Written by Lee Stoerzinger, CFP®
I remember back in college, when we learned about the railroads of the 1800s, how a few concentrated companies owned much of commerce and had to become regulated by the government. You also might remember Standard Oil or even more recent interventions such as the AT&T or Ma Bell split. Over the last century or so, as America was industrializing and foreshadowing what it is today, it seemed common to hear about these pressures in the market. The Sherman Antitrust Act of 1890 was enacted to put regulation in place to protect against monopolization. It seems a bit like ancient history these days as these utilities have become so commonplace in our lives. But are new ones in our midst?
We don’t hear much about monopolies in our discourse today. However, it is something I often find myself thinking about. When we look at the changes in our world, and things like technology, media, or even everyday retail consumer products, we seem to be moving toward an ever-narrowing share of companies owning greater parts of our product and service market. Have you ever looked at the small number of parent companies which control everything we watch and read? Or the conglomerates which stock almost every product on the shelves in our favorite stores? I’m not sure what to make of companies like Amazon yet (not a monopoly by traditional standards), but they are doing nothing less than re-shaping how we think about consumerism. The term illusion of choice comes to mind in all of this. Maybe that’s just something altogether different than a monopoly. If so, fair enough, if we all understand the difference.
Let me say up front that I am no expert in antitrust law. I also fully recognize that companies come and go, new ones which will change our lives forever don’t even exist yet, and the market often decides on winners and losers over time. However, when I see the loop we have created related to a full-on global low-price consumer-driven society combined with narrowing corporate wealth, it’s interesting. This is also fed by an ‘investing class’ reliant on these products in their daily lives, but also for the same success in their 401(k) and retirements. This is a newer phenomenon. Did you know that five companies provided 53% of the S&P 500 return last year? This makes for interesting discussions on diversification and what it means, especially regarding the other 495 companies.
I’m a market guy. I also work with people daily to make decisions which help them secure their wealth. Through this, my perspective is different than just looking at corporate America and determining whether something is a monopoly or not. It’s about the tools we all need to use now and what they are made up of. In addition, we are connected to our government and corporations in ways we have never been before through increased services, monthly billing lifestyles, and a demand-based structure. The line between all the pieces is becoming more and more blurred. As we move forward, I am interested to learn what the next phase of our service and delivery-based economy will present us with. Maybe everything is good and we have moved beyond what a monopoly is. Maybe we don’t care. Whatever the case, as guardians of our clients’ wealth, these are the types of things we think about. We don’t get any practice rounds when we come to work each day. The more we can understand the system and how to best operate in it, the better we believe our clients will be.
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