Do You Know What’s in Your Wallet?

Principles or Profits?

Most Americans agree that both principles and values should come before any financial profits. If you, too, agree, then would it not be logical to assume that your investments ought to reflect the principles that you hold important in your daily life? This fundamental concept can be hard to follow in today’s society when it appears that so many of America’s most admired companies put profits before principles. Stories of greed, selfishness, and corruptness fill our TVs, radios, and newspapers and can pollute our perception of corporate America. For every bad story, there are also numerous good ones; you just have to be willing to look for them.

Many corporate leaders are faced with decisions in which values and profit collide. This is why it is valuable for you, the investor, to set your priorities. Let your principles and values guide you in accomplishing this task. To start, ask yourself this important question: Would I abandon my principles in favor of choosing a path of profit? Think long and hard about that very question.

I Own What?

I met Hannah Stephenson in 2005. At the time, Hannah was working for a Catholic university. She had never put much thought into her retirement portfolio or the values it reflected. As she glanced at the list of stocks held in her mutual funds, she recognized a few familiar names. They appeared to be good companies with good products. However, as she progressed farther down the list, some names stood out like a sore thumb . . .

• A producer of pornographic videos and magazines

• A producer of abortion drugs

• A company involved in cloning and embryonic stem cell research

• A company involved in owning and operating gambling casinos

Beyond the names Hannah recognized, there were probably many others she was unaware of that also violated her moral compass and contradicted the beliefs of her faith. Hannah had made conscious decisions not to support unfavorable companies that did not reflect her values. In spite of these conscious decisions in her consumer life, the end result showed that some of Hannah’s investment purchases had slipped through the cracks in her portfolio. She questioned whether she should be investing in companies she was so strongly opposed to. How could she do this with a clean conscious? If she did profit with her current investments, was it the moral and ethical thing to do?

 Where to Draw the Line?

Hannah makes deliberate choices in her life each and every day. Such choices include, but are not limited to: where she works, where she spends her income, what charities and ministries she supports, and where she invests her savings.

Work: Hannah wouldn’t work at an abortion clinic because she is pro-life.

Spending: She wouldn’t purchase pornography.

Giving: She wouldn’t donate money to homosexual lobbyists or fund embryonic stem cell research.

Investing: Hannah did not even consider where she was investing. She unknowingly was investing in a mutual fund that bought the following types of companies:

• Companies that profited from abortions

• Companies that profited from online pornographic websites and adult entertainment nightclubs

• Companies that profited from cloning animals and embryonic stem cell research

• Companies that were actively promoting the homosexual lifestyle

Disturbingly, upon reviewing her statements closely, Hannah found that she was supporting all of these areas with her investment dollars. Even though Hannah strives to support causes she believes in and avoids things she is opposed to, these factors were never considered in her investments. Each year her investment dollars were supporting values that blatantly contradicted her belief system. Bottom line, Hannah felt that she was working against herself.

Where the Real Power Is

You may be thinking, Hannah was not directly investing in these companies, so what difference does it really make? After all, the companies that she owns in her portfolio don’t really benefit much from an increase in stock prices. Or do they? Isn’t this similar to when you buy a used Ford on a random car lot and Ford does not receive any benefit from that used car sale?

There really is power in your choices. Money is a form of power. If you want to change the world, start with your actions. You have the ability to create change. Stock prices are affected by supply and demand. Supply represents the number of outstanding shares that a company has in the marketplace. Demand is represented by the number of investors willing to pay for the stock of a company. Typical CEO and executive bonuses are tied to stock performance. Boards of directors and key shareholders care what the price of their company stock is. Employees who may have stock options and company stock in their 401(k)s care about the share price. Bottom line: Typical executives, employees, board members, and key shareholders are affected by the increase or decrease of a company’s stock price.

If you want to change a company’s behaviors, affect them where it really hurts: their stock price. It is virtually impossible to boycott every product a company manufactures; however, it is easy to avoid buying a company’s stock. If millions of like-minded investors rallied together to do the same, you could not only affect Wall Street, you could change the direction of this country. Reformation in America is more likely to happen through Wall Street than through the White House. Lobbying can be effective, but changing corporate America is the key! Corporations will listen when Americans begin avoiding their company stock because of immoral activities. Case in point, I was listening to the radio this morning and heard a news report that a major pornographic distributor reported significant losses for their net earnings report due to a 30 percent drop in advertising revenues. If investors avoid buying a company because they advertise in a porn magazine, that corporation will evaluate their advertising practices. This can hurt a company where it really matters: their wallet!

Get Involved

You may be investing in companies that violate your morals and values. Make a conscious effort to find out where your investments are going and what you are involved in. Look at your mutual funds and stocks and analyze your various accounts. I will show you how you can go about doing this as you work through the book. The first step is to commit to becoming aware and consider the alternatives that you may not have known you had.

Photo by House Of Sims

Article by Jay Peroni- Jay is a well respected Certified Financial Planner and founder of www.FaithBasedInvestor.com, a site dedicated to helping individuals and businesses incorporate their faith and values into their financial plans. In his spare time, Jay loves spending time with his wife and four children and blogging at www.jayperoni.com.

Jay has written 4 articles for Good Steward Keys! Read some more of them by visiting Guest Articles!

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