I Can’t Believe I’m Agreeing with George Soros, Here's Why: Part II

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You know I’m no fan of George Soros, (especially since he gave $1 million to reelect Gavin Newsom) but when it comes to BlackRock and their meddling in China, he has a point.

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In a recent op-ed, Soros points out the hypocrisy in BlackRock’s promotion of ESG funds here in the United States, and its foray into Chinese investing. He wrote:

BlackRock takes its responsibilities for its clients’ money seriously and is a leader in the environmental, social and governance movement. But it appears to misunderstand President Xi Jinping’s China.

The firm seems to have taken the statements of Mr. Xi’s regime at face value. It has drawn a distinction between state-owned enterprises and privately owned companies, but that is far from reality. The regime regards all Chinese companies as instruments of the one-party state.

This possible misunderstanding could explain BlackRock’s decision, but there may be another explanation. The profits to be earned from entering China’s hitherto closed financial markets may have influenced their decision.

You know I think BlackRock’s ESG efforts are driven more by EGO and profit than a genuine desire to do good by the world, or by investors.

If Soros is correct, and BlackRock’s Larry Fink simply misunderstands China’s markets and government, it could lead to disastrous results for the asset manager. Look at what is happening to China’s fabled “ghost cities,” built as investments but never even inhabited.

Re-upping the stunning demolition videos showcasing housing oversupply in China: 15 skyscrapers in China that were part of the Liyang Star City Phase II Project were just demolished after sitting unfinished for eight years due to absent market demand. pic.twitter.com/UByqjk8QXX

— Jon Hartley (@Jon_Hartley_) September 15, 2021

The big three asset management firms, BlackRock, Vanguard, and State Street, have become kingmakers in shareholder votes. With their power consolidated, they can control nearly every vote in America’s public company elections. That puts immense power in the hands of a small number of people running these asset managers.

Assets at the big firms are growing, fast. In 2017, Bloomberg predicted the combined assets under management at BlackRock and Vanguard would hit $20 trillion by 2028. As of June 20, 2021, the combined assets of the two companies were $17.5 trillion, well on their way to meeting the $20 trillion goal that the Financial Post said would make them the owners of “almost everything.”

Action Line: Unless you want someone at BlackRock or Vanguard using the power of your investments to achieve their own goals, avoid index mutual funds and ETFs, and instead invest in individual stocks and bonds in a balanced portfolio. If you need help, I’d love to talk with you.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.