Thanks for joining us once again! The subject of this entry is a continuation of our examination of socially responsible investing (SRI) and sin stocks.
We’re planning on giving each a careful explanation and showing what you can expect from either side. It’s important to ensure your money is invested wisely, but peace of mind is also important.
Does Socially Responsible Investing Guarantee Good Practices?
Socially responsible investing is all about earning returns in a way that isn’t see in a negative light. There are plenty of companies on this side, all of which range from things such as technology to health care. Financial services can also be found in this sector.
Basically, those who pursue SRI are looking to expand on profit that makes sense given that their stock is put in productive sectors.
Socially responsible investing may seem like a great way to ensure that you maintain stake in a company that respects the most accepted and uncontested paths for investment, but this is not always the case. Sometimes, even those companies that represent good industries utilize bad practices.
For a nasty example, look at Enron’s infamous scandals. That was a company that focused on energy production, a field found in SRI. What investors have to do is examine their companies carefully to ensure that they make the most sensible choices.
Good Returns On Sin Stocks?
That’s basically why certain people pursue sin stocks. Sin stocks are investments put in companies that cater to whatever the greatest demands are, even if they are unethical or immoral.
These stocks represent companies involved in industries dedicated to alcohol, gambling, sex-related products, and firearms. If you’re comfortable choosing a company in this field, then chances are that you’re going to get a pretty good return one way or another. Or is that not even guaranteed?
The problem with sin stocks is that while they are often very strong, they nevertheless suffer from the contention their companies and products yield in society. Sometimes, these problems reach the government which imposes rules and regulations which can hurt profit. The bad rap cigarettes get these days is a perfect example.
In the end, your stock picking strategy will ultimately be a matter of what drives you. In the next entry, we’re going to check out what these two groups mean for your money. Check in on us again soon!
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2010
{ 3 comments… read them below or add one }
Money has no conscience and, unfortunately, many of those who pursue it likewise have no conscience either.
Being socially responsible with our investing is probably not something many folks consider – even those who act responsible in all other areas of their lives – such as being more environmentally conscious, practising good parenting, contributing to the community and so on.
I would be nice if there was some tax benefit to act as an incentive for those investing in SRI’s and a tax penalty for those in ’sin’ (!!)
Hi Sean
It’s a good move to educate people on not investing in these ’sin’ stocks but better still to show the damage incurred on people’s lives by those that do.
We can do something immediately if we are passionate about this subject and that is to stop investing in companies that pollute, destroy our health, and destroy peoples lives.
Stop buying products that contain the ingredients that do this.
Hi Sean,
You make an excellent point here. I need to make sure that the socially responsible companies I invest in do follow good business practices. I wouldn’t want to inadvertently invest in a company that is doing the wrong thing.
Do they use sin stocks in mutual funds? Could my account with my bank have sin stocks in it? Probably not, right?