I invest in the S&P 500 index. That means I invest in the 500 biggest companies traded on the NYSE. I believe in the “Random Walk” theory of investing, which is that it’s impossible to beat the market, although some people manage to do so by luck. The Random Walk theory basically says that a monkey throwing darts at the WS Journal stock lists will do better than 85% of any fund manager any given year. (Peter Lynch and Warren Buffet are about the only two investors to actually be able to consistently beat the market, and they’re total anomalies.)
I do own one individual stock, Procter & Gamble. I invest with them directly, in a DRIP plan. They’re a local company and I feel that they’re about as safe and sound an investment as little old me can possibly choose.
As for the ethics of it: buying stock in a company does not give money to the company. The person who sold the share gets the money. If you decide that it’s immoral to own WalMart and sell it, somebody else will just buy it. WalMart won’t get the money, but that person will get the dividend.
If I become aware of a company specifically doing something I consider very bad, I may consider not patronizing them. However, I fear it’s a terrible quagmire. Once you go looking for these issues, you’re bound to discover that, short of starting a goat farm in Idaho and living off the land, it’s impossible to avoid the bad guys. I had no problem with letting EBay know that I wasn’t going to use them while they were selling the Eucharist… but, I believe I was supposed to boycott P&G for a while, there, because they were gay-friendly. Those of you who aren’t already living a very alternative life style may be shocked to see just how many P&G brands you have in your home. Charmin, Bounty, Mr. Clean, SpicnSpan, Swifer, Tide, Downy, Bounce, Ivory, Dawn, Joy, Cover Girl, Max Factor, Gillette, Febreeze, Cascade, Folgers, Fixodent, Gain, Camay, Clairol, Head & Shoulders, Pringles, Pampers, Luvs Noxema, Safeguard, Pepto Bismol, Pantene, Secret, Vicks, Olay, Crest, Scope, Tampax … the list goes on and on.
Now, if I found out they were participating in mass genocide or something, I think I’d bother to boycott. But, I don’t think it’s a good idea to get too scrupulous… unless, as I said, you want to go raise your own food and spin your own clothing.
