Change The World

     In past posts,I have described how investing is highly individualized. Every investor has unique needs that can be met by using a targeted approach with their asset allocation. There is also a way to achieve your investment goals while supporting your environmental, social and governance (ESG) agenda. I personally feel that tobacco is one of the most damaging products openly sold to American citizens. Tobacco related illnesses cost all tax payers millions of dollars each year not to mention the people who die from smoking every year. My solution to the problem of big tobacco companies who knowingly sell death is to avoid buying their stocks. I could have profited handsomely over the past 40 years by holding Phillip Morris but I decided to stick to my convictions by investing elsewhere. I also include producers of alcoholic beverages in my list of sin stocks to avoid. I realize that I look like a hypocrite because I enjoy my cocktails and an occasional cigar as much as anybody but I refuse to profit from the sale of these products. Recently, the worlds largest asset manager, Blockrock, has taken steps to address the problem of gun violence after the slaughter of 17 kids in Parkland Florida. Blackrock holds a significant stake in several major gun makers. With already distressed stock prices, the gun makers cannot afford to ignore such a major stock holder. Other asset managers have also joined the effort to reform the gun industry by threatening to divest their holdings unless action is taken to reduce violence. Unlike my puny effort to reform big tobacco, I'm sure that the large asset managers have the attention of the gun industry. How can the individual small investor aid in the effort to improve society? Pay attention to the holdings in your mutual funds and ETF's. Most financial sites post a list of the top 10 holdings of each fund. If you see any stocks that produce products that you find offensive, then don't buy. It can take a lot of time and trouble to research your retirement accounts and other investments but there is an easier way. Most large asset managers now offer some socially responsible investments (SRI) for clients. The long term performance is pretty good also; the MSCI KLD index for socially responsible investing has returned 10.46% per year vrs 9.93% for the S&P500 index since 1990. Money talks so when large asset managers and pension fund managers hear from participants that they care about (ESG) investing, then we can change the world.