Dreamed 2012/8/11 by Wayan
I'm at a bank, talking with an investment counselor. She's intrigued by my ethical investments, and asks so many questions our roles soon seem reversed. I find myself confessing...
"I inherited a conventional IRA from my mom that was invested in things I disapproved of--military contractors, alcohol and tobacco companies and so on. I worked hard to switch those investments over to my own social funds, even if it cost me in the short term."
And suddenly I flash on the Declaration of Independence! "If America's about the pursuit of profit, go sell drugs or steal--that'll maximize your take! But if it's really about the pursuit of happiness, then social investing pays better, even if it WAS less profitable than cutthroat trading--and that was just a myth."
Hmm. I'm ignoring the bonus pleasure of altruism, since so many folks deny its reality. But who denies the reverse? Blood money, like blood diamonds, feels worse. People vary in how much worse, but it's dirty and it feels dirty. Clean money's just as available, so why deal in dirty money at all?
Much simpler than struggling to balance good for others and self. And a lot less stressful than Tooth and Claw.
NOTES IN THE MORNING
A NOTE SEVEN MONTHS LATER
It really is a myth that social investing underperforms. Be warned if you're comparison shopping: apps are crap. I just compared my real yield for the last 20 months (40.2%) to the yield shown on my housemate's default iPad app for market-tracking (don't have it in front of me, but 25%ish) and the yield reported by my broker's own tracker app (also around 25%, even with dollar figures disproving this right next to it!) Again: my real earnings were a good 50% higher than these convenient apps showed! They're quick-and-dirty estimators; by default they emphasize share-price, ignoring the complexities of reinvested dividends and bonuses. They claim to report "total return" but they don't!
And since social funds tend to invest in firms paying high dividends, and aren't so interested in raising the share-price of the fund as a whole, the casual investor is likely to underestimate the yield of social investing generally! I did. I hoped only to keep up with the wider, dirtier market, not beat it.
Nice guys finish first! But your tools may distort that fact.
A NOTE FIFTEEN MONTHS LATER STILL
Still true. Nearly two years now since the dream, my money's nearly doubled, outperforming the market... and those apps register barely two-thirds of my actual gains, making it look like ethical investments underperformed. Oh, and a friend using a third app from another broker has found similar errors! The underestimation is widespread.
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