Emotions and the rise of ethical investing

[Freetrade_Team1 (Freetrade_Team)]

@HarleyJamesOrchard

haha, I don’t think so, but so far I have noticed two opportunities for this without acting (still waiting for freetrade). The first was Nike with the advert, when the price dropped a small amount then corrected, which was a great opportunity for investing (purchasing to hold, nike is a pretty stable company) the second was tesla last Friday which was a great opportunity for trading (buying cheap, selling when it hit profit which was about 17% next day)

To echo what Emma said, I’d be vary wary of this type of thing, you could come up with a perfectly sensible explanation for why Nike’s Kaepernick endorsement was a bad idea or a good idea, for example. So I consider ‘buying the dip’ or buying the rumour e.g. the Tilray situation, as pretty similar to gambling because I think it’s practically impossible to accurately predict what the market’s reaction will be.

On the other hand, if you believed that the endorsement was a smart decision for their business long term, then it might have made sense to have invested in Nike after the advert aired.

I’m a fan of ethical investing for two reasons. Firstly I don’t want to contribute to making the world a worse place. That’s obviously quite a subjective standard & has a relatively high chance of being influenced by emotion but it can be fairly clear cut e.g. tobacco companies kill people.

But perhaps the more calculated reason to invest in ethical companies is that long term, unethical companies business models may end up being unsustainable. So if you agree with the overwhelming scientific consensus that global warming is a thing, then it might be sensible to avoid investing in oil & invest in renewable energy instead because you think that eventually we’ll have to decrease our consumption of fossil fuel. Or at some point, the total amount of tobacco consumption may be reduced, due to regulation.

Some people may not want to bother with trying to figure out which companies are or aren’t ethical, (after all, Nike’s had it’s issues with it’s manufacturing practises too) but overall I think it’s good that some investors are trying to take this into account. I hope that Freetrade will come up with a way to help investors identify ethical companies, to make investing in them more easy.