In my last post, I stated that you should continue to do what works for you, but to make sure you are aware of whats actually happening out there. I want to expand on that because I would also encourage you to take it a step further, and be more active in your investing. For some people investing is about greed, but I would beg to differ on that, myself being an example where my interests are not about greed. Investing is a great form of expression. It can give you a voice where you may have previously thought you didn't have one. It allows you to act on some things that you feel passionate about; and it could even be a political thing. As an example, say you are so fed up with the current state of the economy, and the massive debt, that you want to make a statement about how you feel. Put more of your money in foreign markets! Those can be foreign stocks or bonds. Now, of course you also want your decisions to be financially prudent, so don't do it because your pissed off. If you believe that the U.S. is on a downhill slide, then that is a financially smart thing to do.
Now I just want to make sure I note that I do not feel that the U.S. is going to collapse. Yes I have invested in foreign stocks and bonds, and part of it is because there is a chance the dollar could start to fail if our leadership won't get off the pot. I like countries like Brazil, Turkey, India, and yes even China. These are countries that have an interest in world peace and I feel good about it. They also pay good dividends and have good growth prospects.
I choose not to invest directly into big oil and mining companies that tear down rainforests. That said I do own some controversial stocks and that's because the investment opportunity outweighs my reservations. Monsanto is an example. Monsanto is an agricultural bully to say the least, but I needed exposure to commodities in my portfolio. Other examples... I try to invest in Oregon because I believe in local business. Umpqua Bank is an awesome example. My brother-in-law works there and they are a huge support to local business. Schnitzer Steel in Portland is a steel recycling company... no mining, no destruction of the environment. Unfortunately Schnitzer is in the loss category this year, but its a great company.
So now you can see some examples of how investing can be an outlet for you. It is like having a vote, and feeling like what you do can make a difference. Don't let me fool you though. I am managing my money, and at the core it is all about self interest. I will invest in a controversial company if the return is compelling enough.. but I assure you I do have limits.
Question - what companies would you never invest in for personal or political reasons??
Dan your post is very thought provoking....I like many people out there have learned the hard way that good investing requires awareness and much research. Your articles have inspired me to start moving more of my money out of mutual funds and into my own control based my own set of criteria. Investing based on emotional is a likely recipe for financial ruin, but I would also say that adding too much politics could also lead to poor financial returns as well. For instance we've seen a lot of clean energy companies tank lately.
ReplyDeleteAn interesting question for you question for you is what is your criteria for investment? Do you have a formula, i.e. traditional analysis based on EPS, Earnings, Market Cap etc vs Personal politics? What is the proper balance? Would you take a 8% return in a clean energy company over a 16% return in a mining company?
I think the clean energy industry is a good example. I would love to invest more in them, but it seems like they have struggled. There is an ETF of solar energy companies (TAN)(heavy China) that I held for a while, but it was getting hammered as the Europe picture kept declining. I've definitely learned to make sure its a good investment first. At the time though, I really did think there would be a surge of clean energy as oil prices kept climbing, but it didn't really pan out for TAN. I think with my investing, I just exclude the companies or industries that I have an ethical problem with. I'll admit, the list is getting smaller because you have to work hard to make a buck in these markets. Off the top of my head the list includes large investment banks like Goldman Sachs, mining companies, not big on big oil but I'm not opposed to owning energy ETFs that have oil holdings. I like utilities ETFs more that are gas, hydro, probably some coal plants unfortunately (XLU). There's companies like Microsoft that I just don't respect. It's a list that changes and evolves.
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