#they did tyson SO FUCKING DIRTY in the 2010s
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percy comes home from a saving the world at summer camp and immediately befriends the big smelly kid who has emotional outbursts and imperfect speech. he doesn't know tyson comes from the myth-world, he just sees a lonely kid who could use a friend and immediately sticks out his hand. that's what makes percy a hero. it's not just that he sees through the gods' bullshit, it's not just that he's loyal—it's that his mother raised him to treat people with kindness and empathy, and to stick up for what he believes in
#pjo#percy jackson#percy jackson and the olympians#pjo tv#tyson#god i cant fucking wait#they did tyson SO FUCKING DIRTY in the 2010s#i remember leaving the theatre FUMING and my mom was like wtf is your problem i thought it was a fun movie#like YOU DONT EVEN KNOW MOM#gen z percy jackson you have my whole heart
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Socially Responsible Investing: Is It Also More Profitable?
Since the Dawn of Mustachianism in 2011, the same question has come up over and over again:
“MMM,
I see your point that index fund investing is the best option. But when you buy the index, you’re getting oil companies, factory farm slaughterhouses and a million other dirty stories.
How can I get the benefits of investing for early retirement without contributing to the decline of humanity?”
And in these nine years since then, the movement towards socially responsible investing has only grown. Public pension funds have started to “divest” from oil company stocks, and various social issues like human rights, child labor, climate change or corporate corruption have bubbled to the surface at different times.
And all of this has led to the exploding new field of Socially Responsible Investing (SRI), and a growing array of new ways to do it.
So it seems that this is not just a passing trend – people just might be starting to care a bit more. And since capitalism is just an expression of human behavior, the nature of capitalism itself may be starting to change.
This leads us naturally to the question:
What can I do with my money to help fix the world? And even better, is there a way I can make money in the process of fixing it?
The answer is a good, solid “Probably.”
As long as you don’t get too hung up on getting every last detail perfect, because just like real life, investing is a haphazard and approximate and unpredictable thing. But by understanding the big picture, you can make slightly better decisions on average, which lead to slightly better results. And slightly better results, stacked up consistently over time, can lead to a much better life, or even a much better world.
This is true in all of the main areas we care about – personal wealth, fitness and health, even relationships and happiness. And while your money and investments are certainly not the most important thing in life, they are still worthy of a bit of easy and effective optimization.
So anyway, the first thing to understand with SRI is, “what problem am I trying to solve?”
The answer is, “You are trying to make your investing (especially index fund investing) have a better impact on the world.”
On its own, index fund investing is ridiculously simple. You just get an account at any brokerage like Vanguard, Etrade, Schwab or whatever, and dump all your money into one exchange-traded fund: VTI.
When you do this, you are buying a stake in 3500 companies at once(!), which is both impressive and overwhelming. How do you even know what you are holding?
Well, this is all public information, and easily available with a quick Google search. For example, here’s a list of the top 90 holdings in VTI (click for larger):
Top 90 holdings in Vanguard’s VTI Exchange Traded Fund
As you can see, the biggest chunk of money is allocated to today’s tech darlings, because this index fund is weighted according to market value, and these are the most valuable companies in the US today.
Through a convenient coincidence, the total value of the VTI fund happens to be just under $1 trillion dollars, which means you can just throw a decimal point after the ten billions digit of market value to get a percentage. In other words, about 4.7% of your money will go towards Apple stock, 4.4 towards Microsoft, and so on. Together, these top 90 companies are worth more than the remaining 3,540 companies combined, so these are what really drive your retirement account.
And within this list, you will see some of the usual suspects: Exxon and Chevron (oil), Philip Morris (tobacco), Raytheon and Lockheed (bombs), and so on.
But what about the less-usual suspects? For example, I happen to think that sugar, and especially sugar-packed beverages like Coke, is the biggest killer in the developed world – a major contributor to 2 million of the 2.8 million deaths each year in the US alone. Should I exclude that from my portfolio too?
And what about drug and insurance companies – aren’t they behind the political stalemate and high costs of the US healthcare system? Comcast funded some election disinformation campaigns here in my home town in the early 2010s, should I exclude them too? And if you’re part of a religion that is against charging interest on loans, or in favor of pasta and Pirate costumes, or against a spherical Earth, or any number of additional ornate rules, you may have still more preferences.
The higher your desire for perfection, the more difficult this exercise will become. However, if you are like me and you just want to get most of the desired result with minimal effort, you might simply have a look at the Vanguard fund called ESGV.
ESG stands for “Environmental, Social and Governance”, and in practice it just means “We have tried to avoid some of the shittier companies according to some fairly simple rules.”
And the result is this:
Vanguard’s ESGV Exchange traded fund (ETF) – top 90 holdings
The first thing you’ll notice is that it’s almost the same. In fact, the top five holdings – Apple, Microsoft, Amazon, Facebook, Alphabet (Google) and Netflix not far behind, collectively referred to as the FAANG stocks – are completely unchanged – and this means that there will be plenty of correlation between these funds.
It’s also the reason that the stock market as a whole has recovered so quickly from this COVID-era recession: small businesses like restaurants and hair salons have been destroyed by the shutdowns, but big companies that benefit from people staying at home and using computers and phones are making more money than ever. The stock market isn’t the whole economy, it’s just the publicly traded companies, which are the big ones.
But let’s look at the biggest differences between the normal index fund versus the social version.
The following large companies listed on the left are missing in the ESGV fund, in order of size. And to make up the difference, the stake in the companies on the right have been boosted up to take their place in your portfolio.
Main differences between VTI and ESGV (source: etfrc)
The omission of Berkshire Hathaway was a bit of a shocker, as it is run with solid ethical principles by Warren Buffet, one of the worlds most generous philanthropists. And in fact the modern day nerd-saint Bill Gates is on the Berkshire board of directors, another person whose work I follow and respect greatly.
(side note: Apparently the company fails on the “independent governance” category. And Buffet disputes this category, but in his characteristic way has decided to say, “Fuck it, I’ma just keep doing my own thing with my half-trillion dollar empire over here and you can have fun with your little committee” – I’m paraphrasing a bit but he totally did say that.)
Furthermore, both funds hold the factory meat king Tyson foods, while neither holds Roundup-happy Monsanto, because it was bought by the German conglomerate Bayer AG a while back. Nextera is a giant electric utility in the Southeastern US that claims to be the world’s largest generator of renewable energy. Some do-gooders are against nuclear power, while others (including me) think it’s the Bee’s Knees and we should keep advancing it. And all this just goes to show how nobody will agree 100% on what makes a good socially responsible fund.
But What About The Performance?
In the past, some investors were nervous about giving up oil companies in their portfolio, because while it was a dirty substance, it was also what made the world go round – which meant it was a cash cow.
Now, however, oil is on its way out as renewable energy and battery storage have crossed the cost parity threshold – meaning it’s cheaper to make power (and vehicles) that don’t use oil. In its place, technology is the new cash cow, and tech is heavily represented in the ESG funds. The result:
Traditional index fund (VTI) vs Socially Responsible equivalent (ESGV)
As you can see, the performance has been similar but the ESG fund has done significantly better in the (admittedly short) time since it was introduced at Vanguard.
Of course, we have no idea if this will continue, but the point is that at least our thesis is not a ridiculous one – environmentally sustainable companies do have an advantage, if the world gradually starts to care more about these things. And if you look at the share price of Tesla and other companies that surround it in electric transportation and energy storage, you will see that there are many trillions of dollars already lining up to benefit from this transition. And the very presence of so much investment money creates a self-fulfilling prophecy, as Tesla is now building or expanding five of the world’s largest factories on three continents simultaneously.
So What Should You Do? (and what I do myself)
My latest home-brewed ebike project – this one can reach 42MPH / 67km/hr!
First of all, it helps to remember a fundamental piece of economics: your spending dollars will probably have a much bigger impact than your investment dollars. This is because you are sending a direct message to the world rather than an indirect one:
When you buy a new gasoline-powered Subaru (or a tank of gas for your existing guzzler) or a steak at the grocery store, or a plane ticket, you are telling those company directly that consumers want more of these products, so they will produce more of them immediately.
When you buy shares in Exxon, you are only subtly raising the demand for those shares, which raises the average price, making it ever-so-slightly easier for Exxon to maybe issue more shares in the future. In other words, you are making it easier for them to access capital. But capital is only useful if there is demand for their products. And with oil there is a nearly constant surplus, which is why OPEC and other cartels need to work together to artificially restrict supply, just to keep prices up.
Plus, as a shareholder you are theoretically eligible to place votes and influence the future direction of companies – even companies that you don’t like. If you look up the field of “shareholder activism”, you’ll see this is a tradition that goes way back.
So I have tried to take a few simple steps on the consumer side myself, and I find it quite satisfying: Insulating the shit out of all of my properties, building a DIY solar electric array on one of them, and buying one electric car so far to eliminate local gas burning. And a few electric bikes including a super fast one I made myself.
Each one of these steps has provided a very high economic return, percentage-wise, but that still leaves a lot of money to account for, which brings us back to stock investing.
As someone who loves simplicity, I have done this:
Bought almost entirely VTI (or similar Vanguard funds) from 2000-2015
Started experimenting with Betterment in 2015, liked it, and have been adding a percentage of my ongoing savings to that account to that since then. (Note that Betterment now also offers a socially responsible portfolio option.)
Switched the dividend re-investing of my old Vanguard VTI over to Vanguard ESGV, to avoid “wash sales” in making the most of Betterment’s tax loss harvesting feature.
Bought some shares of Berkshire Hathaway separately, and also make a few sentimental investments in local businesses, including the MMM HQ Coworking space.
But you could choose to be more hardcore in your ESG/SRI investing:
Buy your own basket of stocks based on the index, but with different weighting based on your own values
Spend more money on other things that generate or save money (a bigger solar array on your house, better insulation, electric car, an ebike to reduce car trips, etc.)
Invest in local businesses of your choice, rental real estate, community solar projects, or other things which generate passive income – publicly traded stocks are just one of many ways to fund an early retirement!
Like most areas of life, investing is not something you have to do perfectly in order to succeed – even socially responsible investing. If you apply the 80/20 rule to get the big picture right, you have probably found the Sweet Spot and you can move on to the next area of life to optimize.
In the Comments:
What is your own investment strategy? Have you thought at all about this ESG / SRI stuff? Did this article bring anything new to the table?
from Finance https://www.mrmoneymustache.com/2020/08/22/socially-responsible-investing/
via http://www.rssmix.com/
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My favorite lyrics from New School Rap Artists.
So I run a radio show at my college with one a co-host named C-Bo called “Chillin with C-Bo”. I started out as a guest on the show, but I soon became something more. Now C-Bo is leaving the country for a while, so it’s up to me to run the show.
If you ever wanna listen, I’m on from 11:30 AM- 2:30 Pm EST, on Tuesdays. I’ll provide a link to the online site below.
But enough self promotion!
One thing I promised C-Bo was that I would stick to his style of music for the show to maintain consistency, as well as sprinkle a little bit of my own flavor.
The problem, however, was I wasn’t into the type of music C-Bo was into; New School Rap. I have been hesitant to dive into this genre because I was afraid that it would ruin the flavor of rap and hip hop I had acquired from before 2010 (you know, your basic nostalgia).
But As I began to really listen to artists like Chance the Rapper, Logic, Childish Gambino, and Kendrick Lamar, I fell in love. But not with the beat, or the tempo, or even the voices/flow of the artists. I fell in love with the lyrics. What I love most about rap and hip-hop is that it gives artists a chance to formulate great lyrical content. Other genres of music have become so cheesy and typical with the words, that it gets to the point where they all sound the same.
But in rap, each song is so different.
Nas wrote a song from the point of view of a gun.
Eminem wrote a song about a crazed fan that lost his mind trying to get his attention.
NWA created songs that helped bring a spark into the souls of Compton residents, making them feel like they aren’t all the criminals and gang-bangers everyone sees them as.
Hell, Mackelmore wrote a song about how to shop at a thrift shop!
Today’s modern day rap has taken a bit of a blow in terms of lyrical content, however.
With so many songs about money, drinking, smoking, making money, cursing out the police, and gang banging, along with the rise of Mumble rap and songs that are just repeating the same 3 lines over and over to a loud beat, it’s hard to find good, thought provoking lyrics in today’s rap.
Luckily, I found a few.
If you wanna know what songs these lyrics came from, they’ll be in Parenthesis at the end of each one.
So here are some of my favorite lyrics from some of today’s New School Rap Artists;
Kendrick Lamar
“I can dig rapping... but a rapper with a ghost writer; what the fuck happened?
(Oh no!) I swore I wouldn't tell! But most of you share bars like you got the bottom bunk in a two man cell! (A two man cell?) Something's in the water.(Something's in the water) And if I got a brown nose for some gold, then I'd rather be a bum than a motherfuckin' baller!” (King Kunta)
“I'm so fucking sick and tired of the Photoshop. Show me something natural like afro on Richard Pryor. Show me something natural like ass with some stretch marks.” (HUMBLE)
“I know murder, conviction, burners, boosters, burglars, ballers, dead, redemption, scholars, fathers dead with kids, and I wish I was fed forgiveness
Yeah, yeah, yeah, yeah, soldier's DNA.” (DNA)
“I done been through a whole lot; trials and tribulations, but I know God! Satan wanna put me in a bow-tie, praying that the holy water don't go dry, yeah yeah! As I look around me, so many motherfuckers wanna down me! But enemigo never drown! In front of a dirty double-mirror, they found me. And, I love myself!” (i)
“If I told you that a flower bloomed in a dark room, would you trust it?” (Poetic Justice ft. Drake)
“Everybody gon' respect the shooter, but the one in front of the gun lives forever” (Money Trees)
“Seen a light-skinned n***a with his brains blown out. At the same burger stand, where *censored* hang out. Now this is not a tape recorder saying that he did it. But ever since that day, I was looking at him different. That was back when I was nine. Joey packed the nine. Pack to stand on every porch is fine. We adapt to crime...” (m.A.A.d. city)
“’Okay... Now open your mind up and listen to me, Kendrick! I'm in your conscience, if you do not hear me, then you will be history, Kendrick!
I know that you're nauseous right now, and I'm hopin' to lead you to victory, Kendrick!’ If I take another one down, I'm a drown in some poison abusin' my limit” (Swimming Pools [Drank])
Logic
“Not perceived by the things I believe or the color of my skin, or the fact I'm attracted to her, maybe him, or the fact I'm a single mother living all alone, looking for a man and a home to call my own. But I already have one; the only man I'ma ever need is my son, my son, my son, my son, son, say!” (Black SpiderMan)
“All this other shit I'm talkin' 'bout they think they know it. I've been praying for somebody to save me, no one's heroic. And my life don't even matter. I know it I know it, I know I'm hurting deep down but can't show it. I never had a place to call my own, I never had a home. Ain't nobody callin' my phone. Where you been? Where you at? What's on your mind? They say every life precious, but nobody care about mine.” (1-800-273-8255)
“Everybody gonna die, gonna go one day, maybe it'll happen on a Monday. Drop into work and get hit by a Hyundai, fuck it, let it all go one day” (Fade Away)
“Man, I never knew livin' out a dream meant livin' out a suitcase! I've been working at a new pace! So much money on the road, I ain't even had a minute, not a single second chilling in my new place! Motherfuckers getting two-faced! ‘Cause a brother finally eating, not to mention everybody gettin' two plates!” (Run it)
“Masta deep down inside of me, the plantation deep down inside of me. Everybody fuck like sodomy, because one or the other what it gotta be. Tell me, why my momma gotta lie to me, unity for everyone that lied to me. Peace on earth, what I try to be; I just wanna spread the message of equality” (Take It Back)
“I been knockin doors down like a Jehovah witness, God as my witness, I'm with this, but on the real I think I need another witness!” (Everybody)
Drake
“You know the truth, this not pretend, I'm not your friend, not your guy, I'm not your buddy, show no lovin', and I might go DeMarcus Cousins; out in public!” (6 Man)
“Please, check 'em for a wire or earpiece. Please, please do not let these n***as near me. Please, think before you come for the great one. Please, who's a real n***a and who ain't one? Please.” (Back to Back)
“Oh, Lord! Who else sounded like this? They ain't make me what I am, they just found me like this, I was ready. Fuck that, I've been ready, since my dad used to tell me he was comin' to the house to get me. He ain't show. Valuable lesson, man, I had to grow up! That's why I never ask for help; I'll do it for you n***as and do it for myself!” (0-100/The Catch Up)
“I done kept it real from the jump. Living at my mama's house we'd argue every mornin' n***a, I was trying to get it on my own; working all night, traffic on the way home, and my uncle calling me like, ‘Where ya at?’ I gave you the keys told ya bring it right back, N***a.” (Started from the Bottom)
Chance the Rapper
“Man my daughter couldn't have a better mother. If she ever find another, he better love her! Man I swear my life is perfect, I could merch it! If I die I'll prolly cry at my own service...” (All We Got)
“JJ, Mikey, Lil Derek and them, 79th street was America then. Ice cream truck and the beauty supply, blockbuster movies and Harold's again. We still catching lightening bugs when the plague hit the backyard. Had to come in at dark cause the big shawty's act hard.” (Summer Friends)
“Jesus black life ain't matter, I know I talked to his daddy, said you the man of the house now, look out for your family.” (Blessings)
“Damn man, I don't even need a radio, and my new shit sound like a rodeo
Got the old folks dancing the Do-si-do, so they fuck around, sign me to OVO. Oh, I just might share my next one with Keef, got the industry in disbelief, they be asking for beef!” (Angels)
“Way back then when everything we read was real, and everything we said rhymed. Wide eyed kids being kids. When did you stop? What did you do to your hair? Where did you go to end up right back here? When did you start to forget how to fly?” (Same Drugs)
“Hope there never come a day where we be better as friends. We in a marathon we could build a marriage on. Arguments as parents digging deeper than a baritone. I've been getting blocked just trying to make songs with friends, labels told me to my face that they own my friends.” (Finish Line/Drown)
Childish Gambino
“I got more tail than that PetCo, you faker than some Sweet'N Low. Yeah, you got some silverware, but really are you eating though? Are you eating though? N***a, are you eating though? Breakfast, lunch and dinner's for beginners, you ain't even know.” (IV. Sweatpants)
“All I do is make the stuff I would've liked, reference things I wanna watch, reference girls I wanna bite, now I'm firefly like a burning kite. And you's a fake fuck like a fleshlight” (Fire Fly)
“Can we hear the N-word one day and not get upset? Can we try something new and not be suspect?” (You See Me)
“My shit be Jackson, Jordan, Bolton, Keaton, Tyson: 5 Mikes. Donald Glover, no relation, always workin', no vacation. They couldn't feel me, no vacation.
Murder versus the only motive was motivation...” (Bonfire)
“Got no patience, cause I'm not a doctor. Girl why is you lying, girl why you Mufasa? Yeah, mi casa su casa, gotta strip it like Gaza. Got so high off volcanoes, now the flow is so lava.” (3005)
So, that’s my list. I might have left out some better verses by theses artists, as well as some better artists. That’s mainly cuz these are the only new school rappers i’ve been hearing as of late. If you got any suggestions of artists/songs, please lmk!!! Thanks for reading!!!
#new school rap#rap#hiphop#childish gambino#chance the rapper#logic#kendrick lamar#drake#0-100#swimming pools#sweatpants#same drugs#black spiderman#music#lyrics#donald glover
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Socially Responsible Investing: Is It Also More Profitable?
Since the Dawn of Mustachianism in 2011, the same question has come up over and over again:
“MMM,
I see your point that index fund investing is the best option. But when you buy the index, you’re getting oil companies, factory farm slaughterhouses and a million other dirty stories.
How can I get the benefits of investing for early retirement without contributing to the decline of humanity?”
And in these nine years since then, the movement towards socially responsible investing has only grown. Public pension funds have started to “divest” from oil company stocks, and various social issues like human rights, child labor, climate change or corporate corruption have bubbled to the surface at different times.
And all of this has led to the exploding new field of Socially Responsible Investing (SRI), and a growing array of new ways to do it.
So it seems that this is not just a passing trend – people just might be starting to care a bit more. And since capitalism is just an expression of human behavior, the nature of capitalism itself may be starting to change.
This leads us naturally to the question:
What can I do with my money to help fix the world? And even better, is there a way I can make money in the process of fixing it?
The answer is a good, solid “Probably.”
As long as you don’t get too hung up on getting every last detail perfect, because just like real life, investing is a haphazard and approximate and unpredictable thing. But by understanding the big picture, you can make slightly better decisions on average, which lead to slightly better results. And slightly better results, stacked up consistently over time, can lead to a much better life, or even a much better world.
This is true in all of the main areas we care about – personal wealth, fitness and health, even relationships and happiness. And while your money and investments are certainly not the most important thing in life, they are still worthy of a bit of easy and effective optimization.
So anyway, the first thing to understand with SRI is, “what problem am I trying to solve?”
The answer is, “You are trying to make your investing (especially index fund investing) have a better impact on the world.”
On its own, index fund investing is ridiculously simple. You just get an account at any brokerage like Vanguard, Etrade, Schwab or whatever, and dump all your money into one exchange-traded fund: VTI.
When you do this, you are buying a stake in 3500 companies at once(!), which is both impressive and overwhelming. How do you even know what you are holding?
Well, this is all public information, and easily available with a quick Google search. For example, here’s a list of the top 90 holdings in VTI (click for larger):
Top 90 holdings in Vanguard’s VTI Exchange Traded Fund
As you can see, the biggest chunk of money is allocated to today’s tech darlings, because this index fund is weighted according to market value, and these are the most valuable companies in the US today.
Through a convenient coincidence, the total value of the VTI fund happens to be just under $1 trillion dollars, which means you can just throw a decimal point after the ten billions digit of market value to get a percentage. In other words, about 4.7% of your money will go towards Apple stock, 4.4 towards Microsoft, and so on. Together, these top 90 companies are worth more than the remaining 3,540 companies combined, so these are what really drive your retirement account.
And within this list, you will see some of the usual suspects: Exxon and Chevron (oil), Philip Morris (tobacco), Raytheon and Lockheed (bombs), and so on.
But what about the less-usual suspects? For example, I happen to think that sugar, and especially sugar-packed beverages like Coke, is the biggest killer in the developed world – a major contributor to 2 million of the 2.8 million deaths each year in the US alone. Should I exclude that from my portfolio too?
And what about drug and insurance companies – aren’t they behind the political stalemate and high costs of the US healthcare system? Comcast funded some election disinformation campaigns here in my home town in the early 2010s, should I exclude them too? And if you’re part of a religion that is against charging interest on loans, or in favor of pasta and Pirate costumes, or against a spherical Earth, or any number of additional ornate rules, you may have still more preferences.
The higher your desire for perfection, the more difficult this exercise will become. However, if you are like me and you just want to get most of the desired result with minimal effort, you might simply have a look at the Vanguard fund called ESGV.
ESG stands for “Environmental, Social and Governance”, and in practice it just means “We have tried to avoid some of the shittier companies according to some fairly simple rules.”
And the result is this:
Vanguard’s ESGV Exchange traded fund (ETF) – top 90 holdings
The first thing you’ll notice is that it’s almost the same. In fact, the top five holdings – Apple, Microsoft, Amazon, Facebook, Alphabet (Google) and Netflix not far behind, collectively referred to as the FAANG stocks – are completely unchanged – and this means that there will be plenty of correlation between these funds.
It’s also the reason that the stock market as a whole has recovered so quickly from this COVID-era recession: small businesses like restaurants and hair salons have been destroyed by the shutdowns, but big companies that benefit from people staying at home and using computers and phones are making more money than ever. The stock market isn’t the whole economy, it’s just the publicly traded companies, which are the big ones.
But let’s look at the biggest differences between the normal index fund versus the social version.
The following large companies listed on the left are missing in the ESGV fund, in order of size. And to make up the difference, the stake in the companies on the right have been boosted up to take their place in your portfolio.
Main differences between VTI and ESGV (source: etfrc)
The omission of Berkshire Hathaway was a bit of a shocker, as it is run with solid ethical principles by Warren Buffet, one of the worlds most generous philanthropists. And in fact the modern day nerd-saint Bill Gates is on the Berkshire board of directors, another person whose work I follow and respect greatly.
(side note: Apparently the company fails on the “independent governance” category. And Buffet disputes this category, but in his characteristic way has decided to say, “Fuck it, I’ma just keep doing my own thing with my half-trillion dollar empire over here and you can have fun with your little committee” – I’m paraphrasing a bit but he totally did say that.)
Furthermore, both funds hold the factory meat king Tyson foods, while neither holds Roundup-happy Monsanto, because it was bought by the German conglomerate Bayer AG a while back. Nextera is a giant electric utility in the Southeastern US that claims to be the world’s largest generator of renewable energy. Some do-gooders are against nuclear power, while others (including me) think it’s the Bee’s Knees and we should keep advancing it. And all this just goes to show how nobody will agree 100% on what makes a good socially responsible fund.
But What About The Performance?
In the past, some investors were nervous about giving up oil companies in their portfolio, because while it was a dirty substance, it was also what made the world go round – which meant it was a cash cow.
Now, however, oil is on its way out as renewable energy and battery storage have crossed the cost parity threshold – meaning it’s cheaper to make power (and vehicles) that don’t use oil. In its place, technology is the new cash cow, and tech is heavily represented in the ESG funds. The result:
Traditional index fund (VTI) vs Socially Responsible equivalent (ESGV)
As you can see, the performance has been similar but the ESG fund has done significantly better in the (admittedly short) time since it was introduced at Vanguard.
Of course, we have no idea if this will continue, but the point is that at least our thesis is not a ridiculous one – environmentally sustainable companies do have an advantage, if the world gradually starts to care more about these things. And if you look at the share price of Tesla and other companies that surround it in electric transportation and energy storage, you will see that there are many trillions of dollars already lining up to benefit from this transition. And the very presence of so much investment money creates a self-fulfilling prophecy, as Tesla is now building or expanding five of the world’s largest factories on three continents simultaneously.
So What Should You Do? (and what I do myself)
My latest home-brewed ebike project – this one can reach 42MPH / 67km/hr!
First of all, it helps to remember a fundamental piece of economics: your spending dollars will probably have a much bigger impact than your investment dollars. This is because you are sending a direct message to the world rather than an indirect one:
When you buy a new gasoline-powered Subaru (or a tank of gas for your existing guzzler) or a steak at the grocery store, or a plane ticket, you are telling those company directly that consumers want more of these products, so they will produce more of them immediately.
When you buy shares in Exxon, you are only subtly raising the demand for those shares, which raises the average price, making it ever-so-slightly easier for Exxon to maybe issue more shares in the future. In other words, you are making it easier for them to access capital. But capital is only useful if there is demand for their products. And with oil there is a nearly constant surplus, which is why OPEC and other cartels need to work together to artificially restrict supply, just to keep prices up.
Plus, as a shareholder you are theoretically eligible to place votes and influence the future direction of companies – even companies that you don’t like. If you look up the field of “shareholder activism”, you’ll see this is a tradition that goes way back.
So I have tried to take a few simple steps on the consumer side myself, and I find it quite satisfying: Insulating the shit out of all of my properties, building a DIY solar electric array on one of them, and buying one electric car so far to eliminate local gas burning. And a few electric bikes including a super fast one I made myself.
Each one of these steps has provided a very high economic return, percentage-wise, but that still leaves a lot of money to account for, which brings us back to stock investing.
As someone who loves simplicity, I have done this:
Bought almost entirely VTI (or similar Vanguard funds) from 2000-2015
Started experimenting with Betterment in 2015, liked it, and have been adding a percentage of my ongoing savings to that account to that since then. (Note that Betterment now also offers a socially responsible portfolio option.)
Switched the dividend re-investing of my old Vanguard VTI over to Vanguard ESGV, to avoid “wash sales” in making the most of Betterment’s tax loss harvesting feature.
Bought some shares of Berkshire Hathaway separately, and also make a few sentimental investments in local businesses, including the MMM HQ Coworking space.
But you could choose to be more hardcore in your ESG/SRI investing:
Buy your own basket of stocks based on the index, but with different weighting based on your own values
Spend more money on other things that generate or save money (a bigger solar array on your house, better insulation, electric car, an ebike to reduce car trips, etc.)
Invest in local businesses of your choice, rental real estate, community solar projects, or other things which generate passive income – publicly traded stocks are just one of many ways to fund an early retirement!
Like most areas of life, investing is not something you have to do perfectly in order to succeed – even socially responsible investing. If you apply the 80/20 rule to get the big picture right, you have probably found the Sweet Spot and you can move on to the next area of life to optimize.
In the Comments:
What is your own investment strategy? Have you thought at all about this ESG / SRI stuff? Did this article bring anything new to the table?
from Money 101 https://www.mrmoneymustache.com/2020/08/22/socially-responsible-investing/
via http://www.rssmix.com/
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