What about the makers and sellers of junk foods? Or weapons of mass destruction? What about companies that cause environmental damage? If we buy into the science of global warming and all its implications, can we invest in companies related to the fossil fuel industry? What about the major financial institutions that required a federal bailout to avoid losses that would have wiped out the global financial system? Where does one draw the line?
It's hard enough for the average investor -- or the professional asset manager, for that matter -- to make the right decisions when evaluating the prospects for a financial security to deliver healthy returns. We ought not to raise the bar of success even further out of reach by requiring them to evaluate the social value to society of their investments as well.
When it comes to firearms, most U.S. investors have some stake in gun manufacturers like Smith & Wesson (SWHC) and Sturm, Ruger & Co. (RGR), perhaps through a mutual fund held in their retirement account. Does that mean the people who form the majority in media polls showing support for more gun control are hypocrites?
I think not. The correct venue for addressing these issues is through public policy, advocacy, the democratic process and civic action. If investors anticipate that changes to public policy or public attitudes are going to hamper the financial performance of a company, then of course they should adjust their investment strategy to reflect that. But giving up the fruits of an investment in good business because it engages in activities you disagree with politically or morally is generally not wise.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV