Today's Wall Street Journal had a very interesting article on its front page. I was glad to find out that even with my pathetically limited financial knowledge, I was able to make a lot out of it. Basically the article talked about how hedge fund companies can influence a company's decision-making without even owning any share of the company. It works like this. When a company is going to have a major shareholder meeting, hedge fund companies go around borrowing stocks of this company from broker/dealers. The broker/dealers, as usual, tap into their customers' accounts and lend the stocks to them. However, instead of shorting the shares, the hedge funds hold them until the voting day. After using their share-holder rights to manipulate the outcome of the vote, they simply return the shares to the broker/dealers who they borrowed from. It doesn't cost them a thing, and the original owner of the stocks don't even notice their voting rights, along with their stocks, have just been used by someone else.
This is not the only shrewd tricks devised by brilliant Wall Street elites. I am sure I will learn many, many, more, as long as I keep reading WSJ. But I am really impressed with this one: it is smart, effective, and totally legitimate. It makes me wonder who are the masterminds behind the idea. Surely it's nothing that my little brain would be able to come up with. But after a brief moment, I realized how silly I was. There are so many smart people on the Wall Street, and probably half of them have PhDs in all kinds of majors. Of course they have a ton of brilliant ideas. But wait a second, why does Wall Street have such a high concentration of smart people? Because they are paid well, plain and simple. But why should they be paid so well? Is their job harder than other people's? Are they smarter than other PhDs? I am not 100 percent sure. Don't get me wrong. I am not saying their jobs are not hard or they are not smart people. I am just stating the fact that there are other people who are just as bright and diligent who are simply never gonna be able to afford what the Wall Street guys can enjoy. This has already caused a lot of people switching their jobs or majors which they have been doing for years, and we see more and more smart brains are being drained from other areas to this highly competitive yet highly rewarding industry. Isn't that a biggest waste of people's time and effort? Why do we need so many people to play with money and make the rich richer? I just don't get it.