Moral Investing

[Burgold]

I know a number of you invest in the stock market whether through individual securities, ETFs or mutual funds. I not only invest for myself, but have a few people I advise. Historically, I do pretty well, but that's not germaine to this thread. What is is what happened yesterday. A client came to me with a company and said what do you think of X. I told him that I wouldn't buy it, but it was okay if he did. I told him he'd probably make good money on this company. I admitted that it the metrics looked good and the sector made sense, but that there are a few companies that I just won't deal with on moral grounds. Companies that I think are too destructive, slimey, or corrupt. His response was that as long as he made money on it he was happy. I don't begrudge him that and I also don't deny the fact that I own some companies that aren't exactly Snow White.

So, I'm just wondering for those who invest. Do you have a line in the sand? Are the companies you just won't buy even if every indicator points to it being a really smart investment.

[chipwhich]

So, I'm just wondering for those who invest. Do you have a line in the sand? Are the companies you just won't buy even if every indicator points to it being a really smart investment.

No.

You, the private investor, don't have enough information to make a fair decision on the "moral" beliefs or basis of a company.

It's easy to make a stand against a company like Exxon/Mobil. It's not so easy to understand the morals of a company not in the public eye as much as the big boys.

You wont buy Apple because they have factories in China? Well so does everyone else.

You think big oil are nothing but profiteers. Well so is everyone else.

At some point in time, CEO's of companies have to watch the bottom line to make returns for their investors. Typically that means reducing costs by things a lot of us might find morally wrong.

[DRSmith]

Yes

I am at the point where I am pretty much now into bonds only

I have a problem with the idea of making money at the exspense of others, like a company slashes wages and bennies to increase profits or ships things overseas or a company makes something I do not morally agree with if I think smoking is harmful then it is wrong of me to profit of that which cause addiction and death to another

[Burgold]

Yeah, I won't invest in a tobacco company either. I'd be too much of a hypocrite. I do have some money invested in oil... so, I'm at least somewhat of a hypocrite. Then again, I need to make some money off the insanity I'm paying at the pump. There are a few oil companies I won't touch though. Not because they've had accidents, but because of the way they avoided, handled, neglected their responsibilities.

[Elessar78]

like chipwich, you just can't know how slimey or evil most companies are. You may have intimate knowledge of a few, but the rest is probably is based on media perception and not anything substantive. We are talking about the average investor though. If one is IN the business of investing then that person needs to know the ins and outs of a company. Dubious behavior can be classified as risk on some level, so the investor has to factor that into the expected return premium (I expect a higher rate of return for a riskier company than a stable one).

Most of my investments are in index funds so the slime is in there with the cream, I'm sure.

[twa]

No.

You, the private investor, don't have enough information to make a fair decision on the "moral" beliefs or basis of a company.

While I agree with your premise ,It is much easier if you invest in smaller companies

With the mega corps and funds there is no definitive morality, despite what the PR releases put out.

[Burgold]

By the way, on the poll for option 2, I think I meant low bar... as in, there are very few companies so outrageously bad that I could never invest in them, but there are a few out there.

[pointyfootball]

It's a good goal, but I don't think it's unrealistic as it seems to me to be a Pollyanna-ish. I can rattle of a ton of companies that you could flag for moral reasons: McDonalds, WalMart, Apple, Georgia-Pacific, Siemens, Exxon, Boeing, Sears, Ford, Toyota, Avon, Nestle, etc. etc. Seems like if one wants to do this, they would need to invest in smaller companies that they know intimately and can verify they are ethical. I just assume most large companies are not.

[USS Redskins]

With the very small amount I have to invest I tell my guy one thing - no companies that contribute to NPR.

Just kidding.

Wish I had more to invest and be moral about it.

[pointyfootball]

Yes

I am at the point where I am pretty much now into bonds only

I don't see how bonds are any different from stocks? You still would need to know what the money being borrowed is being used for. Even municipal bonds could end up in unethical/immoral companies hands by the time it's all said and done.

[Burgold]

With the very small amount I have to invest I tell my guy one thing - no companies that contribute to NPR.

Wish I had more to invest and be moral about it.

Well, now we know why you don't have more money to invest with...

Those who give shall receive much.

[chipwhich]

While I agree with your premise ,It is much easier if you invest in smaller companies

With the mega corps and funds there is no definitive morality, despite what the PR releases put out.

Sure, but you also might be swayed because you are biased based on negative propaganda the media organizations put out about the mega corps.

I think too many people allow propaganda to sway their moral judgement.

[Burgold]

I think the term propaganda is incorrect, chipwich. I think you mean incomplete reporting. The term propaganda suggests that there is a conscious conspiracy campaign and I doubt many face that. Although, as a culture we do develop our favorite villains. So, there may be some truth to what you say. Is Dan Snyder really as evil as some like to portray. Was the City Paper dude a reporter or a guy with an agenda? In some rare cases, the line gets thin. Then again, most of the stories that wind up hurting companies do so because the company did something bad or at least negligent.

A side thought is how long our cultural memory can be. People like to bring up Exxon as an evil company. Do you realize how long ago Exxon Valdez was? Sure, they handled that rottenly and spent way more on PR then on clean up, but that's a long held grudge. People still look at Firestone tires with skepticism. That was one unit with a terrible design flaw that came out more than a decade ago. The Yugo... well, they had a point on the Yugo.

[chipwhich]

I think the term propaganda is incorrect, chipwich. I think you mean incomplete reporting.

Yes this. Unfortunately too many people make decisions based on incomplete information. Which was sort of the meaning by my first post in the thread.

It's hard to have a good moral picture of a company.

That said, I am more worried about the upside than the moral side

And I agree with everything else you said.

[Burgold]

Yes this. Unfortunately too many people make decisions based on incomplete information. Which was sort of the meaning by my first post in the thread.

It's hard to have a good moral picture of a company.

That said, I am more worried about the upside than the moral side

And I agree with everything else you said.

I pretty much agree. My moral avoidance tends to fall either really broadly (I will never invest in any tobacco company even if I'm sure I can make money on it) to a few very specific companies. I agree that most companies are neither good nor evil, but morally ambiguous. Their chief function is to turn a profit... in some respects, that's why I also don't like the idea of investing in assisted living or nursing homes. I don't want these companies maximizing return. I want them taking the best possible care of their residents, but if I owned a share in the company I would want to see that annual improvement in net and gross. So the sector alienates me intellectually because I think it's model is counter productive to what it should be doing. Then again, if they didn't make money they would go out of business and then the seniors would really be in the (bleep)

Still, some businesses make more sense to me as a not for profit or government run. For me, that's where the moral side comes in. Sometimes, it costs me money.

[Prosperity]

No.

You, the private investor, don't have enough information to make a fair decision on the "moral" beliefs or basis of a company.

It's easy to make a stand against a company like Exxon/Mobil. It's not so easy to understand the morals of a company not in the public eye as much as the big boys.

You wont buy Apple because they have factories in China? Well so does everyone else.

You think big oil are nothing but profiteers. Well so is everyone else.

At some point in time, CEO's of companies have to watch the bottom line to make returns for their investors. Typically that means reducing costs by things a lot of us might find morally wrong.

Generally it's immoral to act when you don't know WTF you are getting yourself into. If you don't know whether a company acts within acceptable bounds, then why own them? (well $$ obviously, but that's my point)

[gbear]

There are companies I won't touch. I recently got out of Pfizer after reading There is no me without you, which covered a woman raising sick kids in Ethiopia. It was written by a reporter, and throughout the story there are sections about what was happening in the world and what was happening specifically in the pharmaceutical industry.

It was reading the book which turned me off the profit side of pharmaceuticals and the dishonest PR moves they make/made about what help they are giving the poor. I can live with myself for making money on delivering a good or service. With the dishonest "attempts" to give some HIV/AIDS drugs to Africans at an almost free pice (how many were actually given, not just promised?), I came to the conclussion if there is money to be made (and there is/was) from denying people life saving medications, then it's not money I want in my account. If you promise to be there for someody or a people to give them life saving help, then you darn well better come through instead of letting 10's of millions die so your investor can make another 10 cents a share. Yes, a lot of this is allowed under U.S. patent law defended in front of the Supreme Court by both Bush I and Clinton administrations.

So yes, there is a line I draw when it comes to in what I will invest. Pharm industry makes me a bit sad too. I wanted to invest. With an aging population, with my MS, and with my kids, I can see a boom in demand on the horizon...I just won't keep a profit made from forced scarcity to drive up prices and profit when the scarcity involves physically harming people.

[techboy]

I invest exclusively in index funds, which effectively means I own a little piece of everything.

I'm not willing to go down the "ethical investing" rabbit hole, though, because truthfully, one could find issues with almost any investment.

In stocks, I might not agree with everything the company does.

Corporate bonds have the same issue as stocks.

Government bonds, you know you aren't going to agree with everything a government does. Do I support Guantanamo because I own U.S. Treasuries?

I could put my money in the bank, but they're going to turn around and invest it themselves, in other businesses and individuals. I probably wouldn't like everything about that, either.

While we're at it, does this mean that I have to research the company that produces every product I buy or use, and all of the companies they use and deal with? Could I even buy anything?

The only choice here might be to withdraw totally from society and live in a cave on wild plants.

I don't believe that is a moral choice, actually, so I engage in society and try in my own way to leave it a little better than I found it.

Hands off my oil profits! :evilg:

[Prosperity]

People can draw lines in gray areas, we have brains ya know

there's too little accountability... who is responsible for the actions of the corporation? The corp is already one step removed from personal responsibility because it's only a person in some legal contexts. It can't be punished, not really. What about the corporate officers? Plead the Fif. Whenever any sketchy issue arises, there is a long line of "Well I didn't know, how could I?" all the way at the top to the bottom... from Shareholders to the Board to the CEO to Vice Officers to managers and workers.

Doesn't this bother any of you guys? Corporate officers are managed by their buddies at the board, shareholders don't know and better, and don't want to know any better. The one group of people that is supposed to actually act like a human being in all this can't be bothered to learn what he is a part of... The corporations only legitimate motive may be profit, but as a human and a citizen if your only motive is profit.... well we have lots of colorful words for that.

[boofMcboof]

Yeah, there are companies I won't touch. Monsanto is the first that comes to mind.

[pointyfootball]

I invest exclusively in index funds, which effectively means I own a little piece of everything.

I'm not willing to go down the "ethical investing" rabbit hole, though, because truthfully, one could find issues with almost any investment.

That's my situation & theory as well.

I think if people are genuinely concerned about investing money in a compnay, then they should find ways to buy into small, local businesses that they know and can "audit". If you're 1/20th owner of coffee store, you can make sure the cups are recycled, coffee beans are grown environmentally friendly and the pickers are paid a decent wage.

[Big Blue Joe]

I own stock in a tobacco company. It's done pretty well. So, yeah, no line for me.