Author Topic: mustachian values and moral investing  (Read 1003 times)

Surf

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mustachian values and moral investing
« on: March 02, 2018, 10:18:00 AM »
Environmental stewardship is a core philosophy of mustachianism and one that I hold in high value. 

The majority of my portfolio is in low cost funds for the practical reasons we all understand.

Profits derived from such funds are partially driven by the excess consumerism that is rampant in our country, along with corporations who have environmental stewardship at the bottom of their list, eg fossil fuel / plastic industries.

Does anyone else allocate portions of their portfolio for morally motivated investments?

For example, I hold a small, but not meaningless, portion of Tesla stock.  Personally I believe the company is contributing high value to the future of sustainable transportation and energy.  I am fully aware that it is the single riskiest investment in my portfolio.  While it may provide high value to society by driving electric vehicle adoption, there's a real chance that when the dust settles EVs will be here to stay, but Tesla will not.  It's a small way of putting my money where my beliefs are.

Anyone else do something similar?  Thoughts on other investments that might align with a person's moral beliefs?




seattlecyclone

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Re: mustachian values and moral investing
« Reply #1 on: March 02, 2018, 10:40:29 AM »
There have been other threads on this. Put simply, buying or selling a share of stock on the secondary market has essentially no effect on a company's ability to keep on doing business as usual. Once those shares have been issued, the company doesn't receive any money from any further trading of that stock.

If you want to do something to hasten the demise of the oil companies, avoiding their stock is not it. If having oil profits flow into your bank account goes contrary to your moral code, then you need to take some action to purchase more expensive funds that avoid those stocks. Just know that your investment choices are not having any effect on the amount of oil extraction that happens.

Something that might be more effective is to seek out some clean energy companies that are currently raising capital directly from investors. Maybe they need funds to build a wind farm or manufacture solar panels or something. This type of investment, where you actually write a check to the company that will be using it, is the way to have your money actually work toward your own goals. Unfortunately, these investment opportunities are often only available to "accredited investors" (aka millionaires or people with incomes over $200k), and are often not widely advertised.

Surf

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Re: mustachian values and moral investing
« Reply #2 on: March 02, 2018, 11:15:35 AM »
Hmm a google search for threads in this forum with moral / ethical titles came up with many nonrelated threads.  I expected it had been discussed before but I could not find it.

Mistaking "essentially no impact" for "no impact" is concerning.  Me riding my bike for a day instead of driving a car has essentially no impact on global pollution levels.  In aggregate, a great deal of change can be effected, though.  Obviously owning stock is more nuanced in impact.

AFAIK there is no cost effective way to participate in index investing that eliminates subsets of morally objectionable companies. 
If there were a way to buy a US market index, sans coal companies, and everyone switched to those, there would be a tangible impact on the coal industry with such a large movement of money.  This is an absurdity, of course.

I personally don't ascribe to the "there's not much impact so just do whatever" mindset, just wondering if anyone else shared that belief.

It certainly can be uncomfortable to look directly at a set of moneymaking efforts that are bundled with items that conflict with one's belief system.

VoteCthulu

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Re: mustachian values and moral investing
« Reply #3 on: March 02, 2018, 12:09:15 PM »
No, I do not share your mindset. Every company traded on the NYSE does immoral things and employs immoral people. Even if I hate Walmart or Amazon or whoever else for doing bad things, I will still invest in them as part of a broad index.

My way of improving the world is through donations, volunteering, etc. rather than trying to invest in the least smelly bag of shit.

MrsWolfeRN

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Re: mustachian values and moral investing
« Reply #4 on: March 02, 2018, 12:23:53 PM »

Travis

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Re: mustachian values and moral investing
« Reply #5 on: March 02, 2018, 12:30:33 PM »
I believe there are a few "green" or ethically-based mutual or index funds out there to pick from.  As stated earlier, your stock picks aren't going to have much impact if changing those companies is your concern.  You're better off reducing your direct use of that product or company (buy different car, use less fuel, buy less disposal plastic, boycott the company, etc).  If you simply don't want to own their stock because you don't want to be associated with them, there are ways to do that such as my first suggestion.

seattlecyclone

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Re: mustachian values and moral investing
« Reply #6 on: March 02, 2018, 04:23:41 PM »
If there were a way to buy a US market index, sans coal companies, and everyone switched to those, there would be a tangible impact on the coal industry with such a large movement of money.

How do you figure? At some point a given coal company would have needed to sell some shares to the public to raise capital to fund their growth and initial operations. The price of the existing shares only matters to the company if they want to issue more shares in the future, diluting their existing shareholders. If they're profitable, they probably won't need to be doing much of that anymore.

Furthermore, almost every market participant would have to put a given company on their blacklist in order to have any meaningful effect on price. If a sizable enough minority doesn't mind profiting from coal, they'll see even a small downward movement in price as a good buying opportunity and will push the prices back up to about where they were before.

terran

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Re: mustachian values and moral investing
« Reply #7 on: March 02, 2018, 10:34:19 PM »
Hmm a google search for threads in this forum with moral / ethical titles came up with many nonrelated threads.  I expected it had been discussed before but I could not find it.

Try social investing, that's the term for what you're talking about: https://www.google.com/search?q=social+investing+site%3Aforum.mrmoneymustache.com

Radagast

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Re: mustachian values and moral investing
« Reply #8 on: March 02, 2018, 11:21:08 PM »
http://www.etf.com/sections/features-and-news/top-10-socially-responsible-etfs?nopaging=1

https://personal.vanguard.com/us/funds/snapshot?FundId=0213&FundIntExt=INT&funds_disable_redirect=true

There are those, the weak sauce solution. There is strong evidence that "sin" stocks out perform the market. So you are doing youself no financial favors by avoiding them. For the reasons others argue above avoiding them won't do much to deter them, it will merely concentrate the higher profits to their "less ethical" owners.

Therefore, the more effective and hilarious route would be to deliberately buy the companies you dislike and automatically donate the generally higher dividends to what you see as an opposing nonprofit.

harvestbook

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Re: mustachian values and moral investing
« Reply #9 on: March 03, 2018, 08:42:23 AM »

Therefore, the more effective and hilarious route would be to deliberately buy the companies you dislike and automatically donate the generally higher dividends to what you see as an opposing nonprofit.

That's my philosophy. Steal from the rich and give to the poor, starting with me.