Invest Like You Care About Your World:
Sometimes people invest like without any sense of morals or social responsibility. This can especially happen when government fails to provide reasonable restraints for financial markets, and people cannot resist the siren call of quick, unearned riches. In those times, financial idiocy can wreak widespread financial ruin. One way you can avoid the siren call, and have a lifetime of prudent investments, is to invest according to your own moral beliefs.
Of course, there are certain types of traders for whom moral values are not a consideration, such as: day traders who trade stocks like playing a video game; trading machines, with their high-frequency algorithms, that seem to nullify fundamental analysis; and financial institutions that over-leverage. Here is an excellent video where Warren Buffett talks about the flaws in various trading behaviors: words of wisdom from Warren Buffett.
We don’t have to invest like idiots, chasing overnight wealth. We can realize that investing is most successful when it is done, not from a desire for quick riches, but from a desire to both improve our own financial health, and to improve the quality of life for everyone. Investing should be approached as a life-long activity.
Earn Your Wealth:
When you reach retirement age and your investments have made you wealthy, you can feel that you deserve that wealth. You can pat yourself on the back for contributing to the great things your investments have helped to produce, above and beyond your own financial reward. You can also feel that you did not attain that wealth by, in any way, hurting others; rather, you improved the lives of others.
Here are some basic rules to guide you in choosing companies in which to invest your money:
Like the product for the good it does.
Be interested in the product, which will help you follow it.
Understand the product, at least at a high conceptual level.
Confirm that the corporate culture aligns with your own moral values.
Require that the company has an edge in its marketplace, and a likelihood for enduring value.
Do not buy funds unless you know all of the companies within those funds align with your own sense of morality. You can find enough good investments to create your own fund which contains only companies that align with your moral values.
Do not short the market. Invest for the long term.
Expect markets to have up and down cycles. Rely on your selection of companies of enduring value to go up over time.
This hedge fund manager shorts companies that, in his view, will improve society if they cease to exist: Bill Ackman. However, as Warren Buffett advises, do not short if you like to sleep at night.
Jacques Piccard is the Co-Founder and managing director of Davenport Laroche.