Will’s Articles

Stock Ownership

Responsibility in an “Ownership” Society
(January 2002)

An “Ownership Society”, in which individuals are expected to be responsible for their own welfare, cannot exist unless society recognizes its responsibility to owners.

Those of us who advocate the social benefits of an Ownership Society in which individuals have greater responsibility to save and invest for their children’s education, their future health care and their retirement (including social security assets) have another responsibility beyond simple advocacy of the Ownership Society. We have a responsibility to simultaneously advocate truth-in-labeling on stocks that will enable consumers—not just “professional” investors—to make intelligent investment decisions. Those decisions require that consumers be able to easily and reasonably determine the real value and expected return on their stock investments.
In the long run, an Ownership Society cannot be successful if the average citizen must make investment decisions based upon a defective mathematical model (generally accepted accounting principles—“GAAP”) which asserts that owners’ equity is free. Common sense and 40 years of academic research on the Capital Asset Pricing Model prove that capital isn’t free... Yet society persists in allowing financial statements and management incentive pay to perpetuate this myth at the expense of investors.
As a society, we need to formally acknowledge that stock is a consumer product, and we have a responsibility to ensure that stock is as intelligently and truthfully labeled as our food.
American democracy can not be successful if it continues to institutionalize a measurement process that empowers cognoscenti to take advantage of average citizens by making a lottery out of the average person’s life’s work and savings.
Initial suggestions for truth in labeling on stocks are contained in my books: Rich Shareowner, Poor Shareowner™ (Revised Edition) and Money Ain’t Free.