A few days ago, I received, in one of my email accounts, a message from my broker, containing the electronic link for the proxy to one of the equities I hold, Chicago Mercantile Exchange.
It dawned on me, while discussing this with my partner over lunch today, to describe my reaction to this email. A sort of Proustian reflection on the chain of thoughts and feelings pouring forth from that single stimuli- my own personal Madeleine, as it were.
After a few seconds of consideration, with the email opened, viewing the link to the CME proxy voting site, I hit the 'delete' key.
It was a very assured, firm delete. And I have not gone back to my 'deleted emails' folder to rescue or revisit the email.
What occurred to me in that moment, in nanoseconds, actually, was this chain of reflections.
My disciplined, quantitative, non-subjective equities selection process chose CME, and its portfolio weight. That process is the disciplined implementation and expression of my experience, subjective hypotheses, and proprietary research findings with respect to the outperformance of the market, on a consistent basis, by large-cap equities.
I am buyer of equities like CME. I don't want to manage them. I see the causality of the relationshp between CME and me as one way. CME operates, and I reap the results. My process chose CME because it fits a set of criteria which I have found to have a good probability of outperforming the S&P500 for a six-month holding period. I bought CME in order to enjoy its performance results. As of today, I am. It is clearly and handsomely outperforming the S&P, +6.5% to the index's -.25% for the period.
Why would I want to attempt to reverse the direction of causality with respect to CME? What do I think I, personally, as a portfolio manager, can add to the value-creating capability of CME? My selection process chose CME for its behavior before I owned it. It may even be the case that my proxy vote, like the butterfly's flapping wings in the South American rainforest, will have an indirect, but notable, negative effect on CME's performance.
No, I would like the context of CME's operations to be as similar to the period over which my process analyzed it, as possible. I want to effect no change in CME, nor visit any significant influence on it.
Barney Frank, be damned. He has it wrong. So do the corporate governance and "shareholder democracy" crowd.
The only "democratic" thing this shareholder wants is to know that, when I want to sell my CME shares, I can. At the market. With little brokerage expense. Period.
That's it.
I have absolutely no interest in influencing CME myself. Why would I be so arrogant as to think I could buy shares of CME, and then improve its lot with my proxy vote?
Perhaps some investors, especially institutional investors, buy shares of companies which they believe they can improve. Such as private equity investors.
I am not a private equity mogul. I have no billions with which to assume control of CME.
I just want to share in their next few months of consistently superior total returns. To want more than that is to court disaster, and succumb to hubris. The last thing I would want is to have any effect whatsoever on CME's performance. Thus, I deleted that proxy link email as quickly as possible. Lest some unknown quantuum effect derive from my mere reading of the email, and depress CME's share price. I want no part of CME's operating or governance process. I simply want to make money by owning its shares, passively.
Is this such a hard concept to fathom?
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2 comments:
Aren't people like you shirking your duty to yourself, your family, your community and society by disavowing influence over all activities of the companies that you own a part of, except for the activity called earning a profit?
It's rather like enjoying the spoils of capitalism and democracy offered by life in America, but refusing to vote.
People like you are a threat to society and a criminal waste of valuable DNA.
anonymous-
Not in the slightest. You are confusing citizenship, which is a duty involving societal obligations, with volitional participation in an elective and non-obligatory activity, i.e., using the equity capital markets.
If I merely bought and sold equities such that I was never holding any during the proxy period, would that make me less of an investor? No. Would I be guilty of avoiding some duty? No.
I think my post was quite clear. I want to buy a share of the gains that the management of the firms I select will probably return to me. I want to exert no influence over them, because I find their performance and behavior exemplary to begin with.
By the way, I am not even wanting part of "earning a profit," per se. I jsut want the total return on the equity.
What part of this do you not understand?
I certainly am not a threat to society- not as much as, say, Barney Frank. Nor am I a "criminal waste" of DNA.
But if you can't understand my post and comment, you may well be the latter.
-CN
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