Heavyweight champ
Succession drama at BlackRock
Good morning, savvy investors. This is your Stock Market Rundown for September 7th, 2023. Thanks once again for hanging out with me. Let’s dig in:
TODAY’S TOP STORY: TOP OF THE ASSET-MANAGEMENT FOOD CHAIN 💵
Around the boardroom table at asset management firm BlackRock, it must be like the TV show Succession has come to life. The firm’s co-founder and longtime CEO, Larry Fink, is pushing 70 and eyeing retirement.
A group of top execs are vying to take his throne, and serve at the helm of the world’s most powerful financial institution. These would-be successors better get up pretty early in the morning if they want to step in Larry’s shoes: he famously gets up at 5:15 AM. (You know what they say about “early to rise”.)
Over the years BlackRock has gobbled up big slices of the asset management industry, acquiring competitors like iShares, a major player in index funds. Now, with over $10 trillion in assets, BlackRock is the Mike Tyson of the asset management business—pound for pound, the most dominant player.
They run so much money for public-sector pension funds that, if you’re a teacher, firefighter, or police officer, odds are Blackrock has its fingers in your retirement pie.
Some conspiracy theories floating around the internet charge that BlackRock somehow owns all the biggest companies. Could it be that a bunch of bros in gray fleece vests are actually the puppet-masters of corporate America?
Let’s back up and review Index Funds 101. The entire concept of an index fund is that it’s passively managed, and owns a little piece of every company in a given stock index. So, because BlackRock runs literally trillions in index-tracking products, they end up owning a soupçon of every public company.
That doesn’t mean all the airlines or all the pharma companies are owned by Blackrock. The actual owners are the investors whose money it is—the aforementioned teachers, firefighters, and police officers.
So, no, BlackRock isn’t some sort of clandestine cabal, and Larry Fink isn’t its shadowy overlord. He’s just your basic garden-variety billionaire.
SO WHAT ELSE IS GOING ON?
Forget moving out of mom’s place. A top economist says the Fed may have “broken” the housing market, as the ramp-up of interest rates crushed both supply and demand. How about sprucing up the basement with a new vegan-leather couch instead?
Warner Brothers cut its profit outlook by half a billion dollars due to the Hollywood writer’s strike, which has now dragged on for four months, robbing us of the corny jokes of late-night comedians.
OpenAI, the startup behind smash-hit AI tool ChatGPT, is on track for a billion-dollar revenue run rate. Never again will you have to sweat over writing a best man speech for your cousin’s wedding—just get ChatGPT to do it for you.
Grand opening, grand closing: an ETF that tracked Jim Cramer’s stock picks shut down after just five months in operation, having attracted only (cue Dr. Evil voice) one million dollars in assets. TV stock jockeys are entertainers, not financial advisors.
That’s it for today, homies—see you bright and early tomorrow. Yours in capitalism, The Axe