The study of complex networks has given us some remarkable insights into the nature of systems as diverse as forest fires, the internet and earthquakes. This kind of work is even beginning to give econophysicists a glimmer of much-needed insight in the nature of our economy. In a major study, econophysicists have today identified the most powerful companies in the world based on their ability to control stock markets around the globe. it makes uncomfortable reading.When it comes to complex networks, economics has always been poorly understood. That’s at least partly to do with the complexity of the networks n question. It is relatively straightforward to draw up a set of nodes representing the shareholders of major companies and draw in the links between them. This kind of analysis has shown that the control of stock markets is distributed between many nodes.
This kind of basic graphing tells you nothing about the way ownership changes as shares are bought and sold. Another important variable is the market capitalization of the companies–their size–which has an important effect on the dynamics. In theory, including these factors can give you a much greater insight not only into the ownership of these companies, but also into their control.
Now James Glattfelder and Stefano Battiston at the Swiss Federal Institute of Technology in Zurich have included these factors in a study of the control and ownership of stockmarkets in 48 countries around the world. Their results are startling.
It turns out that the insight gained from a simple network analysis –that ownership and control is distributed over large numbers of people–is entirely misleading. When other factors are included, such as the way ownership changes as shares are bought and sold, it turns out that stock markets are controlled by a very small number of companies.
Glattfelder and Battiston have even identified the companies with the greatest power in each of the stockmarkets they study. They have even created a list of global powerbrokers, the companies that are influential in the most stock markets around the world. Here is the top 10:
- The Capital Group Companies
- Fidelity Management & Research
- Barclays PLC
- Franklin Resources
- AXA
- JPMorgan Chase & Cp
- Dimensional Fund Advisors
- Merrill Lynch & Co
- Wellington Management Company
- UBS
These are the companies that control the global stockmarket. That’s a frightening though. What it suggests is that the stability of the complex networks that make up our economy is hugely dependent on the ongoing survival of just a handful of companies.
We’re entitled to ask whether they’re up to the job. Recent experience suggests not.
Ref: arxiv.org/abs/0902.0878: The Backbone of Complex Networks of Corporations: Who is Controlling Whom?
“That’s a frightening though. What it suggests is that the stability of the complex networks that make up our economy is hugely dependent on the ongoing survival of just a handful of companies”
That might be a bit of a leap. Looking at the network dynamics and working backward to the structure doesn’t necessarily allow you to predict how structural changes influence the dynamics. Perhaps the network would be stable across a change in the number or makeup of nodes?
Instead of being frightening, I think this study is disheartening to many people as they realize how little they actually know about how the stock market functions.
Actually this makes total sense. In my opinion it also explains why the stock market tanked today (same day stimulus bill passed the senate). Any sane person (imo) should know that the stimulus bill is a good thing. But the mega-corps don’t like it because it includes a lot of support for the PEOPLE and not so much in the way of free money for the banks and tax cuts for the rich. So their reaction is to try to scare everyone by making the market tank for a bit. Just a theory but …
[...] Econophysicists identify 10 most powerful companies in the world: http://arxivblog.com/?p=1195 [...]
a 3d animation of the first network seen above (the japanese backbone):
http://www.youtube.com/watch?v=RLGtNPDflcw
njoy…
It is natural to assume that the largest holders of securities should have control over those securities whereas the decisions to buy, hold or sell thoses securities is often made up of many individuals within the organization and as these companies are so large and diverse – there is often the case when one division of a company is buying, while another is selling and they do not cross within the institution.
In the case of Franklin Resources – 3 different companies exist within and their management groups are said not to cross the chinese wall between them. It is additionally impossible to get ego-driven money managers to pursue the same course on any given security to control that security in any manner to drive it in any direction.
Having been closely affiliated with 7 of the above 10 – either as a seller to or a seller of their companies securities, they know not what they are doing with individual securities. They are laughable companies, with young, inexperienced people at the helm. Take a look at the history of mismanagement at Franklin. They were so bad at one point, they had a committee of CEO’s. the last one standing turns out to be a grandson of the founder – surprise! All of these companies are driven by the collection of assets to derive a fee from. The more they have under management, they greater the fee income.
The selling of the securities within is the driving force and are only gathered by commission/fee driven people that do not know how to manage for absolute returns. Relative to their peers and a benchmark is their only barometer. If they are close or are in the top quarter, they get the money, when they are not, they lose it.
Take a close look and you will see that the negative flows that these companies are experiencing, are well deserved. and the share prices reflect the relative underperformance and absolute mismanagement of assets.
These companies are a depository of underperforming assets in which the next names of the top 10 will be different than these. Rotation of assets is inevitable and the best never stay the best. In fact, you will see AXA’s sales fall flat after a product change on Feb. 17.
They were one of the largest money raisers in 2007 and 2006 of the Franklin mutual funds within their annuities. Merrill Lynch was the top seller of the AXA annuities, UBS was also a top seller. They all sold the same stuff and are all failing as a result. The lemming factor going up and over and now down is well documented.
More to come as the new players surface to take over their roles.
The market is bigger than these companies.
Quite Naive. The issues in the paper are much better addressed from the point of “governance” versus any sort of network analysis. People really in the know, are upset that big mutual funds (the author’s top ten) do not exert enough ownership control, and instead allow corporations to be captured by ceo’s and inside boards. Instead most mutual funds are “absentee” owners, and sell their stake as soon as they don’t like the direction of the company, instead of trying to influence that direction like an owner _should_. So, if the point of the paper was “mutual funds are big” yeah, but I think capital group’s website kinda tells you that when they list $1T AUM.
ah,, the swiss.
[...] the physics arXiv blog » Blog Archive » Econophysicists identify world’s top 10 most powerful co… (tags: business networks economics physics visualization politics) [...]
[...] Strange Elongated Skulls Discoveredin Russia [Video] Who Controls the Stock Market (Network analysis by physicists) [...]
“That’s a frightening though. What it suggests is that the stability of the complex networks that make up our economy is hugely dependent on the ongoing survival of just a handful of companies.”
So if these 10 companies that control the global stock market go under, then they’ll just sell their assets to others (probably for a good price too), or others will just take over the market share. Also in response to “Dude” up board that posted that, “Any sane person (imo) should know that the stimulus bill is a good thing.” Really? Because logically it seems to me that the “stimulus bill”, which effectively is taking money from profitable businesses and giving it to unprofitable businesses, is counter productive for a healthy economy. I mean if I own two businesses and only one is profitable, I would be a fool, and I coule expect to soon go broke if I took the money out of the profitable business and put it into the unprofitable business.
these are mostly index funds…passive investors who don’t make bets. their portfolio stocks are the most liquid and easiest to sell
better to look at 10 largest traders (as opposed to holders)….probably find big hedge funds there like SAC
I am always intrigued in informative posts about electro magnetic generators and free energy. This really opens my mind. excellent post and I have added you as a bookmark. thank you
Buy Canon IR-2230 Sharp DM-3551
Buy Sharp MX-M200D
Canon Image Runner
Image Runner 2018
Find Canon IR-2870
Review Canon IR-1025IF
High-Performance Laser All-in-One for your Business or Small Workgroup
Buy Panasonic
Panafax UF-7200
Sharp FO-DC535 REFURB
Find 8480 Brother MFC
Canon IR-2016i
Sharp Sharp MX-M260
In my offered opnion that even though it was plain to see a coherent article I think that there were still points to be improved upon. I would like to hear your thoughts..and that of your other readers and whether or not they have come to the same conclusion. Cheers
We’re a group of volunteers and starting a brand new initiative in a community. Your blog provided us valuable information to function on. You have done a marvellous job!
accutane dangers long term, [url=http://www.box.net/shared/t12o1b2ijy]mexico pharmacy online accutane[/url],
accutane neuroblastoma, [url=http://accutane-online.viviti.com]typical dosage of accutane[/url],
accutane dosage calculator, [url=http://accutane.coolpage.biz/?p=15]jessica simpson accutane[/url],
pimples after accutane course, [url=http://nappyboyonline.com/profile/BuyAccutaneOnline]accutane abortion dilemma[/url],
accutane lawyer oklahoma, [url=http://buy-accutane-online.mp/]history of accutane[/url].
Took me a couple of minutes to read all theremarks, but I truly preferthe post. It proved to be reallymeaningfulto me and I am more than sure to almost all of the commenters here!
Maca is considered to be a natural remedy for poor immune systems.
Good writing, maybe im more intrested in other posts liek this, can someone post links if they know? Thanks!
Top-notch post indeed. I have been awaiting for this update.
Hello, i feel that i noticed you visited my blog thus i got here to A§return the wantA¨.I am trying to in finding things to enhance my site!I guess its adequate to make use of some of your concepts!!
Your a good writer.. keep it up, your going to go far.
cam development print designer gold v10 crd multilingual…
cam development print designer gold v10 crd serial keygen…
Honestly loved viewing this posting, which is made easier by the great theme you are using. Is it custom made produced for it looks very professional, cheers yet again for the fantastic article.
Pleasant data. Cheers just for this.
Hello there, I came across your website via Google while searching for a related topic, your website showed up, it seems great. I have bookmarked it in my google bookmarks.
Good report out there. I rarely ever let a 24-hour period end up withouth having most up-to-date data right from this site.
As I web-site possessor I think the content material here is rattling excellent , appreciate it for your hard work. You need to preserve it up forever! Best of luck.
Need be to follow up and mean you can know how, a tremendous amount I liked acquiring your web site today. I’d personally consider it a honor to perform at my company and also utilize tips shared upon your web site and also face visitors’ remarks this way. Should a position affiliated with guest writer become being offered at your last part, i highly recommend you ok, i’ll know.
Curso Dreamweaver…
Econophysicists identify world’s top 10 most powerful companies « the physics arXiv blog…
I heard you can buy website traffic at buxp. Did you testthat out already? I would like to know if it is good
[...] arxXiv blog entry on “econophysicists identify world’s top 10 most powerful companies.” [...]
The most terrifying thought is, all the world’s Governments have also become slaves to this Master Entity, those very Government’s that the people put into office and look to, for protection, from attacks from just such a monstrous monolythic entity, has been assimilated, by the very entity they serve…the governments of the world, including and most especially the most advanced world governments have become slaves, dependent on the beast for their own survival with little or no compassion for the masses of trhe voiceless, unprotected “peasants” they feed into their host’s ravenous maw
I believe you have mentioned some very interesting points , thanks for the post.
makeup case…
[...]Econophysicists identify world’s top 10 most powerful companies « the physics arXiv blog[...]…
You definitely can afford north face footwear limited at discount price. Andnorth face footwear also own the stylish design.
You should take part in a contest for one of the best blogs on the web. I will recommend this site!
It’s really a great and useful piece of info. I’m satisfied that you simply shared this useful information with us. Please keep us informed like this. Thank you for sharing.
Jocuri…
[...]Econophysicists identify world’s top 10 most powerful companies « the physics arXiv blog[...]…
tigara…
[...]Econophysicists identify world’s top 10 most powerful companies « the physics arXiv blog[...]…
You realize therefore significantly in the case of this matter, made me in my opinion imagine it from a lot of various angles. Its like men and women aren’t interested until it is one thing to accomplish with Woman gaga! Your personal stuffs nice. At all times handle it up!
financial…
[...]Econophysicists identify world’s top 10 most powerful companies « the physics arXiv blog[...]…
This is all starting to leak out to the main stream media… finally. We just need to KEEP THE HEAT on them. We will soon be posting new petition and email campaign info as well as protest ideas. We just need more people following this group and we can use resources from the Tea Party, Occupy and other groups. THEY win as long as they can keep us arguing with each other.
WE need to come together with people we wouldn’t normally work with to bring these criminals DOWN! Spread the word, others have carried the load of exposing this activity. Now we the people NEED to come out and make it a major issue in the news and in this political cycle.
http://www.facebook.com/BankAndPoliticianFinancialCorruption
A lot of thanks for all your valuable efforts on this site. My mother takes pleasure in setting aside time for internet research and it’s easy to see why. Most people know all concerning the dynamic means you convey very important secrets on your web blog and in addition encourage contribution from some other people on that situation while our favorite simple princess has always been learning a lot. Take pleasure in the remaining portion of the new year. You’re the one carrying out a stunning job.
It’s the best time to make some plans for the future and it’s time to be happy.
I’ve read this post and if I could I desire to suggest you few interesting things or advice. Maybe you can write next articles referring to this article. I want to read even more things about it!
Have a look at my site: prescription glasses sports
Good day! I could have sworn I’ve visited this website before but after browsing through many of the articles I realized it’s
new to me. Anyhow, I’m definitely delighted I discovered it and I’ll be book-marking it and checking back often!
Your site is exactly what I’ve been wanting to find. What a very revealing read. If every author could be as visitor focussed just like you, everyday living could be far less difficult.
You’re actually a good webmaster. The web site loading velocity is incredible. It sort of feels that you’re doing any distinctive trick. Furthermore, The contents are masterwork. you have performed a excellent process in this topic!
Hello, Well put together posting. There exists a trouble with your site with website traveler, might follow through? Web browser however may be the current market innovator and a significant amount of folks will leave out your wonderful publishing because of this trouble.