Moral Investing

[juno24]

I have recently begun investing in the stock market, and as I do the homework involved in determining which stocks to invest in, I am nagged by the question of how much moral weight to put into my picks. What I mean is, how do I determine if a particular company's philosophy lines up with Church teaching on basic moral principles?
For instance, I have already decided that I cannot invest in most of the big agricultural companies right now because so many of them are growing much needed grains not for food, but for fuel. I cannot in good conscience attempt to make a monetary gain from companies who are causing food prices to skyrocket by selling food products as fuel instead of its intended purpose.
Anyway, my question is how do I find companies that are making money as well as good moral (or at least not immoral) policy decisions. After all, I am investing in order to make money, but I do not want to sell out my principles and ignore my conscience while doing so.
Does anyone have a way of finding out good, solid companies whose philosphies and policies are in line with Catholic teaching?

[buffalo]

Check out Ave Maria Mutual Funds.

[juno24]

Originally Posted by buffalo

Check out Ave Maria Mutual Funds.

Thank you, buffalo, that looks like a good start. I am also trying to learn how to spot individual companies to invest in, and the more homework I do, the more reasons I find for NOT investing in a certain company.

I am finding it is hard to be a capitalist and a Catholic!

[thedavidwilson]

Originally Posted by buffalo

Check out Ave Maria Mutual Funds.

This might be a good time to invest in these. The market has dropped and so have these funds recently. You might catch them on the way up. You could also look at the stocks that make up these funds if you want to invest in individual funds.

[Ridgerunner]

Maybe I don't have a sufficiently developed conscience. (That's likely in any case.) But I think a person could easily end up condemning every last company on the market, depending on his level of sensitivity to certain things, and his beliefs about them.

Meat producing companies use grain that could be shipped to Darfur or someplace. But they feed a lot of people with high quality protein, support a lot of farmers and workers. But, since they feed grain to animals, can we not invest in them?

Automobile manufacturers make (among other things) gas guzzlers. In addition, many people overextend themselves to buy machines that are psychologically attractive beyond their utility. Can we not invest in them?

Lots of corporations donate to the Dem or Repub parties, usually both. So, where are we with that?

Companies that make baby bottles might encourage mothers to stop breast feeding premautrely. What about them?

Agribusinesses don't only sell corn to ethanol plants. They employ a lot of people; support a lot of farmers and provide a means of wide food processing and distribution. There are lots of reasons food prices are going up; the cost of oil being one of them and U.S. inflation being another. There's nothing ADM, for example, can do about those things. It's not all black.

Almost no company can quite avoid indirect participation in what somebody or other thinks is evil or may, in some context or other, aid in the commission of some evil.

Smith & Wesson makes guns. Is that out? Boeing makes warplanes. No Boeing?

Banks foreclose on people who don't make their mortgage payments. No banks?

Seems to me there are companies that are "over the line", though, and directly promote evil and mean to do it. Providers of abortion services come to mind. That's direct. Disney promotes "gay days" at Disneyland. That's direct. The major media networks are pretty anti-Catholic and promote "gay friendly" programming that's actually gay propaganda. That's direct.

To me, living in the world at all, and certainly being involved in commerce, is to be presented with dilemmas all the time. But we can't just freeze because of the possibility that some evil might attend something someone else does by inadvertence, like those Hindus who put cotton up their noses to avoid inhaling,thus killing, an insect.

Not sure I can say anything more about it. To me, it's not too hard to think it through. But, as I admitted right from the start, my conscience might not be as well developed as perhaps it should be.

[juno24]

Originally Posted by Ridgerunner

Maybe I don't have a sufficiently developed conscience. (That's likely in any case.) But I think a person could easily end up condemning every last company on the market, depending on his level of sensitivity to certain things, and his beliefs about them.

You are absolutely right. If one is looking to be condemnatory, one will always find lots of things to condemn. That's not my purpose in being discerning. What I am looking for are companies whose policies and activities are in line with Church teaching. I want to invest my money in companies whose values mirror my own as much as possible.

Meat producing companies use grain that could be shipped to Darfur or someplace. But they feed a lot of people with high quality protein, support a lot of farmers and workers. But, since they feed grain to animals, can we not invest in them?

I have no problem with animals eating grains. That's what they are meant to do. And so, I have no problem with farmers selling their grains to meat and poultry producers, because ultimately those producers are still producing food. Now, if they somehow figured out that beef or chicken can be turned into fuel, and yet another food source is diverted from feeding people to making more expensive source of energy than we already have, then I have a problem investing in those companies.
All of your other examples are, to me, along these same lines. Just because a consumer is greedy, financially irresponsible, or just plain misuses a product does not mean that the company that produced the goods or service is in anyway acting immorally.

What I am actually looking for here is some solid advice on how to discern which companies out there actually have business practices that align with the teachings of the Church.

Seems to me there are companies that are "over the line", though, and directly promote evil and mean to do it. Providers of abortion services come to mind. That's direct. Disney promotes "gay days" at Disneyland. That's direct. The major media networks are pretty anti-Catholic and promote "gay friendly" programming that's actually gay propaganda. That's direct.

And these are the types of company of which I am speaking. Although these are some of the more obvious factors, I am also trying to discern which companies have a broader social conscience as well. For example, it is irresponsible (at the very least) to use food to fuel engines rather than feed people, and it is unconscionable to sell poison to children in Asia (a very big market for the tobacco companies right now) in order to make money. So there is another sector I won't invest in.

To me, living in the world at all, and certainly being involved in commerce, is to be presented with dilemmas all the time. But we can't just freeze because of the possibility that some evil might attend something someone else does by inadvertence, like those Hindus who put cotton up their noses to avoid inhaling,thus killing, an insect.

You are absolutely right! That is why I am looking for ways to discern which companies are worth my time and money to invest in. I am not saying that we should not invest because someone might misuse or abuse the product.
In fact, I am asking how to do just the opposite. I cannot in good conscience just invest in any old company simply because it is a hot commodity and may make me a ton of money. I want to know that the company stands for something. I want to invest in companies that stand for the things for which I also stand.

Not sure I can say anything more about it. To me, it's not too hard to think it through. But, as I admitted right from the start, my conscience might not be as well developed as perhaps it should be.

Had I started investing several years ago, I might feel the same way. I know that my own conscience was not well formed, and I don't think I would have cared as much about the ethical and moral aspects of what a company was doing as long as it made me money. Now, granted, I still want to make money. No one invests in the stock market with the idea that they don't care if they make a profit or not. It is just that now I am also concerned about where my money is going.

[juno24]

Originally Posted by thedavidwilson

This might be a good time to invest in these. The market has dropped and so have these funds recently. You might catch them on the way up. You could also look at the stocks that make up these funds if you want to invest in individual funds.

Yes, I've been looking at some of the individual companies in their funds, and some of them do look to be within my financial means. I'd love to know what Ave Maria's moral criteria are.

The next several months look to be a pretty good time to buy more shares (or start investing if you haven't already started). I started watching Jim Cramer's Mad Money every night several months ago, have done quite a bit of research on individual stocks, and I feel I have a fair grasp of what to look for financially in a company. Now I need to learn how to discern their moral and ethical worthiness.

[Ridgerunner]

Juno 24:

I know a man who has a company that does, indeed, make fuel out of poultry products. He owns it all, so it's stock is not for sale, but let me tell you about it. He makes biodiesel out of chicken fat. He really does. But do you know what? If he didn't it would go into pet food. It would, because of the way the USDA sets up the inspection lineup. If, at a certain point in meat processing, a product is not destined for human consumption by the producer, its only permissible alternative destination is pet food. So the guy has no way to get it into the human food chain despite the fact that it's food.

What does bother me the most is that he makes a powder out of those parts of the chicken people won't eat; wingtips, backs, necks, tails, hearts, gizzards. Perfectly edible, and you would buy them if you buy a whole chicken, but you might waste them, and you would never buy them separately. So the poultry producers, who produce a tremendous number of them, can't sell them. So, they go into pet food. In the EU, pet food has to be certified human consumable (unlike in the U.S.). He devised a way to persuade poultry producers to keep those parts in the line through the final inspection so they remained "human consumable". So, it's perfectly edible powder and incredibly nutritious, made out of meat, bones, skin and cartilage. He's a pretty religious guy, so he decided to sell a bunch of it at cost to third world countries as an extremely cheap food supplement. It even tastes good. But you know what? He couldn't, because while it is certified "human consumable", it's not exportable because it doesn't meet the criteria of human consumable exports, which is a different thing. It doesn't meet them because they're classified for "pet food" simply because of what they are, and are not designated by the producer as a product for sale into the human food chain, even though if you bought a whole chicken with them still on, they would be. Third world governments won't allow its importation either, for the same reason. So, all he can do with it is put it in pet food, which he does. Makes a lot of money doing it too. Now who's the good guy and the bad guy in that? It's hard to know sometimes.

But back to the topic. They say you should never buy a stock until you study the industry well enough to understand what it does, how it does it, with what and for whom. If you do that, which you should do anyway, you'll learn what the company does; good or bad. So I wouldn't worry too much about it. Pick some business that you already know something about. Everybody knows something about something. A medical worker knows what medicines are being used a lot; what equipment works well. An automotive worker knows who makes auto parts. A carpenter knows who makes tools and materials that are cheap and tools and materials that are expensive. A store worker knows what goods fly off the shelves and what ones collect a little dust. An office worker knows who makes office machines. Pick a few in the sector you already know most about and study them well. You'll know what to do, then, when it comes to moral choices.

[juno24]

Originally Posted by Ridgerunner

Juno 24:

I know a man who has a company that does, indeed, make fuel out of poultry products. He owns it all, so it's stock is not for sale, but let me tell you about it. He makes biodiesel out of chicken fat. He really does. But do you know what? If he didn't it would go into pet food. It would, because of the way the USDA sets up the inspection lineup. If, at a certain point in meat processing, a product is not destined for human consumption by the producer, its only permissible alternative destination is pet food. So the guy has no way to get it into the human food chain despite the fact that it's food.

What does bother me the most is that he makes a powder out of those parts of the chicken people won't eat; wingtips, backs, necks, tails, hearts, gizzards. Perfectly edible, and you would buy them if you buy a whole chicken, but you might waste them, and you would never buy them separately. So the poultry producers, who produce a tremendous number of them, can't sell them. So, they go into pet food. In the EU, pet food has to be certified human consumable (unlike in the U.S.). He devised a way to persuade poultry producers to keep those parts in the line through the final inspection so they remained "human consumable". So, it's perfectly edible powder and incredibly nutritious, made out of meat, bones, skin and cartilage. He's a pretty religious guy, so he decided to sell a bunch of it at cost to third world countries as an extremely cheap food supplement. It even tastes good. But you know what? He couldn't, because while it is certified "human consumable", it's not exportable because it doesn't meet the criteria of human consumable exports, which is a different thing. It doesn't meet them because they're classified for "pet food" simply because of what they are, and are not designated by the producer as a product for sale into the human food chain, even though if you bought a whole chicken with them still on, they would be. Third world governments won't allow its importation either, for the same reason. So, all he can do with it is put it in pet food, which he does. Makes a lot of money doing it too. Now who's the good guy and the bad guy in that? It's hard to know sometimes.

This sounds like the type of company I might like to invest in. It's too bad for me that the company is privately held. I am all for using by-products for bio-diesel. Animal fat and used vegetable fat (e.g. old frying oil) are easy to come by and fairly inexpensive to convert to fuel. Food is not being diverted from human consumption, and the fat, which may otherwise be wasted, is put to good use.
I'd be all for an ag company that found a way to use plant by-products (stems, stalks, husks, etc) as bio-fuel, AND could convert it cheaply. I understand that some of ag companies are studying how to do just that, and so the sector is worth keeping an eye on to see if they can accomplish that. If they stopped using the food portion for bio-fuel, that would be one roadblock out my way to investing in those companies.
As for the protein powder made from the other by-products, I actually applaud this type of innovation. The company owner is trying to feed people, but is apparently being hindered by government. That seems like something that needs to be corrected, but in the meantime, he is not doing anything immoral by selling this by-product powder to pet food makers.

But back to the topic. They say you should never buy a stock until you study the industry well enough to understand what it does, how it does it, with what and for whom. If you do that, which you should do anyway, you'll learn what the company does; good or bad. So I wouldn't worry too much about it. Pick some business that you already know something about. Everybody knows something about something. A medical worker knows what medicines are being used a lot; what equipment works well. An automotive worker knows who makes auto parts. A carpenter knows who makes tools and materials that are cheap and tools and materials that are expensive. A store worker knows what goods fly off the shelves and what ones collect a little dust. An office worker knows who makes office machines. Pick a few in the sector you already know most about and study them well. You'll know what to do, then, when it comes to moral choices.

Thanks, Ridge. That's exactly what I am trying to do.

[Ridgerunner]

Originally Posted by juno24

This sounds like the type of company I might like to invest in. It's too bad for me that the company is privately held. I am all for using by-products for bio-diesel. Animal fat and used vegetable fat (e.g. old frying oil) are easy to come by and fairly inexpensive to convert to fuel. Food is not being diverted from human consumption, and the fat, which may otherwise be wasted, is put to good use.
I'd be all for an ag company that found a way to use plant by-products (stems, stalks, husks, etc) as bio-fuel, AND could convert it cheaply. I understand that some of ag companies are studying how to do just that, and so the sector is worth keeping an eye on to see if they can accomplish that. If they stopped using the food portion for bio-fuel, that would be one roadblock out my way to investing in those companies.
As for the protein powder made from the other by-products, I actually applaud this type of innovation. The company owner is trying to feed people, but is apparently being hindered by government. That seems like something that needs to be corrected, but in the meantime, he is not doing anything immoral by selling this by-product powder to pet food makers.

Thanks, Ridge. That's exactly what I am trying to do.

I wish you the best of luck, my friend.

[12Mary12]

I agree with all of you on the difficulty of finding a way to invest my money responsibly. I use mutual funds and it is very difficult to pick and choose. My experience is that the information for environmental concerns is available and sometimes you can find a fund which does not invest in military industries.

I too have been following Dave Ramsey's principles and am down to just my car payment. The car is in great shape so it will last me many years.

I am much happier living below my means and feel so much more relaxed without the credit cards. I do have a debit card but I am careful so I don't get myself in trouble. I have become a cheapskate (the good kind). I have learned the difference between wanting something and needing something, but that was a very difficult lesson

[juno24]

Originally Posted by 12Mary12

I too have been following Dave Ramsey's principles and am down to just my car payment. The car is in great shape so it will last me many years.

I am much happier living below my means and feel so much more relaxed without the credit cards. I do have a debit card but I am careful so I don't get myself in trouble. I have become a cheapskate (the good kind). I have learned the difference between wanting something and needing something, but that was a very difficult lesson

I've heard of Dave Ramsey, but never looked into his strategies. After college, I got into a great deal of financial trouble-- opening credit accounts with no income to pay them off, not paying my student loans on time, etc. I finally took control of myself and my spending, paid off all my cards one by
one. I made deals with the credit companies, used a credit counseling service for a time, and just stopped using ALL credit until I was at a zero balance. I now have a good credit score (it has gone up almost 400 points in 5 years)! All my credit is on one card on which I pay extra every single month. I took out a 72 month car loan, and pay extra every month so I can pay it off much earlier than 6 years (in Florida there is no penalty for early pay off, so it is beneficial to take the longer term loan and pay it as early as possible. That way, if I ever have a month where I cannot afford the extra, I can fall back on the ridiculously low monthly payment I agreed to when I bought the car). Because I got control of myself, I am now in a position to take that money that I was paying in late fees and overlimit fees and put it into investments.

I know exactly what you mean about that great feeling of living below one's means. I can actually breathe again! I mean that literally, too. I used to have such horrible anxiety over my finances that I would not be able to breathe. Now, I pay my bills, have extra for things I want, and have no anxiety over late fees or missed payments or those horrid collections phone calls.

Now my problem (if I can call it that) is figuring out where to invest my money.

[Miles Mariae]

If you have time to do your homework, avoid mutual funds.

[12Mary12]

I agree that if you have the time to learn about investments, it may be very good to avoid mutual funds.

However, I have a company which has a 401K and must decide which funds to work with. I have spoken with my managers on more than one occasion, managers who have political and moral opinions which are all across the gambit. Finally, after discussion all agreed to go with the funds which help them retire as well as possible. I believe I was able to avoid one fund which invests in the "military complex", which was important to a few of the managers, but was unable to break down funds for environmental or moral investments.

Also, with mutual funds, remember that they buy and sell stock on a regular basis, so unless you work with a management group committed to "responsible" management, whatever you feel is responsible and important, you are looking primarily at returns. I have heard about Ave' Maria investments but know little about them. Investments are not my specialty.

[mike14620]

I think you have to look at the big picture with a lot of companies. I agree with the poster who said that if you look at most any publicly listed company, you can probably find some moral fault if you think about it hard enough.

But take the agriculture stocks as an example. I recently sold off positions in a couple of agriculture stocks. Corn prices may increase as a result of the use of the crop as fuel. But there are benefits to using ethanol. This creates an ability for Americans to provide more fuel for ourselves, rather than having to get it from countries that may or may not support Christian values. The federal government also increases the cost of food by subsidizing farms, but MOST Americans don't seem to care about that (I happen to be of the anti-subsidy camp, but recognize my minority status).

There are companies that trade publicly whose products are fundamentally opposed to Church teaching. From pornography to contraception, there are certainly companies that I wouldn't ever put money in. Generally, by looking at a basic description of the company on a broker's website (1st) or the company website (2nd), you can get a good grasp for this pretty quickly.

Some industries on the fringe of morality (some of these I would (and have) invest in, others I would not, and some go on a case-by-case basis, but some for people to ponder)

Gun manufacturers - certainly nothing is intrinsically immoral about owning a gun, but the gun lobby certainly doesn't help when it comes to reducing gun violence.
Alcohol producers - while there is nothing wrong with having a few drinks now and then, certainly the products these companies produce can cause the occasion of sin when alcohol causes people to do things that are morally wrong.
Tobacco companies- Tobacco kills. The addiction started by tobacco companies to this day is not productive to society on the whole.
Drug manufacturers - many companies produce contraceptives and abortifacients of various types, as well as chemicals used in the death penalty, but at the same time, they produce life saving medications. Many companies do both.Many do only one - I'd suggest homework here - not hard, go to the company's website and view a list of products, and see if any are contraceptives (easier said than done for some, I suppose; I'm in pharmacy school, so I can pretty much look at a list and pick out the OC's).
Agro-business - see above
Oil companies - we need oil, but the morality of these companies is up for debate.

I'm sure others could come up with other industries that straddle or sit on the fence.

I'm comfortable with my ability to avoid stocks in companies I find morally problematic. I suppose the fact that I use mostly technical analysis to make trades makes me delve less deeply into a company's business, but for me, there are generally red flags that come up in the first couple sentences explaining a company. I look for red flags, not hidden sins.