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Ultimately, it behooves the investors to be informed about the companies they invest in, and if they don't like what the company is doing, vote with their feet and divest. I am going to go and take a good look at the "securities class-actions" and "derivative lawsuits" that are mentioned in my parallel comment and see what these lawsuits are really about. I doubt they are over marginal variations of the rate of return.

And small investors who object to the practices of institutional investors such as index funds should not put their money into index funds in the first place. Hell, if all you want to track an index just buy index futures. Don't give your money to someone else so they get to charge you a fee, and have shareholder rights at a bunch of companies.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Sun Dec 24th, 2006 at 05:06:16 AM EST
Yes, and I tend to prefer mechanisms based on moving-foot voting rather than raised-hand voting. When people vote with their feet, they get what they choose, and hence have reason to invest serious thought in the choice. When they vote with their hands, they tend to be relatively thoughtless,because their vote is almost guaranteed to make no difference. Worse, their thoughtless choices (en mass) impose the results on the unwilling -- which, when policies are implemented, is apt to include themselves.

(BTW, regarding shareholder lawsuits, where does the settlement money come from?)

Words and ideas I offer here may be used freely and without attribution.

by technopolitical on Sun Dec 24th, 2006 at 03:54:52 PM EST
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