Investing and personal choices

[stef_tm]

(1) If you have an income and invest in stocks/mutual funds - either via a retirement account or retail account, are there any types of stocks you avoid based on your personal ethic?

Commonly avoided examples include: sin stocks (tobacco, gambling, alcohol), defense stocks, avoiding a company due to business practices or environmental (Exxon-Mobil, GE, Walmart, Levi-Strauss, McDonalds,) avoiding a company due to the personality of the CEO (Apple, Microsoft)

(2) If there are stocks you avoid, do you choose mutual funds that exclude the same stocks?

Just curious; I've been experimenting with several types of stock screens - Smith and Wesson Holding Company came up in one screen. It caught me off guard.

Intellectually - yes I would buy this. There is a little voice in my mind - my parents implanted sympathetic magic - you don't buy the suffering of other people. Hence nothing that is used specifically to harm others (weapons) and nothing that profits on the losses of another (foreclosures.) Ironic since my father collects guns and will be the first to buy something from someone under economic distress.

Comments

[jacflash.livejournal.com]

I stay away from banks because they're a bitch to value properly. Other than that... there are companies I probably wouldn't buy because they make my stomach churn, but not so much a specific category of them.

FWIW, S&W makes most of its money selling firearms, body armor, and related stuff (ranging from mountain bikes to handcuffs) to *police departments*, if that makes you feel better. (I get that it might make some feel worse. I'm ambivalent, personally.)

[nokomisjeff.livejournal.com]

Letting emotions and morals to guide the purchase of stocks is tomfoolery. You buy stocks to go up, and you short stocks to go down. If you wouldn't buy a stock because of moral issues, would you be comfortable in shorting the same stock?


In any trading, or buying or selling a stock, 50% of the parties in the transaction feel misery, except in a sideways market.

Jeff

[stef-tm.livejournal.com]

Exactly - it's a zero sum game.

I've had discussions with my father about this and said to him that all of life is a zero sum game, given we live and operate within a closed system.

He has real issues with my playing poker for the reason that I could be taking money from gambling addicts. I say that there's no gun to the other player's head, but he disagrees.

[nokomisjeff.livejournal.com]

Trading stocks is not a zero sum game but futures approaches a zero sum, but still falls short. The transaction costs, slippage, bid/ask spread, friction, and vig all take their cut of the action.
I've done some excellent quantification studies on several of the above mentioned costs.
Jeff

[jacflash.livejournal.com]

A lot of my squishy-lefty friends don't understand why I badmouth Domini Funds (which they all seem to be invested in). I tell them, "their fees are too high, their performance is lousy, and their screens are ridiculous," but that apparently doesn't matter in the face of doing so much GOOD. Sigh.

[nokomisjeff.livejournal.com]

applying morals to markets beyond what is legal will cost you money. The markets are tough enough without adding additional baggage:)

Jeff

[yaaresse.livejournal.com]

I'm not qualified to comment on the OP, but I find your dad's reasoning about playing poker intriguing, and I'm trying to comprehend it. By extension, if you owned a buffet restaurant, would he argue that you would be morally responsible for every obese person who overeats at your establishment? My MIL is an alcoholic. If we go to a restaurant that serves wine and she decides to have a drink, am I responsible for her falling off the wagon? I say no. Now, if prepare a bourbon-saturated cake, coerce/guilt her into having a huge slice, and that pushes her off the wagon, I might well be in the wrong.

[titania82.livejournal.com]

Slightly off topic- but relevant. One must be a shareholder in one of those sin or environmentally unfriendly companies to effectively sway a board. Current example: the GLBTQA community is always up in arms over Exxon not having a non discrimination policy, benefits, etc (and taking them away when they took over Mobil). We are urged to not own stock and to not shop in the stores. That would be fine, except that in recent years, the only people who could force the board to adopt the policies were the shareholders through annual voting. The HRC didn't bother to bombard the Exxon shareholders via mail with an urge to
a. remember to actually go online and vote or use their paper ballot
b. once a was initiated, to vote for the non discrimination policy.

:::jumps off soapbox:::

[jacflash.livejournal.com]

This is an excellent, excellent point. It's also worth noting that shareholder meetings are actual physical events, that one can attend if one is a shareholder, that even with big companies the attendance is usually very very small unless something dramatic is happening, and one only needs to own one share to be a shareholder.

Also: Mutual funds have annual meetings too, and all of the above applies. I once went to a Fidelity Magellan shareholder meeting (I worked for Fidelity at the time) -- at the time, Magellan was the world's largest mutual fund -- and the attendees were 3 or 4 elderly locals who had stopped by to thank the company for years of good performance. Meeting was over in 5 minutes.

[jacflash.livejournal.com]

(The famous exception re shareholder meeting attendance is Berkshire Hathaway, where shareholders come to Omaha in droves and Warren Buffett and company turn it into a two-day Event with dinners and presentations and hobnob-with-Warren time and whatnot. They are said to be both highly educational and great fun...)

[titania82.livejournal.com]

I wonder if, given BH's recent downturn, this years meeting will be as well attented by WB devotees (groupees).