Value and Virtue…
I know I’m not alone in noticing that the holiday season is starting earlier and earlier. People celebrate by moving the outside inside and the inside outside. Trees are cut down and propped up in houses, while lights (typically a feature for lighting up the indoors) are moved outside and dangled from every surface that supports their weight. The radio bursts to life with jingle bells before the Halloween jack-o-lanterns start rotting, and the pumpkin spiced lattes are shoved to the side to make room for the hot cocoa and peppermint flavored calorie vehicles.
I always find it ironic that Thanksgiving embodies contentment and thankfulness for what we have, yet we follow that up immediately with the holiday of “getting”. Storefronts are plastered with advertisements showcasing the latest fashion trends in outerwear, gizmos for kids (battery not included), and the sale that the store is running on that thing you’ve always wanted. But I can’t pretend I don’t love the spirit. Maybe it’s the warmth it brings to a season that is getting progressively colder and gloomier, maybe it’s the time that will be spent with those we love, or maybe it’s as simple as the fact that work will be put on hold for a bit, but the holidays are always something to look forward to.
Photo by David Beale on Unsplash
Another thing that fascinates me is how the holidays look so different to so many people. Thanksgiving and Christmas are steeped in the individual’s religion, values, and traditions, and all of those manifest themselves in the way we celebrate. Those values are what I want to focus on today. Everybody has heard of this, and everyone is conscious of it deep down, but (to combine things in a way they shouldn’t be combined) it remains the white elephant in the room. I’m talking about the reality that the money you spend often goes to support causes that don’t align with your personal convictions and beliefs.
When we are going through the checkout after our Christmas shopping, or adding something to our virtual “carts”, we are supporting an organization with our business, like it or not. Sometimes, that organization might stand for things we don’t like! However, we all know that life is so much easier when we forget about this entirely and shop with the price filter set to “lowest first”. Unfortunately, investing is affected by this as well. Corporations are known to donate money to political or social campaigns, and these might very well be morally or ethically questionable. However, if you are invested in that corporation, you (technically) had a small part in that. There is a solution.
Photo by Tamanna Rumee on Unsplash
Now I plan to introduce some confusion into your life and hopefully clear it up immediately afterwards. There are two very similar sounding investment concepts that mean entirely different things; “Value investing” and “Values-based investing”.
“Value investing” is the simple idea that you want to buy undervalued stocks, which you think will then increase in value, so you can sell them at a profit. Typically, this means buying stocks that haven’t been performing well, but you have reason to believe will turn around in the future. I never thought I would use a gambling reference, but this concept is like betting on the underdog in a basketball game.
Its counterpart is “Growth investing”, the idea that you want to buy stocks that are already performing well. Your line of thinking there would be that since these stocks are currently “going up”, they’ll probably continue to do so! Obviously, this would be more like betting on the team that is expected to win, jumping on the bandwagon. It has nothing to do with the morals of the companies or your personal values, and everything to do with the future value of stock. To illustrate, I could invest in a toxic waste disposal company that pipes everything straight into the river and still tell people that I am “value investing”.
“Values-based investing” is the solution I promised earlier. Values-based investors are like Christmas shoppers that only buy from companies they think are ethical. Taking this approach does mean limiting your investment options, but (despite what you’ll hear) it doesn’t necessarily result in lower investment returns. At the least I’d say it’s worth a conversation.
Hopefully that gives you something to chew on besides leftover turkey.
This week’s quote:
“If a fellow isn’t thankful for what he’s got, he isn’t likely to be thankful for what he’s going to get.”
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