Why focusing just on “maximizing shareholder revenue” actually often ends up hurting shareholders anyway


We already know that in many situations when actors only act in their own self interest it can often leave everybody worse off. Yet the idea of simply being laser focused on “maximizing shareholder value” is clung to like a religion.

And that’s simply because it’s the easiest way to be precise about the rules. When we make it fuzzy it makes us all uncomfortable. Reality is way more nuanced than we like. We keep chasing the ultimate answer, the golden rule, the essential nugget that can somehow free us from this discomfort of not knowing. There’s peace in simplicity. I love a hammer while I get a little stressed by a multi-tool.

But a hammer can’t do everything I need. I need the right tool for the right task and many tasks require several tools together.

Here’s a great post that goes into some of the unexpected consequences of this mindset. It’s a little too dramatic but it makes some good points.

All this was done in service of a lunatic religion of “maximizing shareholder value.” “MSV” by now has been proven a moronic canard – even onetime shareholder icon Jack Welch said ten years ago it was “the dumbest idea in the world” – and it’s had the result of promoting a generation of corporate leaders who are skilled at firing people, hustling public subsidies, and borrowing money to fund stock awards for themselves, but apparently know jack about anything else.

Total Net Worth of US billionaires 2018


No real opinions here, none held strongly, just some observations I recently made about the scale of some of the numbers I was interested in, with some quick thoughts added. I couldn’t find this data easily, so I had to compile it from the list here.

US Billionaires 2018

Total Count: 585

Avg Age: 68

Median Age: 68

Avg Net Worth: $5.29B

Median Net Worth: $2.80B

Total Combined Net Worth: $3.096T

US Federal Budget

FY17 Revenue: $3.316T

FY17 Spending: $3.982T

Deficit: $(666B)

To simply put this in perspective, if the all the present billionaires in the US liquidated and gave away their entire wealth, it would:

1) Fund the US Federal spend of 2017 for 9 months

2) Fund the US Federal deficit for 4.6 years

Other things to observe

Most of the increase in wealth of the wealthy comes from investments and capital returns, and these are not subject to income tax. They are subject to capital gains tax, which after 1 yr of holding assets are limited to 20%.

As an example, if you had enough cash lying around that you could bet on cryptocurrencies when they were just a fad, you could’ve made 1000+% return on your investment in 2-3 yrs, yet paid only 20% tax on it. In fact, the average return on a class of crypto investments made in 2017 was a whopping 136,000 percent. Yes, those are 3 zeroes. Yet, you’d only owe 20% capital gains tax on that, regardless of your income level or net worth.

On less volatile assets, if you had $1bn invested in the S&P 500 in 2013, by the end of that year, it would’ve grown to $1.3bn. So you’d have earned $300M in one year, just with the capital you had lying around. And regardless of your total net worth or your income level, you’d just pay a capital gains tax of $20% on it.

These are some ways how the rich keep getting disproportionately richer.

Random finance-focused suggestions


These are random finance-focused suggestions that summarize what I often discuss with friends one-on-one. This is not a comprehensive list. And this is definitely not real financial advice. Different things for different people and different situations. Just sharing these in case they inspire some thoughts and ideas.

1. If you have student loans, don’t obsess about paying them off any sooner. It’s the cheapest credit you can get. Usually they fall well below 7%. There’s very little financial incentive to pay off student loans sooner and those funds are better used investing in other things and in yourself. Make the minimum possible payment you are required to make. Consolidate, extend, etc to bring your interest rate and monthly total to be as low as possible.

2. Instead use your additional savings to buy into Index Funds. On 10yr+ timelines they are one of the safest investments you can make. And will return a CAGR of 5%-9% with the potential of a lot more upside on longer time horizons.

3. Set and forget. Make good decisions and then put them on auto-pilot. Checking your portfolio daily, weekly, monthly doesn’t increase your return – in most cases it reduces it because it tempts you to try and time the market or to second guess yourself and you end up being worse off. Patience pays.

4. Savings accounts return interests lower than inflation. Any money you put in a savings account is actually shrinking. Use savings accounts. But just be aware that it’s the least productive place for your savings.

5. Understand the difference between assets and liabilities. Liabilities leave you worse off. A car is usually not an asset. If you need a car, buy the cheapest car you can get. The first home you buy is usually not an asset. Renting is sometimes better than owning, if you are disciplined enough to live within your means and can save on your own. If not, buying a house will force you to commit to saving up and to make some sacrifices – and you might be better off. But you will sometimes be trading off opportunity costs, time overhead and other intangibles that will be hard to quantify. Buy a house for the lifestyle and to force yourself to save. Any net financial gains should be considered welcome surprises, but don’t count on them.

6. Save, save save. But also invest in yourself. The world is changing at an accelerating clip. Everything you know can potentially become quite irrelevant in 5yrs. Upgrade yourself. Grow yourself. Learn to enjoy being uncomfortable and keep challenging yourself.

7. It’s never all or nothing. It’s all between the lines. There’s no one right thing to do. Do different things and do them in moderation.

Apple Pay: frictionless


Finally got to try Apple Pay and it’s the most frictionless payment I have ever made. It happened almost at the speed of thought.

  • Sec 1: oh look, I can pay with Apple Pay
  • Sec 2: double tap on home button (fingerprint read simultaneously)
  • Sec 2: done

 The fact that this was also the most secure payment I have ever made at a terminal is just icing on the cake. My credit card is hard-bound to my physical phone (my CC number is not associated with anything in the “cloud”). A unique one-time use string gets generated and transmitted each time I initiate a payment. Even if Whole Foods gets hacked, hackers won’t find any CC numbers, or usable auth codes in their database.