Black Rock is an Asset Management Company that is the world's biggest investor.
It has $4.1 Trillion of assets under management.
It is bigger than any bank in the world.
It is the biggest share holder in half of the world's 30 largest companies.
It also invests in bonds, commodities, hedge funds, property and any thing else investable.
This is a bigger portfolio than all the world's hedge funds and private equity firms combined, whilst the assets of Black Rock actually include many of those hedge funds and private equity firms.
But the decisions on how the invested money of Black Rock is used is not decided by people, but by a piece of computer software known as 'Aladdin'. This software not only decides how their $4.1 Trillion is invested but also an other $11 Trillion of investment held under management by competing Asset Managers! Black Rock hire out the services of Aladdin to other businesses.
So what are the problems with this?
1.......Moral Investment...
Aladdin is a computer program which is doing the "thinking" for Black Rock, the other asset management firms it is being contracted out to, and all their investors combined.
-But....As any investment business should have,- There should be a responsibility to any one else who may be effected by the investments that Black Rock and any one who makes investments based on the judgement of Aladdin.-In other words Aladdin should have a conscious that would prevent it investing money in ways that may have a detrimental effect on those not involved or linked in any way with Aladdin and Black Rock! .......................................................................................................................
This may seem a slightly optimistic idea to some, as it is fairly clear that from events in the financial world over the past years have proved that to expect investment bankers, traders, hedge funds etc to have a consciousness with regard to others is asking too much., let alone a computer system and software that had been designed with these same people in mind!
-I think we can there fore take it that Aladdin has no responsibility to the economics out side of the people that Aladdin is actually working for .................
If you know different, please explain how this works and I will share it with the world!.....If you have a genuine logical explanation?!
2.........Manipulation of Markets...
-Manipulation of markets.- That is to take action that will give an unfair advantage is illegal............But Black Rock deals with so much cash that it has a vast influence on the markets. It has the ability to cause a crash in a commodity price or a share price in a big company, just by actions it decides to take. As Black Rock grows, which it is doing so now at around an increase of 10% a year, investment businesses out side of the umbrella Black Rock and Aladdin are going to have to think less about market prices and more about what Aladdin is going to be doing next. Whether these competing businesses can be successful or not will depend on whether it can keep ahead of the thinking of Aladdin, or at least be that close behind it that losses incurred are not so great that they cause major problems for these smaller disadvantaged investment schemes.
3...Who ever is in control of Aladdin has been given too much power. ..........................................................................................................................................
4..The rate that Black Rock and Aladdin are sucking in investment means that it doesn't need to make good investments in order to payout returns on investments.
'Technical issues' regarding 'sensitivity' are currently delaying the completion of this post!
It has $4.1 Trillion of assets under management.It is bigger than any bank in the world.
It is the biggest share holder in half of the world's 30 largest companies.
It also invests in bonds, commodities, hedge funds, property and any thing else investable.
This is a bigger portfolio than all the world's hedge funds and private equity firms combined, whilst the assets of Black Rock actually include many of those hedge funds and private equity firms.But the decisions on how the invested money of Black Rock is used is not decided by people, but by a piece of computer software known as 'Aladdin'. This software not only decides how their $4.1 Trillion is invested but also an other $11 Trillion of investment held under management by competing Asset Managers! Black Rock hire out the services of Aladdin to other businesses.
So what are the problems with this?
1.......Moral Investment...
Aladdin is a computer program which is doing the "thinking" for Black Rock, the other asset management firms it is being contracted out to, and all their investors combined.
-But....As any investment business should have,- There should be a responsibility to any one else who may be effected by the investments that Black Rock and any one who makes investments based on the judgement of Aladdin.-In other words Aladdin should have a conscious that would prevent it investing money in ways that may have a detrimental effect on those not involved or linked in any way with Aladdin and Black Rock! .......................................................................................................................
This may seem a slightly optimistic idea to some, as it is fairly clear that from events in the financial world over the past years have proved that to expect investment bankers, traders, hedge funds etc to have a consciousness with regard to others is asking too much., let alone a computer system and software that had been designed with these same people in mind!
-I think we can there fore take it that Aladdin has no responsibility to the economics out side of the people that Aladdin is actually working for .................
If you know different, please explain how this works and I will share it with the world!.....If you have a genuine logical explanation?!
2.........Manipulation of Markets...
-Manipulation of markets.- That is to take action that will give an unfair advantage is illegal............But Black Rock deals with so much cash that it has a vast influence on the markets. It has the ability to cause a crash in a commodity price or a share price in a big company, just by actions it decides to take. As Black Rock grows, which it is doing so now at around an increase of 10% a year, investment businesses out side of the umbrella Black Rock and Aladdin are going to have to think less about market prices and more about what Aladdin is going to be doing next. Whether these competing businesses can be successful or not will depend on whether it can keep ahead of the thinking of Aladdin, or at least be that close behind it that losses incurred are not so great that they cause major problems for these smaller disadvantaged investment schemes.
3...Who ever is in control of Aladdin has been given too much power. ..........................................................................................................................................
4..The rate that Black Rock and Aladdin are sucking in investment means that it doesn't need to make good investments in order to payout returns on investments.
'Technical issues' regarding 'sensitivity' are currently delaying the completion of this post!
Hmm, can't resist it. Aladdin Sane!
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