Ethics and Investing
This post originally appeard in the Invest with Credo Community.
How much does ethics play into your investing. Do you not buy companies that you don’t like or don’t agree with how they make their money? How much does this play into your investments?
I live in the United States, and I’ve always been taught that with capitalism you “vote with your money.” If you don’t like something, don’t buy it. If you don’t agree with a company, don’t buy from them. If want to support local businesses, do you your shopping with them. And as a consumer this makes a lot of sense. It’s very binary. I buy or don’t buy. That’s my vote.
When it comes to investing, I’m wondering how many people have the same thought process. It’s less binary. I choose not to buy a stock because I don’t like what the company is doing. By doing this, I miss out on making money from that company that may be very profitable. The company doesn’t lose my sales, I lose the investment income.
When I first started investing, I didn’t consider ethics. I bought stocks based on the companies financials and future outlook. How much money would I get as a return? That’s changed a lot over the years. In my consideration for a lot of investments now I look at what the investment stands for. I’ve sold my positions in companies I don’t like, and with that lost out on a lot of potential returns. Facebook, Palantir, and Altria are three companies that come to mind.
This was also one of the reasons I started investing in cryptocurrencies. The technology and the ideology around cryptocurrencies was something I agreed with and gravitated towards. A decentralized monetary system. I system that encourages buy and hold, rather than earn and spend. A system that tries to be governed by a collective good, than an individual entity.
I don’t have an answer for how much ethics or beliefs should play into you investing. I know for me it now plays a bigger part. I’m curious if it plays a part for other investors. Is it a driving force in your investing? Is it a nice to have, but doesn’t make or break an investment? Does it have no role in the investments you choose? This is something that has been on my mind more and more and I’d like to hear from others.