I don’t know. I smell a scam.
Check out the last paragraph at the bottom of the page at that link. The guy is a Certified Financial Planner and a “Certified Kingdom Advisor”.
You can’t take it with you, but you can have it waiting for you when you get there (i.e., to Heaven) [LOL]
intercst
I was thinking about something a little more rodent-like.
Pete
I have no problem with socially responsible investing, however one may define that. In some sense, we all invest within our personal moral codes.
The only issue I see is a marketer teaming up with two CFAs to tell people how they should invest - all working for the same investment advisory firm. I already know what they’re going to say: Invest with us. That’s where the rat is living. The rest is just putting lipstick on a … well, you know.
They’re simply following in the footsteps of someone who is probably not PT Barnum: There’s a sucker born every minute. There's a sucker born every minute - Wikipedia
This particular flavor happens to be wearing the clothes of religion. The same thing has shown up many times, wearing many different clothes. The mortarboards of education. The bright colors of Africa. Singing Reggae tunes or dancing to the beat of Banda.
The problem isn’t religion. It’s affinity scams.
–Peter
Agreed. But in the US, religion-based scams seem to be the most popular – the “orange Jesus” being first among them.
intercst
IMO, “socially responsible investing” is largely a myth. If you own -for example- stock in a firearm company, technically you own a small piece of it. But unless you got it at IPO (or other stock offering), or are a MAJOR stockholder, it’s really just baseball cards. If I buy the shares from you, the company doesn’t get a piece of that any more than Mickey Mantle will get money from us trading his card. I give that money to you. They make their money at IPO.
But even buying in the secondary market, the buyer still makes their money by owning a part of that business. Take the firearm company. As a shareholder, I collect dividends from the profits of selling firearms. Or the value of my stock goes up because the business of selling firearms is profitable. Either way, I am making money based on the success of the firearms business.
Does my refusal to buy that stock affect the business direct? No. But my refusal, when combined with other people’s refusal, can have a theoretical (and sometimes not so theoretical) affect on the price of the company’s stock.
Socially responsible investing isn’t always about affecting the company, its about how the investor chooses to make money.
Pick something, some activity, that offends your personal sensibilities. Something that you think is morally wrong. (I could suggest examples, but they’d get pretty graphic pretty quickly, so I’m going to let this be a mental exercise.) Would you buy stock (from a stock exchange, not an IPO) in a company that profited from that activity? If so, I’d question the depth of your offense at that activity. Think of something even more offensive to you and repeat the exercise. If not, then that is where your line for socially responsible investing lies.
–Peter
Actually, I used to own MO. Obviously they are more than just a tobacco company, but that is one of their units. Not to the same level of firearms, but I do find tobacco a blight on society. However, my owning them made no difference. They didn’t get anything from me. I would never have bought in an offering, but from a financial standpoint at that time it made sense for me to own some.
I also have a couple of OJ Simpson football cards. I’m not going to toss them just because I think he’s a murderer (or, more likely, watched while a hired thug did the murder).
Though I do get your point. Yeah, if enough people come together they can nuke a company. Doesn’t happen often, though. And I would have missed out on an element I wanted in my poorfolio at the time. As long as the enterprise is legal, and I don’t directly contribute to it, then it’s just numbers on a page.
Sold MO a long time ago. As I recall, I always voted against their board, too.
I want to talk to them, but tell them I only follow Leviticus. So no investing in companies that make clothes from more than one fabric, no cloven hoofs companies, etc.
Since Levi says nothing about guns or tobacco, those are fine, of course.
You’re still not getting it. It’s not about the company. It’s about the investor. The investor doesn’t want to make money off tobacco or firearms or whatever.
Any impact on the company itself is merely a secondary effect.
—Peter
Yeah, I get it. But it’s not really rational. If I own OJ’s football card, I don’t make any money off OJ. I make money on whatever someone is willing to pay for the card.
I’m not saying people can’t do that with investing. But all the portfolios that I’m aware of that emphasize being “moral” or “socially responsible” generally underperform the market.
But a sports card is not the same as owning stock. When you own stock, dividends come directly from the operations of the company. Gains in the value of the stock are related, at least in part, to the company’s success in business. So you do profit - you do make money - off of what the business does.
Beating the market is not the goal. In many ways, it should never be the goal, whether you are seeking socially responsible investing or not. Obtaining a return adequate for your needs is all you really need. A lot of angst is spent chasing market beating returns. And a lot of misrepresentations come with the claim of market beating returns. The whole point of index investing is to obtain roughly market average returns.
But even if that is a goal you want to pursue, is it really different from another investor wanting to select investments that fit within their morals or their definition of socially responsible? All investment goals come with tradeoffs. Who other than the individual investor is qualified to judge what investment goal is right for that investor?
–Peter
My understanding, and please let me know if it’s not true, is we’re only investing in ‘the philosophy’’ of the company, when we buy an IPO or subsequent new issue stock. That’s when our money goes directly into their pockets.
All subsequent purchases on the open market are simply a gamble on the direction of the market. The company doesn’t receive that money.
Some tiny advantage could go to employees and management of the company who hold their stock, but our puny lot sizes probably don’t register.
So, the gist is you only support a company’s philosophy when you buy an IPO or new issue shares, the proceeds of which go directly into the coffers of the company.
Otherwise, we’re just gambling. And if you say you’re gambling on a white horse or a dark horse doesn’t matter.
I’m not going to say that you are wrong, but I don’t believe you’re completely right, either. And that’s because …
… of this. I cannot agree with this. Purchasing a stock is much more than a gamble on the direction of the market. If it were, all stocks would move up and down in lock step. The results of an investment in a company depend, in some significant part, on how the company performs. If part of your return is in dividends, you are sharing quite directly in the profits of the company. That dividend is profit earned by the company and passed along to the shareholders as their share of the profits.
If the return on your stock investment is entirely dependent on the performance of the stock, that performance is still significantly impacted by the profits (current or expected future) of the company.
Either way, the return on your stock investment is tied to the profits the company makes. It is not a gamble completely devoid of any connection to the company.
So now, let’s look at your initial question.
It is correct that the only time your invested dollars go directly to the company is in some kind of public offering. But that’s not the same as investing in the “philosophy” of the company. Because the profits of your stock investment are intimately connected to the profits of the company, I would argue that any investment in the stock is an investment in the company’s philosophy.
If you buy the stock of an auto maker, you are profiting from the auto industry. If you buy the stock of a restaurant, you are profiting from the restaurant industry. If you buy stock in a distiller of alcohol, you are profiting from the alcohol business. If you buy the stock of a firearms maker, you are profiting from firearms industry.
I’m not going to tell you that any of these investments are moral or immoral. That’s up to you. I’m just trying to point out that your profits from investing in a company come from the profits of the industry in which that company conducts it’s business.
–Peter
If I didn’t want to try to beat the market, I would just use index funds and call it a day. Actually, I do have some index in a retirement account. Individual stocks have allowed me to retire before age 60. Without that, I’d still be work-a-day and resenting that by the time I could retire I would be too old to enjoy what remains of my life. I won’t need SS for 10 years, and in those 10 years I am free to experience life outside of an 8’x8’ cube.
I abstain from owning cigarette stocks, firearms, etc., and I don’t eat factory farmed beef, pork or poultry but I also do not argue about it because it is a personal choice.
Even the vegan stuff is questionable today. The Chief Operating Officer of Beyond Meat bit somebody’s nose off.
Beyond Meat executive accused of biting man’s nose is leaving company
intercst
I was brought up Catholic, but I don’t invest via Biblical teachings, I favor Aesop’s Fables.
( over my many years, I’ve learned that the people that are pushing religious investment philosophy ( no matter the religion ) are crooked as can be )
( don’t get me started on tax exempt religious organizations preaching politics during the Sunday sermons. They should be stripped of the tax exempt status after the 1st minute of the sermon. )
I realized just a couple of years ago how well in my childhood I internalized the lessons of The Little Red Hen.