“Should you care if the companies you invest in have a dark side, if they make money in ways that might end conversations at cocktail parties or operate in the same slop bucket as the seamy underworld you’d rather not have your name associated with?”
Thus begins Andy Kessler’s article in his column, Wall Street Wired: An Irreverent Look at Business and Technology (Login to NY Times Select required). Kessler describes the moral tension between loving hot companies and recognizing that the products driving their success may be unethical or immoral.
So he asks the question, should you care how the profit is made as long as it is a “good investment”?
Examples
Some companies profit when consumers violate copyright laws, using their products to store or play illegal music or movies. Sales of writable CD drives and discs exploded when we all learned to make copies of CDs, and downloads of illegally-shared music and videos has helped fuel sales of iPods.
Other companies such as cable television providers and major hotel chains profit from making pornographic content available. And don’t forget businesses that profit from "lifestyle vices" like smoking and gambling.
A Biblical Point of View
There are at least three angles to process from a biblical point of view.
1 The role of the company. What guides the purpose, values, and actions of a business? Certainly companies can create products that are used for unintended purposes (a car used in a bank heist). But some companies exist for the purpose of promoting a vice or enabling you to break the law (pornography, radar detectors).
2 The role of the customer. What is it that we actually buy…and why? Is it a vice? Is it illegal? How do you make your decision (or justify it)?
3 The role of the investor. Do we care what a company does as long as it’s a great investment? Kessler admits that he doesn’t invest in a tobacco company like Philip Morris or in gambling enterprises like MGM Mirage. But he holds Yahoo even though it makes money running NCAA basketball brackets. Should you care that media companies, cable/satellite providers, hotel chains, and mainstream internet companies like Google and Yahoo make a ton of money off of “adult” programming?
Kessler’s Conclusion
I’m not passing judgment. I’m neither looking down my nose nor condoning piracy, hot stocks or sleazy vice businesses. This stuff is going to happen — its part of the world. But money is blind; it chases profits. As long as laws and social norms allow it, don’t let your own morals get in the way of a good investment.
Would you agree with his conclusion?
Comments (2)
what about index funds?
Hi Dan,
I’m wondering about your opinion would be about investing in index funds, such as one that tracks the S&P 500? While it seems obviously wrong to me to invest in say, a cigarette company, I’ve never been sure about a broad index where the majority of the companies are likely morally solid but a minority pursue immoral financial gain. Do you think there is a meaningful distinction, or should they be considered the same?
What about index funds?
It’s a very tough question that has a bit of a slippery slope built into it. I struggle with this issue as well. You are right that direct investment in companies that directly contribute to things that I consider questionable is a pretty straightforward decision of our own conscience. I am careful, though, because I understand that not everyone has the same convictions as I might on a given matter of conscience.
As far as index funds, some have approached this by investing only in funds that filter for certain ethical/moral causes or other issues such as the environment. That is one route to go and there are a growing number of choices with specific filters.
As far as general index funds, I generally don’t have a problem with them…perhaps it is the indirectness of it that you point out. Maybe that’s a cop out.
The slippery slope is something I see in a lot of this sort of discussion. I’m reminded of what Paul said where he pointed out that the only escape from sin is to leave the world altogether. I think that it is a matter of conscience before God. A fund that you and I might favor might be looked upon as wrong by someone who is particularly attuned to an issue that you and I are not.
Once when I was directing a large conference center, a lady walked up to me and told me that she would never come back unless I quit using the Celestial Seasonings teas we had, which to her mind were produced by a company committed to occult practices - which I could never confirm. Similar situations can be endlessly conceived. Businesses, nonprofits, educational institutions…all suffer from being a mixture of good and bad.
And suppose that you were against the war and companies that produced equipment for the military such as GE. Would you then quit using GE light bulbs and refuse to be tested with MRI machines that GE produced?
As an investor, I believe that I can "vote" with my investment in specific companies, I can exercise my rights as a shareholder to communicate with the company. And I can work to make sure that, in this imperfect world, that my investments more and more reflect my personal values and purpose.
It’s not a tight answer to your question, but I don’t think that we can ever escape the tension as long as we are in the world.
Seek God and have a clear conscience in your decision. And as we see other people make decisions, I think that we need to remember the instruction in Romans 14 - that we avoid judgment of others and seek the things that make for peace and the building up of one another.