Defeating the purpose of my socially conscious investments

[Boho]

I consider the MSCI ESG RESEARCH rating (Environmental, Social & Governance) that Fidelity gives me when I research a stock. I'd really like a report with a little detail on the ESG rating, but I don't know if it's possible to find one.

I was just wondering whether it helps or hurts the business if I actively trade their stock, selling when unusually high and buying when unusually low. Maybe it defeats the purpose of choosing a socially responsible company if I'll be trading like that.

 

[MichaelB]

Uh, what do you mean by help or hurt?

 

[Texas Proud]

IMO the company does not care one wit if you (or anybody) is trading their stock....

 

[Boho]

Uh, what do you mean by help or hurt?

I read about how it helps companies to buy their stock. One way is when they give shares to employees. I wonder if successful frequent buying and selling by an investor reduces profits for those who just hold the stock.

 

[exnavynuke]

I read about how it helps companies to buy their stock. One way is when they give shares to employees. I wonder if successful frequent buying and selling by an investor reduces profits for those who just hold the stock.

Not unless that investor can materially impact stock prices. Warren Buffett selling $6 billion worth of shares can impact the stock price. You... not so much.

 

[marko]

Not unless that investor can materially impact stock prices. Warren Buffett selling $6 billion worth of shares can impact the stock price. You... not so much.

Perhaps I'm not socially conscious enough but I really couldn't care less about what happens to the company who's stock I'm selling.

 

[samclem]

IMO the company does not care one wit if you (or anybody) is trading their stock....

That's one reason the whole "socially conscious investing" thing is a belly laugh. The company may be slightly affected if their stock prices goes down (e.g if they hold a lot of it and were going to borrow against it, if they were about to issue more shres, etc), but generally it isn't much of a factor. But as long as people are willing to pay higher expenses for mutual funds/ETFs holding only "socially conscious" companies, then they'll keep making these funds and taking the money of investors.
Companies care most about sales and, especially, profits. If you want to impact a company (positively or negatively), that's where your point of leverage is.

 

[Clone]

I used a bit of the anti-socially conscious approach:

I used to invest my HSA money in stocks associated with Liquor, Cigarettes, and Gambling.

It worked for me.

 

[MRG]

I used a bit of the anti-socially conscious approach:

I used to invest my HSA money in stocks associated with Liquor, Cigarettes, and Gambling.

It worked for me.

MO, RGR, SWHC, BF were all part of my BATF portfolio. Made me a lot of money. I still hold MO.

Socially responsible? Most of our estate is going to America Cancer and American Heart Association. I can't change the world by what I invest in. Maybe the money will.

 

[marko]

So this doesn't sound like the thread to bring up VICEX eh?

 

[Boho]

So this doesn't sound like the thread to bring up VICEX eh?

I almost made a note not to buy their funds but there are only two and I don't think I'd miss the warning signs in my research.

BTW, I even avoid investing in companies in states that I don't like. I was researching manufacturers of PEEK plastic for a while but I didn't buy anything because of the state the companies were in. And one foreign company wasn't doing too well, so no PEEK for me.

 

[marko]

I almost made a note not to buy their funds but there are only two and I don't think I'd miss the warning signs in my research.

BTW, I even avoid investing in companies in states that I don't like. I was researching manufacturers of PEEK plastic for a while but I didn't buy anything because of the state the companies were in. And one foreign company wasn't doing too well, so no PEEK for me.

As long as it's legal, I just like money; don't care where it came from.

 

[gerntz]

I used a bit of the anti-socially conscious approach:

I used to invest my HSA money in stocks associated with Liquor, Cigarettes, and Gambling.

It worked for me.

What, no coal?

 

[Boho]

One reason I'd like an actual detailed report on the ESG ratings is because I wouldn't necessarily penalize companies who make weapons solely for the government, assuming there are such companies. And who knows what else is held against them when there's no detail.

 

[NW-Bound]

So this doesn't sound like the thread to bring up VICEX eh?

Never heard of VICEX with this unabashed symbol, so I looked up its holdings: tobacco, gambling, and alcohol. All the good stuff, but still lacking something. I guess prostitution is not a big enough industry to invest in, even though it's legal in Nevada. But how about MJ?

The following article describes how a small hedge fund got an eye-popping return last year of 145%: https://www.bloomberg.com/news/arti...oke-hedge-fund-s-ascent-to-top-with-145-surge.

 

[Totoro]

Not allocating capital to an 'evil' company in my view just rewards those shareholders that don't care about ethics, so why do it?

Consider: if demand goes down, the price goes down. This means the stock is available cheaper and dividend yield is higher. The non-ethical investor wins! If nobody wanted to own a tobacco company I could buy billions of dollars of earnings with a penny. Why not?

It's not as if as a small shareholder I can influence policy. As an institutional investor it is a bit different, since one can. Better off simply not investing though, easier to explain to activists.

Conversely, investing or trading in highly ethical companies just drives the price up and subsequent returns down, nothing else. Most of this is moot though, looking at the valuations of 'evil' stocks most investors don't care.

 

[marko]

My sense is that owners of socially conscious stocks/funds tend to focus on good feelings rather than good performance. As my granddad used to say "Feelings don't put food on the table"

Me, I'm in the market to make money. If I want to feel good, I'll go to church.

 

[Winemaker]

What, no coal?

+1

 

[Boho]

I don't even want to help fund managers who choose the sin stocks. They clearly make a bigger difference than an individual investor. How do you consciously choose to help the bad guy? I won't help someone like that earn money.

Some day I want to figure out the consequences of creating a portfolio of individual stocks from a moderately sized index like the NASDAQ-100 minus the sin stocks. For now I'm including the socially responsible PRBLX which seems to be a good investment even by non-socially responsible standards.

 

[Bir48die]

I don't even want to help fund managers who choose the sin stocks. They clearly make a bigger difference than an individual investor. How do you consciously choose to help the bad guy? I won't help someone like that earn money.

Some day I want to figure out the consequences of creating a portfolio of individual stocks from a moderately sized index like the NASDAQ-100 minus the sin stocks. For now I'm including the socially responsible PRBLX which seems to be a good investment even by non-socially responsible standards.

This seems like it's making it's way into a political statement that is looking for support