Snap, crackle, monopoly: Do you invest in breakfast?

Just three companies — Vanguard, BlackRock, and State Street Global Advisors — control over $16 trillion of assets in their massive proprietary funds.1 With so much money under their control, it's common for these companies (as well as other big financial players in the industry) to own large stakes of multiple competing companies in the same industry.

Retirement's big, yeah, yeah, yeah ...

In a recent NPR article, a Yale economist/kids cereal aficionado and his cohorts decided to study whether large companies with common ownership have the effect of creating a "stealth monopoly." They decided to test their hypothesis using cereal companies because the aforementioned big three investment companies each own about 5% of each of the big four cereal companies: General Mills, Post, Quaker Oats, and Kellogg's.

The gist of their hypothesis was to determine whether our collective retirement savings through our 401(k)s, pensions, IRAs, etc. — which are heavily invested in mutual funds managed by the Vanguard, BlackRock, and State Street Global Advisors of the world — had the effect of helping create a behind-the-scenes monopoly that raises the prices of goods and services we consume, such as, you guessed it, breakfast cereal.

Mikey likes it!

To this author's delight, the study did not find any evidence of price effects of common ownership in the breakfast cereal market. Now if I could only figure out how to corner the frozen concentrated orange juice market, I can retire early from the tax game.


A sweet SNAFU

I'm not a huge fan of Valentine's Day, but I DO like conversation hearts. Orange and yellow are my favorite, white and pink are gross.

Doing some research on these seasonal candies, I discovered they were originally made by NECCO (an acronym!) and they date back to 1901.1 But their recent history has been plagued with bad business decisions and production failures that have kept lovers of these chalky little hearts on an emotional rollercoaster.

Flavor of the week

In 2010, after 109 years of success and consistency, NECCO not only changed the recipe of the hearts, dumping the original pastel formula for a softer candy in brighter colors, but they also introduced new flavors. Generally, people do not like when you mess with a familiar and beloved comestible, and I'm just going to mention New Coke as another example of this.

The public was not happy with these new sour apple, strawberry, and "spring fresh" offerings. (What does spring fresh taste like? A dryer sheet?)

It's not you, it's me

In 2018, NECCO declared bankruptcy (just saying ... spring fresh), and Sweethearts was acquired by Spangler Candy Company. But in the process of setting up its plant to manufacture the newly acquired confection, Spangler missed Valentine's Day 2019. Sweethearts returned in 2020 with the original flavors but again there was trouble in paradise. Due to equipment problems, the familiar sayings ("Be mine," "LOL," "Miss you") were either incomplete or missing entirely from the hearts.2

Reunited, and it feels so good

Spangler got hearts in boxes and into stores in time for Valentine's Day 2021.3 They added new sayings to the hearts to commemorate classic love songs (including "At last," "IgotU babe," and "Sugar Sugar"). And if they ever consider bringing back the spring fresh flavor, maybe they can print those with "Love stinks."


What's in an acronym?

In response to last week's piece on the prevalence of acronyms stemming from all of the tax legislation over the last year, we received acronym meaning suggestions from a couple of readers. Here are the ones that were fit to print.

Charles T.:

RSVP = Really Serious Virtual Presentation

CARES = Can't Actually Remember Every Section

LOL = Lobbyists Often Legislate

FFCRA = Finding Federal Citations Relieves Angst

Phil H.:

TLA = Three Letter Acronym

Evie S.:

FFCRA = Fatty Foods Cause Regrettable Angst

Did you know?

The word acronym is surprisingly young, as words go. It's formed from the Greek roots acr-, meaning "height, summit, or tip" and -onym, meaning "name." It appears to have originated in German, with the German form Akronym found around 1921. English language citations for acronym date to a 1940 translation of a Lion Feuchtwanger novel.1


A few fun facts about this week's writers:

Mike Giangrande, J.D., LL.M.Mike Giangrande, J.D., LL.M., is an Orange County native, and you can find him around his backyard smoker, working in his garage, or sipping lemonade at either a baseball or soccer game for this three children.

Kathryn Zdan, EAKathryn Zdan, EA, spends her non-Spidell hours on photography and watching horror films (and then sleeping with the light on). She also enjoys hiking, biking, and walks with her ancient Jindo, Mango.

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