When I was a broker it was trendy to invest in socially responsible mutual funds. The question is does this investment strategy work when it comes down to returns?  These funds under performed other mutual funds. However, for me ethical investing works and I recommend it.

What is socially responsible investing

There are two parts to this definition what to exclude and what to include. I think everyone should do the first and if you are idealistic you might want to consider the second.

What not to invest in – This investing is excluding things commonly known as sin stocks. I think this is clear. However, I have an added ideal, that is do not invest in anything that would take advantage of human loss of life, such as speculating or profiting from a world trouble spot that resulted human suffering.  For example, there was an oil spill where human lives were lost. I do not want to invest in this stock connected with this downturn. I do not like speculating on anything to do with war.

Some people extend this to not investing in governments that are not up to par with human rights.

What to invest in – Things that help the world from alternative energy to health.

Why use ethics as a screening criteria?

Why use ethics at all for any choice in your life. Basically that is something you have to answer for yourself. However, I would say that in the universe of potential investments filtering out unethical companies are not going to hurt you. Why? Because has a millions of things you can invest in. Almost anything from Art to Stocks, unless you are really limited in your creativity you can find ways to win and profit without putting your money into something harmful.

Why does socially responsible ethical investing work for some and not for others?

Normal reasons, simply some people are good stock pickers and some people are not. It has nothing to do with this style of investing.

socially responsible investing

Use your code of morality to make Wall street picks

Nest steps – where to put your money

Simply pick stocks like normal and exclude the ones that are sin stocks. If you really want, research the Domini 400 Social Index (DS400). This is an index of stocks that has meet certain criteria for being green or responsible. It is interesting to note that 250 equities out of the S&P 500 are in this index. Calvert funds also has an index. However, I do not like investing in managed funds and indexes like this.

I prefer a lean portfolio based on a true and tried stock picker like Jim Jubek and next screened for social responsibility. While at the same time being conscious of the moving average of the market index as taught by Stan Weinstein.

My basic idea for the stock market: Jim Jubek + Stan Weinstein + ethical investment filter = good choices.

One more thing about having a code of ethics or morality to your choices is it is good karmically. I do not know if such thing as karma exists, but does it not sure feel like there is? Our life experiences are very subjective so we can not measure something like this. But think back on your life, do you not feel the times you were honest and good life seemed to work better than when you cut corners?  A good conscience gives the best long-run returns. Win lose or draw with adding this one last filter for morals basic on your philosophy of good, will make you a winner.

Does ethics matter for your portfolio?

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