Socially Responsible Investing

[GnosticWarrior]

Did anybody else read "Darfur a thorny issue for state ERS (http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20070319/NEWS02/703190341/1006/NEWS)" in todays Advertiser? I want to highlight either Roy Takumi's or my ignorance when it comes to SRI. As a Capitalist I feel that Takumi is doing a diservice to the public by wasting his time with this Darfur issue. He should not restrict the Employees' Retirement System of the State of Hawaii, and its investment selections. I wonder if he is aware of some facts. Let's look at Berkshire Hathaway as an example. Warren Buffett as CEO invested in a Chinese government run company called PetroChina, they have some involvement in oil fields in Darfur. However, Berkshire Hathaway is an OPMI, an outside passive minority investor. Which means Buffett exerts no influence over the manner in which PetroChina conducts its business. Also did Takumi know that majority of the investors purchase their shares in secondary markets, like the NYSE, AMEX, and NASDAQ exchanges. If I buy 100 shares of PetroChina on the NYSE, ZERO of the dollars of my investment goes into the hands of PetroChina! A current shareholder is selling the shares he holds to me, that's person who gets the money. Only when you purchase shares during and IPO, initial public offering, or secondary offering would you in essence fund the company. The investment banks handle the IPO's.

Where else can you have a disagreement over policy with someone and enhance your position to do somehting about it? You ever heard the saying "If I had a nickle for everytime someone did that, i'd be rich!" well you can position yourself this way with stocks. Someone like Buffett believes he possess a minority point of view, but perhaps the better point of view. A view that the Democratic system will not support. But, what he found was that the stock market was a way to get paid if he could predict who consumers would vote for with their dollars. So, yes Al Gore's "An Inconvenient Truth" was very eye opening. Alternative energy is researched and being produced more than ever, but ultimately how will consumers choose to vote with their dollars? Buffett bet on oil and that PetroChina would be one of the winners. A bet that consumption would increase or level off? He bet it would increase. So for those who don't like Buffetts bets, don't send your votes in his direction? I bet Takumi consumes oil and fossil fuel related products and indirectly supports what's going on in Darfur. What a Hypocrite!

Remember, the stock markets are like gambling houses where people are betting on businesses instead of horses or on card and dice. The sole intent is to make money. The investors have no control of the outcome. If any Buffett and others just psyche themsleves out to think like their the business owner's because when you do you have more success at picking the winners. Just as if a gambler understood horse psychology and its nature might have an edge betting at the horse track. So would Takumi do us a favor and choose to focus on education or homelessness in Hawaii instead.

[Pua'i Mana'o]

Gnos, I have read these three paragraphs over and over and I need bullets. Ya went all over the place with this one, lol...

[scrivener]

The managers of the ERS are charged with the task of managing the portfolio in such a way that it brings dollars. As long as it does this effectively enough to satisfy its stakeholders, why does anyone care if the managers are imposing their own filters -- whatever those filters are -- on what kinds of interests to take ownership of?

I worked for a Southern Baptist school, and our 403(b)s were run by Guidestone, the Annuity Board of the Southern Baptist Convention, which commits to its holders to doing its best to keep its interests in only the kinds of pursuits its membership would approve of. I admire this, especially since my retirement portfolio was a thing of beauty until I rolled it over. If it means that I make 1% less per year because my mutual fund's managers won't invest in tobbaco companies, it's a trade-off I'm happy to make.

[GnosticWarrior]

Gnos, I have read these three paragraphs over and over and I need bullets. Ya went all over the place with this one, lol...

Sorry, I ramble a lot and as I start typing my main point, I often add in other tangents. Main point, is why all the fuss over the ERS having possible investments in companies with links to Darfur?


If ERS bought its shares on the stock exchanges, none of that money went to finance anything in Darfur.

The ERS is an outside passive minority investor. They excert no control over how the company conducts its operations, and would have practically have no influence to change anything with the company.

The main purpose of the stock market is for its participants to have a very efficient and liquid way to exchange shares in publicly traded companies. Usually for a profit motive.

Maybe Roy Takumi should educate himself in the field in which he is trying to make change. His current Bill is pretty much effectiveless in helping people in Darfur. So I only guess his motives is to appear that he's doing something good but in reality its just an unecessary headache for ERS and a waste of taxpayer's dollars.

Some added info not if my first post. That Hawaii State constitution gurantees the pensioners of the ERS that their retirement benefit will not be reduced. This pension obligation ultimately falls on the taxpayers.

[GnosticWarrior]

If it means that I make 1% less per year because my mutual fund's managers won't invest in tobbaco companies, it's a trade-off I'm happy to make.

Since the money that would have been invested would not have gone into the companies hands, and the pension board would have virtually no influence over how the company operates, is this a good trade off? Take that 1% compounded over time and that's how much money you could have donated to an anti-smoking or anti-tobacco organization. Which would be more effective? I don't think its hypocritical to have made more money that way.

Yes, it would be different if the money invested did actually go to the tobacco company and the pension board were control investors where they could dictate how the company is run. In this case the investment did play a part in assisting the company accomplish its objectives. In the further above senario, there is zero assistance.

btw, Altria (Philip Morris) also owns Kraft foods. If you buy Oscar Myer hot dogs, Maxwellhouse coffee, or Kraft cheese, your dollars go to the company. Would about then? Wouldn't this be worst that being a passive investor in the stock?

[anapuni808]

Since I don't consider myself a capitalist in the true sense, maybe I look at things in a more simplistic way: if I don't buy stock from someone selling theirs in a company that is involved in the Sudan, then that someone is not going to be making a profit. If 10,000 people, like me, refuse to buy the same stocks, then there is no profit in acquiring these stocks. If there is no profit to the individual buying/selling these stocks - then the company is left with stocks it can't sell.

and BTW - I don't buy any Kraft products because of the tobacco connection. I also avoided a lot of products during the effort to end apartheid. Those boycotts of products helped make stock less valuable and helped put financial pressure on companies to put pressure on So. Africa to change their policies.

These are efforts that start small and take time - but economic pressure does work to change things. We all can use the power of our wallets to get corporations to pay attention. I'm a firm believer in product boycotts, even if it's only myself that disagrees with a corporation's policies.

On a local level - I don't shop the "Big Box" stores if I can find a local company that can provide the same product. It may cost a few $$$ more but it's my way of supporting my community. Same way at the grocery store - I buy local where/when I can.

I truly believe that sometimes we must do things simply because it is the right & moral thing to do. I'm sure that sounds "preachy" but I do believe it.

[joshuatree]

If ERS bought its shares on the stock exchanges, none of that money went to finance anything in Darfur.

The ERS is an outside passive minority investor. They excert no control over how the company conducts its operations, and would have practically have no influence to change anything with the company.


That's not entirely true. If a company floats more stock shares out there, then that money did go to finance whatever it may be in Darfur for this example.

If you are a shareholder, you end up having a shareholder vote. So you do have some control over the company.

[GnosticWarrior]

If you are a shareholder, you end up having a shareholder vote. So you do have some control over the company.

Yes, I used to think that being able to vote gave me a least a little say. But, when you own stocks as the miniority shareholder and the majority Insiders are doing a deal that benefits them over you, you start to find out quick how you actually have no say. Even if all the miniority holders voted "nay", with a 100% unified vote, that's still not enough to out vote the majority shareholders. But, the situation can vary from company to company.

[anapuni808]

This is from an article on MSNBC.com this morning re Gore's testimony before congressional committees on Global Warming. It refers to an earlier remark in this thread having to do with how the State ERS makes investments:

"Gore on Tuesday told an investors' conference that climate change and environmental sustainability should be factored into investment programs and routinely integrated into financial analysis.

"Pension funds should be joining this call," Gore told the Council of Institutional Investors, which represents $3 trillion in pension funds. He urged pension-fund managers to look beyond short-term performance and "take sustainability into account" when making investment decisions.

CEO: ‘It's a business message’
Specifically, Gore suggested pension managers consider factors such as how companies treat the environment, their employees, the communities in which they operate and their corporate culture and ethics. With such an approach, he said, pension funds can be "a part of the solution" to climate change.

Several large pension funds on Tuesday did endorse the notion of carbon curbs, and conference leader Jack Ehnes, CEO of the California teachers' retirement system, said Gore's thinking is much needed in politics.

"It's not just for tree-huggers in California," Ehnes said of the speech. "It's a business message. We do not have political leaders that have taken this challenge to heart. The vice president exemplifies this type of leadership."

I'm not advocating for Gore. I just believe that "socially responsible investing" is the right way to go - even for a true capitalist.

[GnosticWarrior]

I'm not advocating for Gore. I just believe that "socially responsible investing" is the right way to go - even for a true capitalist.

I happen to like Al Gore, in fact I have more respect for him after watching the movie "An Inconvenient Truth". Bush did steal the presidency from him and Bill Clinton was the public image to win the votes and Gore was the actual brains.

The problem with public figures though, is determining who the "Real" expert is especially if you yourself is not an expert. I don't claim to be an expert in Capitalism but if you were to ask me who's more knowledgeable in that field; Greenspan, Bernake, or Buffett I would have to say Buffett because of his measureable results.

Winning the popular vote, or being appointed by someone who did, does not make you the expert in the field. Albert Einstein is credited with being a great scientist because his theories were proven true.

So I just think, Government officials should stick to their circle of competence. They end up doing more harm to the general public when they decide to mettle outside of that circle. Any maybe some of their proposals in reality would not be as effective as they view in their mind and might actually produce an opposite effect.

Don't know about anybody else, but I think America's best and brightest minds are in the private sector and would believe any of the experts there before a government official.

Off topic, here's a funny clip by Sarah Silverman doing a spoof on Gore's movie: http://www.youtube.com/watch?v=HMliLih1jsY