"Without policies such as regulations or taxes on very polluting investments, it's unlikely that wealthy individuals making a lot of money from fossil fuel investments will stop investing in them," says one economist.
https://youtu.be/NJ7W6HFHPYs - This video from Climate Town explains how the bank or credit union only keeps a fraction of your money in reserve when you deposit your money in a savings account, certificate of deposit, or other bank account. The bank/CU is investing the majority of your money, and ecological harm is not a consideration when they are choosing investments. When you deposit money with a financial institution it is almost certain that some portion of your money is being invested in ecologically harmful organizations.
Similarly, your 401k funds are likely in index funds or mutual funds that hold significant shares in ecologically and socially harmful companies like ExxonMobil, Nestle, Chevron, Coca-Cola, et. al.
Environmental, Social, and Governance (ESG) investment funds exist that ideally exclude ecologically & socially harmful industries, but every ESG fund I have ever encountered is not nearly exclusive enough and has significantly higher fees.
For example - the Vanguard ESG International Stock ETF VSGX excludes adult entertainment, recreational drugs, gambling, weapons, nuclear power, and fossil fuels, yet Nestle is the second largest holding in the fund, and many of the other stocks in the fund likely contribute to environmental and social harm indirectly.
Consider investing in small-businesses and organizations in your local community instead. It is truly bizarre and unique to our time that investing on Wall Street is more accessible than investing on Main Street.
If I buy or sell stock long after an IPO, I’m not giving or taking money from the company. Stocks are simply being bought and sold between other investors. It means nothing to the actual company other than a scoreboard they can point to, as the stock should reflect the performance and outlook of the company.
You can support a company by buying what they’re selling. Similarly, not buying what they are selling will show a lack of support.
What your advocating for with investing in small local companies has been show to reduce investing participation, as people are saddled with so many options they don’t know what to do and do nothing. It is also dramatically more risky, as they are now investing in single stocks. They are also investing based on emotion and ideals rather than the realities of what will drive an investment to go up. This seems like really bad advice they will hurt people’s retirement, while doing nothing to help the environment.
By contributing to demand for a stock you increase the valuation of that stock. Securities Based Lending is often how companies and executives secure loans and avoid taxable events. By contributing to demand for a stock we facilitate additional funding for the issuer of the stock and it’s largest shareholders.
I absolutely agree, cash flow is a much more immediate concern to any company, but one wealthy shareholder divesting can have the same financial impact as ten thousand average citizens boycotting. Local investing is more difficult and risky, but also more rewarding and necessary. It is not just about a monetary return, it is about building social capital and local resiliency.
You’re arguing that people should give no consideration to the long-term social and ecological harms of their investments beyond what will make them the most money. By directing our actions in that purely incentivized way we sacrifice everything unprofitable, and that alienation is exactly what causes so many chronic societal issues. I agree that an individual can have very little impact alone, but capitalism places this burden at the individual level.
We’re not talking about people trying to pull some kind of GME thing to manipulate a stock and artificially inflate its value. We’re talking about people investing in retirement accounts primarily. Someone’s ETF/mutual fund choice in their retirement account is not going to have those kinds of targeting impact on individual stocks in that fund.
When investing in something like the S&P 500, it’s not saying, “I believe and support these 500 specific companies,” it’s saying you believe in the American economy. An emerging market fund would similarly be a diversified bet on that sector. A fund keyed in on a particular market sector, like energy, retail, or home builders, would show belief in that industry.
I think the average person investing in their 401k should seek diversity above all else, because a retirement fund is a retirement fund, not a political or social statement. I’m not saying to invest in, or not to invest in, an oil company. I’m saying to invest in funds that give exposure to a broad cross section of the market and if there is an oil company in there, oh well, it’s just part of the economy.
Let your actions, what you buy from companies, dictate their success failure. If/when renewable energy hits its tipping point, the index will likely include those renewable energy companies in the fund, and maybe even one day remove the oil companies if they are on their way out. And if/when that happens, great, you’re already invested and have nothing extra to do.
Investing in some kind of broad market index is not the same as being a big investor showing support for a company by giving a direct investment and being invested in the success of that individual company. I don’t care what happens to any individual stock in the S&P, as long as the overall market is moving in the right direction. And for 99.99999% of investors, they shouldn’t either.
If someone has some funds to invest beyond their retirement fund, and they want to help promising local businesses and invest directly with them. I think that’s great, but that’s not a retirement fund, it’s an expensive lottery ticket in most cases.
It means nothing to the actual company other than a scoreboard they can point to, as the stock should reflect the performance and outlook of the company.
Except that scoreboard is exactly what they point to when they need a loan or other capital investment to grow their business. Better stock value = bigger/better loans.
Oh, and also the companies are able to release additional stock to raise capital outside of their IPO.
And their executives are rewarded for having high stock value.
And you think when a company release good earnings numbers that the stock is going to stay low because a couple of people sold in the name of the earth? If there is even a minor impact for a major company it will be seen that it’s undervalued and that stock will get brought right back up.
And when we’re talking about index funds, no one is even going to notice anything. The stock influences the index, not the other way around. You’re not going to sell so many shares of the S&P that you tank the market. It’s way too liquid for that.
There are videos out there of both Steve Jobs and Jeff Bezos being questioned about their undervalued stock from long ago. Both of them said it didn’t matter, because they knew the business was solid. And if getting a loan, investors will be looking at the health of the business and the ability to pay back the loan and to make a profit, not just looking at the stock price. Giving a bunch of money to a failing company with an overvalued hyped up stock isn’t a good idea. If the investors are getting a share of the company, they would actually prefer the stock be undervalued, as that means their investment has some built in insurance and more room to grow. A company is projected to grow to $100B with a new investment, would you rather invest at a valuation of $20B or $75B. You’re saying $75B, but the answer is $20B.
This is about collective action, not just one or two people. You seem to be leaning heavily into the same excuses everyone uses when they don’t want to do the right thing if it’s even a small inconvenience. “Why should I do X when there’s a bunch of other people doing Y? It’ll never make a difference.”
would you rather invest at a valuation of $20B or $75B. You’re saying $75B, but the answer is $20B.
I’ve got no idea where you went overboard here, but what I’m saying is, if the company in question is doing significant harm to the planet, don’t invest. Not sure why you thought I meant invest later.
And if the moral argument against profiting from harmful industries isn’t good enough for you, financially you’re introducing risk to your portfolio by choosing to invest in companies that are at high risk of running into regulatory challenges and lawsuits globally.
I don’t think anyone should be investing their retirement account with single stocks, which makes almost all of this a moot point imo, but people seem to want to throw broad market index funds away because they contain 1 stock they don’t like.
That’s going to hurt a lot of people taking that advice, as picking stocks just based on morals is probably going to net them a horrible result. Even people trying to pick stocks based on financials of the companies usually have terrible results, or at least not as good as the index fund over the long haul. The exceptions to this rule are unicorns.
If institutional investors want to divest from fossil fuels, cool. They can band together to make massive impacts, as they drive the market. And if it has enough impact, those stocks may end up getting removed from the index funds at some point, cool… but the average person just trying to figure out where to stick their 15% for retirement, or us the company match, should not be heading down this road. They’re just going to screw themselves 99.9999% of the time.
Boy you sure are acting incredibly dense. You’re acting like I’m implying normal investing guidance doesn’t apply. Please stop making up worst case scenarios to try and justify supporting climate damage. I’m not saying dump all your money into a single solar stock somewhere.
There’s literally hundreds of ETFs & mutual funds focused on avoiding the major polluting businesses. For example, just look at things like SPYX instead of SPY, etc. (Adding an extra bit to emphasize I’m using this as an example, not telling everyone to only invest in SPYX, because I can already see your response coming in laser focused on that one example). There’s countless options, do some homework if you’re investing, as you should be doing regardless of whether or not you care about the climate.
The one that’s currently hardest is target date retirement funds which many use for their 401k. Not because there aren’t enough options, but because many fund managers don’t include those options in their offerings. Your hands may be tied but at least you looked. Contact your fund manager and let them know you’re interested in ESG investing.
I’m not saying dump your money down the drain, but check if your investments can be moved somewhere less harmful.
I think we need to keep in mind that as the options for 401k investing increase, program participation drops. So in many cases it can become a question of having a retirement fund or having nothing at all. As you increase the perceived barrier to entry for people, they get overwhelmed and quit, or more likely, never start. A majority of people aren’t great investors, they’re not even good investors, and they have no interest in learning the normal guidance. That’s why target date funds are so popular in the first place. Planning to retire in 2050, great, pick the 2050 fund, done. Too many people don’t even get that far.
https://youtu.be/NJ7W6HFHPYs - This video from Climate Town explains how the bank or credit union only keeps a fraction of your money in reserve when you deposit your money in a savings account, certificate of deposit, or other bank account. The bank/CU is investing the majority of your money, and ecological harm is not a consideration when they are choosing investments. When you deposit money with a financial institution it is almost certain that some portion of your money is being invested in ecologically harmful organizations.
Similarly, your 401k funds are likely in index funds or mutual funds that hold significant shares in ecologically and socially harmful companies like ExxonMobil, Nestle, Chevron, Coca-Cola, et. al.
Environmental, Social, and Governance (ESG) investment funds exist that ideally exclude ecologically & socially harmful industries, but every ESG fund I have ever encountered is not nearly exclusive enough and has significantly higher fees.
For example - the Vanguard ESG International Stock ETF VSGX excludes adult entertainment, recreational drugs, gambling, weapons, nuclear power, and fossil fuels, yet Nestle is the second largest holding in the fund, and many of the other stocks in the fund likely contribute to environmental and social harm indirectly.
Consider investing in small-businesses and organizations in your local community instead. It is truly bizarre and unique to our time that investing on Wall Street is more accessible than investing on Main Street.
If I buy or sell stock long after an IPO, I’m not giving or taking money from the company. Stocks are simply being bought and sold between other investors. It means nothing to the actual company other than a scoreboard they can point to, as the stock should reflect the performance and outlook of the company.
You can support a company by buying what they’re selling. Similarly, not buying what they are selling will show a lack of support.
What your advocating for with investing in small local companies has been show to reduce investing participation, as people are saddled with so many options they don’t know what to do and do nothing. It is also dramatically more risky, as they are now investing in single stocks. They are also investing based on emotion and ideals rather than the realities of what will drive an investment to go up. This seems like really bad advice they will hurt people’s retirement, while doing nothing to help the environment.
By contributing to demand for a stock you increase the valuation of that stock. Securities Based Lending is often how companies and executives secure loans and avoid taxable events. By contributing to demand for a stock we facilitate additional funding for the issuer of the stock and it’s largest shareholders.
I absolutely agree, cash flow is a much more immediate concern to any company, but one wealthy shareholder divesting can have the same financial impact as ten thousand average citizens boycotting. Local investing is more difficult and risky, but also more rewarding and necessary. It is not just about a monetary return, it is about building social capital and local resiliency.
You’re arguing that people should give no consideration to the long-term social and ecological harms of their investments beyond what will make them the most money. By directing our actions in that purely incentivized way we sacrifice everything unprofitable, and that alienation is exactly what causes so many chronic societal issues. I agree that an individual can have very little impact alone, but capitalism places this burden at the individual level.
We’re not talking about people trying to pull some kind of GME thing to manipulate a stock and artificially inflate its value. We’re talking about people investing in retirement accounts primarily. Someone’s ETF/mutual fund choice in their retirement account is not going to have those kinds of targeting impact on individual stocks in that fund.
When investing in something like the S&P 500, it’s not saying, “I believe and support these 500 specific companies,” it’s saying you believe in the American economy. An emerging market fund would similarly be a diversified bet on that sector. A fund keyed in on a particular market sector, like energy, retail, or home builders, would show belief in that industry.
I think the average person investing in their 401k should seek diversity above all else, because a retirement fund is a retirement fund, not a political or social statement. I’m not saying to invest in, or not to invest in, an oil company. I’m saying to invest in funds that give exposure to a broad cross section of the market and if there is an oil company in there, oh well, it’s just part of the economy.
Let your actions, what you buy from companies, dictate their success failure. If/when renewable energy hits its tipping point, the index will likely include those renewable energy companies in the fund, and maybe even one day remove the oil companies if they are on their way out. And if/when that happens, great, you’re already invested and have nothing extra to do.
Investing in some kind of broad market index is not the same as being a big investor showing support for a company by giving a direct investment and being invested in the success of that individual company. I don’t care what happens to any individual stock in the S&P, as long as the overall market is moving in the right direction. And for 99.99999% of investors, they shouldn’t either.
If someone has some funds to invest beyond their retirement fund, and they want to help promising local businesses and invest directly with them. I think that’s great, but that’s not a retirement fund, it’s an expensive lottery ticket in most cases.
Except that scoreboard is exactly what they point to when they need a loan or other capital investment to grow their business. Better stock value = bigger/better loans.
Oh, and also the companies are able to release additional stock to raise capital outside of their IPO.
And their executives are rewarded for having high stock value.
And you think when a company release good earnings numbers that the stock is going to stay low because a couple of people sold in the name of the earth? If there is even a minor impact for a major company it will be seen that it’s undervalued and that stock will get brought right back up.
And when we’re talking about index funds, no one is even going to notice anything. The stock influences the index, not the other way around. You’re not going to sell so many shares of the S&P that you tank the market. It’s way too liquid for that.
There are videos out there of both Steve Jobs and Jeff Bezos being questioned about their undervalued stock from long ago. Both of them said it didn’t matter, because they knew the business was solid. And if getting a loan, investors will be looking at the health of the business and the ability to pay back the loan and to make a profit, not just looking at the stock price. Giving a bunch of money to a failing company with an overvalued hyped up stock isn’t a good idea. If the investors are getting a share of the company, they would actually prefer the stock be undervalued, as that means their investment has some built in insurance and more room to grow. A company is projected to grow to $100B with a new investment, would you rather invest at a valuation of $20B or $75B. You’re saying $75B, but the answer is $20B.
This is about collective action, not just one or two people. You seem to be leaning heavily into the same excuses everyone uses when they don’t want to do the right thing if it’s even a small inconvenience. “Why should I do X when there’s a bunch of other people doing Y? It’ll never make a difference.”
Sure, in a vacuum, you selling your stock in BP won’t make a difference, but alternatively in a world where asset managers collections holding over $8 trillion in assets have pledged to divest from fossil fuels, the pool of people willing and able to buy up those shares is shrinking, and the more people who act the smaller the pool gets.
On this note:
I’ve got no idea where you went overboard here, but what I’m saying is, if the company in question is doing significant harm to the planet, don’t invest. Not sure why you thought I meant invest later.
And if the moral argument against profiting from harmful industries isn’t good enough for you, financially you’re introducing risk to your portfolio by choosing to invest in companies that are at high risk of running into regulatory challenges and lawsuits globally.
I don’t think anyone should be investing their retirement account with single stocks, which makes almost all of this a moot point imo, but people seem to want to throw broad market index funds away because they contain 1 stock they don’t like.
That’s going to hurt a lot of people taking that advice, as picking stocks just based on morals is probably going to net them a horrible result. Even people trying to pick stocks based on financials of the companies usually have terrible results, or at least not as good as the index fund over the long haul. The exceptions to this rule are unicorns.
If institutional investors want to divest from fossil fuels, cool. They can band together to make massive impacts, as they drive the market. And if it has enough impact, those stocks may end up getting removed from the index funds at some point, cool… but the average person just trying to figure out where to stick their 15% for retirement, or us the company match, should not be heading down this road. They’re just going to screw themselves 99.9999% of the time.
Boy you sure are acting incredibly dense. You’re acting like I’m implying normal investing guidance doesn’t apply. Please stop making up worst case scenarios to try and justify supporting climate damage. I’m not saying dump all your money into a single solar stock somewhere.
There’s literally hundreds of ETFs & mutual funds focused on avoiding the major polluting businesses. For example, just look at things like SPYX instead of SPY, etc. (Adding an extra bit to emphasize I’m using this as an example, not telling everyone to only invest in SPYX, because I can already see your response coming in laser focused on that one example). There’s countless options, do some homework if you’re investing, as you should be doing regardless of whether or not you care about the climate.
The one that’s currently hardest is target date retirement funds which many use for their 401k. Not because there aren’t enough options, but because many fund managers don’t include those options in their offerings. Your hands may be tied but at least you looked. Contact your fund manager and let them know you’re interested in ESG investing.
I’m not saying dump your money down the drain, but check if your investments can be moved somewhere less harmful.
I think we need to keep in mind that as the options for 401k investing increase, program participation drops. So in many cases it can become a question of having a retirement fund or having nothing at all. As you increase the perceived barrier to entry for people, they get overwhelmed and quit, or more likely, never start. A majority of people aren’t great investors, they’re not even good investors, and they have no interest in learning the normal guidance. That’s why target date funds are so popular in the first place. Planning to retire in 2050, great, pick the 2050 fund, done. Too many people don’t even get that far.