Moral High Ground Difficult to Find in Stock Selection

You’re watching a TV news story that’s exposing a huge corporation for polluting the air and water. It manufactures products that can injure or kill. Now, do you run out tomorrow to buy that company’s stock? Of course not, you say. Who, in good conscience, would want to be a part of such a thing? But, here’s the other side. The company has worked for decades on pollution control, spent millions on environmental equipment and plasters warning labels all over its products to be sure that they’re used properly and safely. Does this make owning the company’s stock more justifiable? What if I told you the stock price has grown 30 percent a year? That might allow a sufficient rationalization to buy 100 shares. Still having pangs of guilt? Then invest in a mutual fund that has already bought the company, along with 50 others. Then you can deny involvement, since you can’t control what the fund manager buys, while still reaping the rewards. If Rod Serling was still with us, he might warn that you’re entering a socially responsible Twilight Zone. Although this isn’t new, socially responsible investing (SRI) is a big issue with many people. You can understand the objections some people might have with manufacturers of tobacco, alcohol, explosives, firearms, etc. How about clothing manufactured using child labor in Bangladesh sweatshops? Do we buy Exxon stock or continue the protest of the Alaskan oil spill? Due to religious reasons, ...