There’s a fascinating change happening in the world. Twitter, Facebook, and other social networks have created an environment where we have unparalleled transparency to the world around us.
In the past, a company could “stay on message” and it would be difficult to penetrate through to reality. Same goes for politicians. Now however, we can connect to each other in such a way that we’re fact-checking across demographics. It’s kinda cool and having pretty widespread impact on how business is conducted.
It’s forcing a change.
In fact, some are picking up on the change, and running with it. These companies are aligning to a set of community values as a way to participate “socially” with their customers.
- Patagonia declares war on dirty denim.
- SeaWorld profit drops 84% as customers desert park.
- CVS stops selling cigarettes, offers customers ‘quit smoking’ programs.
I’m not a big fan of the “pun”. My wife reminds people that I don’t read between the lines, ever. Most puns simply go right over my head.
That said, notice the ‘s’ in ‘values’. (See, I’m even explaining the pun.)
Value investing has been around a long time. It refers to the idea of buying “undervalued” companies based on some fundamental metrics. Value investing is what not what I’m talking about.
Values investing is something different. It’s about investing in alignment to your personal value system.
When you own a share of a company (through purchase on the stock market) you own some (very small) fraction of a company. It’s your company.
Would you lead a life, for example, carefully selecting healthy food but then own a company like McDonalds or Coke who’s values couldn’t be further from “healthy living”?
Would you get upset at the irresponsible behavior of “big banks” but then be the co-owner of one? Even Dilbert jokes about how bankers are criminals. The association is definitely part of our culture at this point. Do you want to be associated with bankers? (I know many who are quite nice… but that’s not the point.)
Or, would you prefer to own CVS, proud of their anti-smoking stance? Or Whole Foods, hoping that they successfully bring healthier eating to more communities?
In truth, it’s never as black-and-white as any of us would like. Good people do bad things, as do good organizations. We can think of it as a spectrum. A spectrum of values, and a spectrum of alignment to those values.
Maybe you can appreciate that Coke is starting to bow to pressure and remove unhealthy ingredients, but have zero-tolerance for the damage Exxon is doing to the environment?
Mutual funds are a black box
The thing is, when you invest in the most recommended funds for beginners, passive index funds, you’re investing in these companies.
If you’re OK with that, fine. We all make compromises. I know I often compromise to make things easier. It’s smart to invest in passive index funds, but maybe you can take some of that investment and put it in companies you admire? Maybe you can start to learn more about investing so that you can do less of the stuff that doesn’t align to your values and more of the stuff that does?
It’s not just individuals who are thinking this way. Canada’s Second-Largest Christian Church Is Divesting from Fossil Fuels on social grounds. Norway’s sovereign wealth fund is removing four companies from it’s fund because they’re turning rainforests into palm oil plantations. You may be skeptical that moral decisions are the only ones at play here, and you may be right. Even if there are many factors contribute (like good marketing or the fact that clean energy may be a good investment) we’re still getting more investment that’s good for the planet.
Investing is like dieting
The more I think about the Elephant’s Paycheck Blueprint, the more parallels I see to dieting. Successful dieting doesn’t come about with instant dramatic change to your diet. It starts with small steps. First walk instead of taking the stairs. Then, cut out some bread. And desserts. Before you know it, you have a healthy life style without feeling overwhelmed.
Being healthy doesn’t mean never having a candy bar.
Investing in alignment to your values doesn’t mean never buying a mutual fund. In fact, “socially responsible investing” is starting to become a thing of sorts. RBC has a Canadian fund that incorporates social, governance, and environmental considerations into traditional financial analysis.
It does mean setting out on a journey to learn about other options. Options that aren’t beyond you. Options that are as easy as mutual funds, as rewarding, and even perhaps more fun. Most importantly, options that enable you to live a little more consistently to your own personal value system.
The first release of my book The Elephant in the Room has a Paycheck shipped last Thursday. It’s PDF only and unedited. As such, it’s being sold as a discount with the promise of free future “digital upgrades” (specifically, to the edited version and to versions for kindle & iBooks).
It’s an easy read. Some people have read it in a single evening. It’s approachable, and hopefully even a little inspiring.
It presents a simple step-by-step plan for beginners to learn about dividend investing. There’s a bit of my personal story, which I hope will inspire you. There’s also some unique aspects to the blueprint that are designed to make it fun and keep you motivated.
I encourage you to check it out. If you do, let me know what you think directly or through the comments below.