Don’t invest to save the world
Recently I read a post by at Financial Jungle called - How Heavy Is Your Portfolio On The Sin Scale?. Basically the topic is whether or not you should invest in “sinful”, or morally empty companies. A great example would be a tobacco company. Should you buy stock in a tobacco company? I say go nuts, if the company is solid, and the price is attractive.
You’re not saving the pandas
If you feel that you have a deep connection to those furry little guys, then by all means - work with them. Donate your time to help them, and even donate your money if you want. But when it comes to investments, business is business. Don’t worry if the company you’re investing in cuts down the rainforest. Don’t worry if their product causes cancer. You are investing to make money - never let that out of your sight.
Your portfolio doesn’t care about the pandas
At the end of the day, your investment decisions determine how healthy of a return you receive. Choose to invest in only panda-saving companies, and you’re limiting yourself. Branch out, focus on the fundamentals. Look at the bottom line - that’s all that matters in this game.
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April 17th, 2008 at 11:42 am
I get the intent of socially responsible investing, but I don’t think that most people understand that it really doesn’t make a huge difference.
The reality is, all the investments you are buying are generally trading in the “secondary markets”, between you and other investors. It’s not like these companies get a cut of what you invest.
Yes, I know we don’t want to encourage bad behavior, BUT, I think I’d rather see people make sound investments choices, and use their profits to directly fund conservation / social causes.
April 17th, 2008 at 11:46 am
You make a great point about the secondary market. When you buy stock in a company, you’re not sending a check to the company itself - you’re sending a check to the guy who’s selling that same stock! You’re doing very little to actually “support” the company in question.
If you want to save the pandas when you’re done, use all that money you earned by holding tobacco stock. I’m sure the Panda Society won’t turn down your check because it’s “dirty” money.
April 18th, 2008 at 11:34 am
Actually many sin stocks issue new shares to grow their business. Sometimes you do abet the business when you buy their shares. In other instances, you bid the market price higher, which allows the business to receive an even bigger check from the next guy.
Thanks for the link.