questo · Lurker · 2 points ·
Blackrock is interesting as it is fundamentally a company that basically is a big amount of small investors working together as one big investor. Its task is to mathematically calculate a stock portfolio which creates as much gains as possible while being as safe as possible. Keep in mind however that they are a long time holder and its profits come from gaining the highest dividends (basically imagine it as a big loanshark).
There are various ways to calculate the expected long time profit of a stock. Black rock does so by determine how "healthy" a company is - the more healthy, the more likely it is the company will survive long term. Eg. A mining company that employs minors would not considered to be healthy as the risk of a lawsuit against this company is very likely to ruin it. The term healthy includes an entire (non public) framework of aspects a comany is graded on. We can only estimate the entire framework but we can safely guess individual aspects of it such as legal actions against company, amount of new products that dont flop or workplace situations such as fair salaires or good health coverage. The dei part would count to the latest one (a company that has diverse employees would likely be considered healthier in the framework)
The big problem is that this basically creates a death spiral. Companies warp themself so they can fit the investment criterias better (remember, stocks are loans) which leads to them failing. This means adoptation from blackrock which then takes the success companies, who manage to get away with dei bc of monopolic situations or good products, higher up in their framework. So the companies again refit themself so they better fit this and so on. Blackrock has no need to change this because 1) methematically the framework works and they make profit and 2) they are not required to purchase those companies only bc they correspond to the framework.
There are various ways to calculate the expected long time profit of a stock. Black rock does so by determine how "healthy" a company is - the more healthy, the more likely it is the company will survive long term. Eg. A mining company that employs minors would not considered to be healthy as the risk of a lawsuit against this company is very likely to ruin it. The term healthy includes an entire (non public) framework of aspects a comany is graded on. We can only estimate the entire framework but we can safely guess individual aspects of it such as legal actions against company, amount of new products that dont flop or workplace situations such as fair salaires or good health coverage. The dei part would count to the latest one (a company that has diverse employees would likely be considered healthier in the framework)
The big problem is that this basically creates a death spiral. Companies warp themself so they can fit the investment criterias better (remember, stocks are loans) which leads to them failing. This means adoptation from blackrock which then takes the success companies, who manage to get away with dei bc of monopolic situations or good products, higher up in their framework. So the companies again refit themself so they better fit this and so on. Blackrock has no need to change this because 1) methematically the framework works and they make profit and 2) they are not required to purchase those companies only bc they correspond to the framework.
41,542 
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