From Jim Gilliam's blog archives
June 9, 2004 9:29 AM
Michael Lewis in The Irresponsible Investor:
There's an entire sector, called Socially Responsible Investing (S.R.I.), that exists to create pressure on businessmen to behave less like greedy automatons and more like responsible human beings. But by the most wildly generous calculation, only about 1 in 9 dollars is invested in S.R.I. funds, and the vast majority of those merely seek to avoid tobacco stocks. Of the roughly $19 trillion in American investment capital, in other words, $17 trillion or so is invested with the implicit instruction: ''Just give me back as much money as possible. Gouge consumers, cheat employees, poison the environment, lie to the public markets -- just do it all sufficiently artfully that it doesn't dent my portfolio.'' Then, when the market falls and one of the people on the receiving end of their beastly demands is caught behaving badly, investors collapse to the floor in disbelief and bay for their money back. It is at that moment -- and not a minute before -- that they discover the novel idea that businessmen in possession of other people's capital should be held to the highest ethical standards. But of course, now the idea pays.
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Read the 3 comments.
Actually you are talking about two totally differant methods of investing. Had you followed Socially Responsible Investing you could easily have had money in Tyco and World Com and Martha Stewert, what's not socially "nice" about a toy company and a communication company?
Tight fisted investors out to get every dime they can for their buck will closely study companies to ensure they are not opening themselves for lawsuits (Phillip Morris), excessive corporate perks (Enron-Tyco), and questionably excessive profits for the industry standard (World Com). Its lazy follow the herd investors that get burned on massive scales.
Wed Jun 9 2004 11:46 AM
Jim: Agreed. The problem is deeper than structure, though. People will always look for ways to feel better about themselves. Americans spent $68B on self-help last year. Having said that, however, we have to be able to make institutional changes as well, and that involves changing the world scene. An interesting new book that comes out in August is "The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits", by C.K. Prahalad. We should also be thinking about how to bring some of these countries up to speed through debt-forgiveness. Check out http://www.jubileedebtcampaign.org.uk/default.asp.
Fri Jun 11 2004 6:41 AM
Link does not work?
Fri Jun 11 2004 11:13 AM
Last week's soundtrack: