The clip below offers some incredibly rare, candid commentary on the massive capital risks presently embedded in long always products and marketers. I am not generally a fan of Carl Icahn, but what he says in public here about BlackRock in front of CEO Larry Fink is exactly right and unusually frank in a business full of industry gladhanders who usually stick together.
Fink’s response is vapid mouthing because he has no viable arguments to refute the criticisms. He can only offer empty sentences. Fink’s whole business model is to get people to buy in at every price, everyday in every way. But he is typical of finance types. Like all ETF, fund cos, and conventional asset allocators, BlackRock sells different colors of risk ‘jelly beans’, which they package in many different flashy wrappings. But when, like today, jelly beans are all heinously over-valued, offering us the same jelly beans wrapped in different packages and brands, offers no value, diversity or capital protection.
Passive fund cos and managers like BlackRock and Fink (Warren Buffett too) have grown in wealth and prestige on the back of animal spirits fueled by the Fed’s QE programs over the past 5 years. They have been simply riding the wave and calling it genius. When the wave recedes again and capital crashes, they will claim it was not their fault. Seeing the CNBC anchor assert that Icahn’s criticisms are ‘not fair’, is predictable. BlackRock is a huge CNBC sponsor and Fink is one of their regular, much over-lauded and promoted guests.
Here is a direct video link.