I was reading NYTimes and found an article (link below) which said Nestle was spreading obesity in Brazil.
That set me off on another thought. Should you invest in a ‘bad’ company? And who is to decide what is bad and what is good. Clearly tobacco, alcohol, porn, armaments, guns, explosives….are in most ‘bad’ lists. Sure.
Who is to decide whether McDowell, McDonalds, Kellogs, Dominos, HuL, ….are good or bad?
What about companies which bribe? which treat women badly?
The argument for ‘not investing’ in ‘sin’ companies is that those companies will get less capital, so it will be a matter of time when they will close down does not cut much ice.
Also how are we to decide which is a good company and which is a bad company? Who are we to morally police ANYBODY? None of us really knows a virtuous / well managed company from one that isn’t. We might have a vague idea of what is virtuous, but there is no specific way to determine this other than a company that operates lawfully and one that operates illegally. Other than that, the idea of a “sin stock” is questionale for sure. As all publicly traded companies are operating legally then the idea of a “sinful” company must be rather blurred.
Tobacco, Liquor, Porn, and armaments companies also provide goods and services to people who are willing to pay for that. While most of us might find some of these businesses ‘wrong’ they have a clientele that finds them valuable! In fact ITC has grown at a CAGR OF 27% over the past 6 years – far ahead of Colgate and Hul. And if it is legal to sell tobacco who is to say it should not be done? What about a veg or a cheeseburger (lethal) is more sinful than Tobacco? At least the person buying tobacco or alcohol is a major. Kids are force fed on burgers and then they get addicted. For me there might be degrees of sin in the way these companies produce their goods and services, and profits, but the line is not clear.
Capitalist entities are designed to be inherently selfish to some degree. They lure you in and get you addicted to their products and maximize as much profit as possible while selling you something you find so valuable that you’ll stay addicted to it. Look at a banker selling you brokerage services. Or the RM selling you Futures and Options portfolio. Or the loans – marriage, honeymoon, vacation, car, house, education for kids – name it and it is given to you. ULIP makes money for the manufacturer, distributor, and the media. Sucks you, the customer. Said differently, all capitalist entities sin a little. I am a sinner too. People get addicted to the blog and hopefully click on the ads. That means Google pays me money. They didn’t become huge public companies by being charities. I earn dividends from banks, steel manufacturers, tobacco, airline, food, pharma, water, addicting food, ulip, mutual fund….and here I am preaching morality?
And do we really think I can determine or guide you in that gray area between the companies that sin a lot and sin a little?
Call me skeptical! or whatever, but not God’s messanger on earth.
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