When you watch the movie "Dumb Money," you realize people now have the unprecedented power to take back the corporate sector. The movie, which opened nationwide Sept. 15, ends with a clear statement: the movement to take on Wall Street has just begun. But the power of the movement goes much further.
The film takes its name from Wall Street’s belittling term for retail investors, who do not have the resources to analyze stocks as do institutional investors. There is nothing dumb about investing money in company shares and then exercising the additional benefit of voting those shares via proxy. That amounts to a retail investor superpower.
"Dumb Money" illustrates the attitude Wall Street (aka "smart money") adopted toward retail investors until a group of these novices flipped the script and taught hedge funds a lesson in 2021. More specifically, hedge funds were out-flanked by a bunch of "wireless investors" who bought GameStop stock via commission-free trading apps and coordinated their collective efforts to take on Wall Street using social media.
Such wireless investors are people who use apps such Robinhood, Webull, Public.com, Charles Schwab, or Fidelity to buy and trade their shares. They obtain most of their investing information from online sources like websites, Reddit, YouTube, X (formerly Twitter), Instagram, or TikTok. Wireless investors also tend to coordinate their collective endeavors on a global scale online. This global engagement makes wireless investors indomitable.
According to an August 2023 Public.com report, as many as 30 million new brokerage accounts were opened in the United States between 2020 and 2022. This influx of new investors has begun to bring an increased diversity to a field previously dominated by older, white men. In particular, there has been an increase in women investors and in African American and Asian investors and new investors also have tended to be younger. For example, according to a Charles Schwab report, of the new investors in 2020, 51% were Millennials and 16% were GenZ’ers. This means that millions of people who have never engaged with the corporate sector have now acquired the superpowers that holding shares carries.
Not only are younger generations acquiring superpowers through holding company shares but they are also just on the verge of wielding a great fiscal firepower that will increase over time. The Great Wealth Transfer is now underway, transferring as much as $84 trillion in assets from Boomers to GenX and Millennials, with GenZ’ers also benefiting. Although corporations rival nation-states in the wealth they control, it will be hard to ignore the collective fiscal firepower of these investors, particularly when combined with their voting superpowers.
When wireless investors ultimately forced a short squeeze of GameStop’s stock, it captured the world’s attention with many referring to it as a David v. Goliath moment. As the collective power of individual investors goes mainstream with the release of "Dumb Money," the world gets a glimpse into the potential power of wireless investors.
What might be hidden to most, however, is that when people own shares, their ability to steer corporations is limitless. And there is something more. When people influence corporations, they can have corporations mirror their values—this is more important than ever as diversity in share ownership increases.
But how do wireless investors unleash their superpowers to steer corporations? People can claim back control over the corporate sector if they voice their values through voting proxies in relation to annual general meetings of shareholders. This is the most unbelievable missed opportunity today. Currently, only approximately 30% of shares held by retail investors are voted each year.
According to Public.com’s survey, the No. 1 reason for not voting is a lack of knowledge regarding the power to vote. This is understandable as the proxy voting process is not necessarily intuitive nor is it a matter of common knowledge. In fact, we have argued for mandatory corporate governance education at least at the high school level so that the proxy voting process becomes like second nature.
The second reason for not voting is not understanding the subject matter. But, in recent years, several startups have developed aimed at providing tools to enhance retail investor engagement. For example, iconik allows retail investors to link their brokerage accounts and submit a profile reflecting their stances on a variety of issues. Iconik will vote shares on the investors’ behalf based on these profiles, thus eliminating the need to remember to vote in each specific corporation’s annual meeting. Another startup, troop, offers a platform for individual investors to stay informed on votes and build collection action to propel changes at corporations and, in turn, society.
Tools like these as well as the internet provide the infrastructure that allows anyone to stay informed, coordinate online with other investors, and vote shares at effectively no cost.
Wireless investors have the power to bring their personal values to corporate governance and make the corporate sector responsive to what people need. You are sitting on massive amounts of untapped influence.
It’s time to unleash your inner superpowers, vote those shares, and fuel the movement.
Sergio Alberto Gramitto Ricci is an Associate Professor of Law at UMKC School of Law, in Kansas City, Missouri.
Christina M. Sautter is a Professor of Law at SMU Dedman School of Law in Dallas, Texas.