. Now, the reason ETFs became so popular was because of the way they were structured. A lot of investors in the stock market wanted to invest in a basket of different companies, maybe 50, 100, 500, or 1,000 different companies. Well, that takes a lot of work and a of money to buy individual shares of all those companies. So for example, you could come and buy one share of iShares, and that would allow you to buy dozens or hundreds of companies across different markets. Additionally, this was primarily driven by algorithms or computers that would do the trading and rebalancing for you, which would take a lot of the management fees that traditional funds would charge of 2%, 3%, 5% down to almost zero. ETFs have become one of the most popular tools around the world for financial professionals. So for example, today, the S&P 500 is an ETF that buys the 500 most profitable companies. This was a huge benefit to investors and also to the companies that they bought into because it allowed more money to flow in the market. And this has been great for decades until it's not. And we'll explain this in just a few minutes. And this is how BlackRock has made billions of dollars. They were at the beginning and have grown with this entire industry over the last few decades. Now, in most recent years, Larry Fink has pushed strong ESG incentives over the last decade. I've been a little confused on how all these Fortune 500 companies, separate companies individually, all decided they want to go after ESG initiatives or other political and social things. And it always confused me on how they all coordinated that together. But then when you look at the underlying asset class, you go, huh, BlackRock is the majority stakeholder in almost all of those companies. And if Larry Fink says, hey, I want you to push an ESG initiative, you're going to push that initiative or else. And the or else means we might remove you from our ETF and all that money that used to flow to your company and buy your share price and put things up is now going to cease. And again, this is why Larry Fink is one of the most powerful people on the globe. Now, are ESG initiatives good or bad? Well, it depends. Now, ESG stands for environmental, social, and governance. The initial plan was we want to help the environment. We want to have a sustainable future. Okay. That sounds great. The second one, social, and then the third one, governance. Started to get into murky waters. And actually, Larry Fink himself just a few months ago came out and said that he believes this ESG initiative had good intentions at the beginning but has kind of gone off track. Because who decides what's good for social initiatives? Is it a committee? Is it groupthink? Is it just public poll? Who decides what social things are right or wrong? That is usually up for debate. And I believe this has led to an increase in cancel culture of some groups saying this is an ESG initiative, we need to silence a certain side, or, and/or we don't like your political agenda, so we're gonna cancel you. This comes from that S and also the governance issues that came about from ESG. Now, while ESG initiatives started with good intentions, it appears to have moved a lot of companies in way different directions and hurt ultimately shareholder value. Now, for more information on that, we did a full video on the rise of the retail investor that dives into way more detail on this. Now let's move to the second company in this space, which is Vanguard. Vanguard manages over $7.7 trillion and similar to BlackRock, started with humble beginnings in the '90s and quickly grew in the ETF age. Vanguard completely disrupted the industry with low-cost ETF managed funds when traditionally other people were using high-margin and high-fee trading accounts. Vanguard offered a very low-fee, cost-effective, diversified approach to investing, and the results speak for themselves. Today they manage over $7.7 trillion. They have 203 US funds and 227 international funds. And the firm boasts over 50 million investors from around the globe. The 3rd company on our list is State Street that manages $3.7 trillion. Founded in 1792, State Street is the 2nd oldest bank in the United States. To get— put that into perspective, that was during the 2nd election of George Washington this company was founded. They made their mark serving and issuing some of the first mutual funds in the United States in the 1830s, and over 100 years later pioneered one of the first multi-currency accounting platforms in 1972. However, from the 1970s until now, State Street has become a behemoth on Wall Street because of a strategic move they made into the asset management space with State Street Global Advisors. They became a leader in the ETF space, specifically with launching the S&P 500 SPDR ETF, which is currently one of the most popular ETFs on planet Earth. So you're seeing a common thread here. A lot of these investment managers found a very low-cost, efficient way to move hundreds of billions and trillions of dollars of investor capital into ETFs that would then go buy hundreds and thousands of different companies. This accumulation of capital helped both the investor, the business owner, and the asset manager, and was a win-win for everybody. But now we are starting to see some of the dangers and concerns of these few companies that control pretty much the whole globe. Now, you might be saying, Bridger, these ETFs don't have that much power over these individual companies. But I would argue, yes, they do. For example, if you're a company called Disney and your largest 3 shareholders are State Street, Vanguard, and BlackRock, and they are telling you to push a certain ESG agenda into shows and kid films and other things, or else they're going to remove and delist you from a lot of these big ETFs, moving billions and billions of dollars of market cap from your business. If you're the CEO of Disney or another company, you're kind of in a tough spot. If you don't push these social agendas, they might sell your stock and your stock price is going to plummet. However, if you do push these agendas like we've seen with Disney, a lot of people out there have protested against Disney because of these certain policies they've been trying to push in films. But this isn't the case just for one company. This is happening for thousands of companies around the globe. And again, I go into more detail on this on the Rise of the Retail Investor video. But ultimately, this is kind of a scary thought, and maybe they're not doing it now, but could they do it in the future? What if just these 3 companies wanted to push a pro-X or pro-Y agenda that you disagree with? Only a handful of individuals essentially have a monopoly on the entire market. Now, I'm all for capitalism. I actually love capitalism. I believe capitalism drives innovation. It allows us to become our best and find the best services and products that help people, customers, and businesses the best will rise to the top. And us as consumers, we just vote with our feet and we vote with our eyeballs. Whatever we watch and consume, we are voting every day. Whatever we pay for and buy, we are voting with. The time when capitalism fails us is when we have monopolies. And that's why governments are in place, is to disrupt and break apart a lot of these monopolies to ensure that companies can't price gouge customers. But I currently don't believe Congress has the power to dismantle companies like BlackRock, State Street, and Vanguard because they kind of sneakily own these shares. It's not like they directly own these companies and are directly competing. They passively own these businesses. Additionally, this is not just affecting the stock market. These 3 companies additionally have started getting into real estate. In 2021, 1 in 7 residential homes was purchased by big funds on Wall Street. Last year it was 1 in 5, meaning 20% of all single-family homes that were sold were purchased by big groups like State Street, Vanguard, and BlackRock. They are buying up farmland and food production facilities. They're also buying up TV and news networks. It's like we're living in the WALL-E movie where only 1 or 2 companies control the entire globe and everything you see, you consume, you eat is all controlled just by a handful of companies. And I don't know about you, this scares the crap out of me. Because their hand is so strong, us as consumers may not have a choice to move and/or choose different services or products besides ones that are provided by these 3 big firms. Now, I'm not just straight doom and gloom about our current situation. I actually do believe there's a solution and a way out of this. And no, it's not protesting. No, it's not writing to your congressperson, which could work and might actually be fine. I believe we need to figure out how to beat them at their own game. I believe that more people like us need to figure out how funds are built and actually launch new funds into the marketplace to decentralize Wall Street. I'm actually okay with funds and things buying up and owning assets as long as they are different and separately owned companies. I'm okay if there was 10,000 different BlackRocks and Vanguards and State Streets all competing and trying to drive down prices to win customers over and having a competitive marketplace. Because why? A competitive marketplace ultimately benefits the consumer the best. This is why companies like Walmart and Target and these other retail brands, they are competing to the bottom. Why? To win more customers. And what that ultimately does is it helps us, the customer, get cheaper prices and more efficient goods and services to our doorstep. So I believe the solution is people like us need to wake up to the sense of what is going on. We the people need to understand how funds are built, how they're put together, and maybe even look at launching our own funds that we can move and manage money in different ways to decentralize and dismantle this establishment of only just 3 companies that control pretty much the entire world. Additionally, I don't think we're too late. I believe we still have a handful of years where we could do and accomplish this. Now, if this video was made in 2045, I don't know what's going to happen then. We might already be in a situation that we can't unwind this. But I believe the society is waking up. The rise of the retail investor is happening. Over 20% of all trades happening now are from retail investors, people like me and you that are going out and doing this. And that's why I believe it's so important to educate and teach more people about investment funds. And actually, that's what this channel is dedicated to. All of our videos in this channel are all about funds, how they're built, how to put one together, and how you could only go out and do something like that. And I don't believe it's just to go out and make money, even though that is a byproduct if you run a good fund. I believe it's more important to our society, to our grandchildren, to our great-grandchildren, to give them something that is actually a competitive marketplace and is not owned by just 3 big companies. So with that, comment hoorah down below in the comments, hit that like button, and I will see you guys on the next video. Peace.