Apr 27, 2018
Get the Most Out Of Investing By Using Your Moral Compass
As an investor, I want to support companies whose mission aligns with my morals. That is why I decided to look for the few companies I could find that I really love, corporations that are wonderful in the sense that they share my values and they walk my talk.
I wanted to support the Andrew Carnegies, Steve Jobses, and Oprahs of the world. They were not driven only by greed. They weren’t perfect; they were and are driven by the personal desire to be the best, to create the best product, to invest their lives in making the best thing they could. It’s not idealistic to say so.
How was I going to figure out who the good guys were? I used to think the alluringly underachieving Lloyd Dobler in Say Anything was exactly right, when I was wary enough to avoid investing in any business: “I don’t want to sell anything, buy anything, or process anything as a career. I don’t want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed. You know, as a career, I don’t want to do that.”
Fair enough, Lloyd, you boom box–playing tall, cool drink of water. But that wasn’t me anymore. A few months ago, yes, but not now. What I wanted to do now was invest in people who were into everything Lloyd was not: people who were selling quality goods, who were buying things they’d carefully chosen, who were behaving with integrity. Some of my friends think we live in a dystopian world of corporate fascism driven by the greed of faceless men. That might be true if we do nothing. But I could cast a vote for which corporations and CEOs would occupy my world in the future.
Using Your Money As A Vote
I suddenly realized I could vote with my dollars in a larger way. Every day we, you and I, act on our morals with our money. We choose to buy organic food, sweatshop-free clothing, or American-made cars. But we have the opportunity to vote with our dollars in a much bigger, more impactful way than just buying dolphin-free tuna at the grocery store; we can support the Mission of a right-acting company by buying its stock. By voting with all of our dollars, we could fix this stock market mess.
As a consumer, I had voted with my dollars every single day for what I wanted to see more of in the market. I wouldn’t buy conventional produce grown with herbicide expecting that my choice would increase the amount of organic produce next year. If I bought organic, it encouraged more organic—and indeed, the organic grocery market has gone from nonexistent to changing the face of the grocery industry in the last thirty years, thanks largely to consumers voting with their dollars at Whole Foods, which forced conventional grocery stores to offer more natural and organic foods in order to compete.
In exactly the same way, I now could expand voting with my dollars to the stock market. Rather than being limited by my physical proximity and my immediate consumer needs, my dollars could support companies that consider all of their stakeholders when they make major decisions run by leaders with integrity. If I had to invest, I wanted to invest in companies that understood that the bottom line, net profit, is required for their existence, but that it is not the only reason for existing. I wanted to vote for companies that had a Mission to change the world for the better just as much as the founders of the startups I loved did. The more I thought about it, the more I felt that these companies, with a strong Mission I supported, would be better custodians of my money than anyone else.
Deciding Which Companies To Invest In
I did not want to support a company that took advantage of good people looking for honest work by paying its employees the bare minimum and treating them poorly, like Walmart does. A company can do extremely well financially without treating its employees well, as Walmart has, but I don’t think it has great long-term prospects. There is a slow decaying process to a company with a lot of employees who are unhappy. Aside from the ethics of how they are treated, those employees are definitely not going to give the extra hour needed to make something perfect, they’re not going to provide excellent service to customers, and they probably won’t stay at that company if they can find a viable alternative job. Similarly, I didn’t want to own a company that buys chickens raised crammed into tiny cages and filled with antibiotics, like McDonald’s. It matters to me to not shop in those stores and not buy that food, when I can help it.
In the same way that I wouldn’t shop at companies that I didn’t agree with, I wouldn’t invest in them either.
Does Moral Investing Work?
If we combine Mission with a growing, well-managed, income generating company, the impact would be incredible. I would do well for Future Danielle by generating income to bring me to financial freedom, and I would join the rest of us 85 percent to support and invest in companies that deserve my hard-earned money—companies that are consciously capitalist, in which doing good actively supports and enhances the bottom line.
It has happened already: Investors took their money out of companies and organizations that supported or benefited from apartheid, and apartheid died. Investors took their money out of cigarette companies, and they have been severely weakened. Investors put their money into organic and natural foods companies, and now even conventional grocery stores not only offer natural and organic products, they position them right up front where they’re easy to find.
It’s true! Money Talks.
Adapted from Invested: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, My Emotions, & My Money (with a Little Help From My Dad).
Take command of your life and finances!
In this essential handbook—a blend of Rich Dad, Poor Dad and The Happiness Project—I share my yearlong journey learning to invest, as taught to me by my father, investor and bestselling author Phil Town.