Yeah, I said it.
I respect this man for his success in the investing world. He is no doubt a legend.
But his focus is on the MONEY and NOT aligning with one’s deepest personal values.
His stance that "“For most people, the best thing to do is to own the S&P 500 index fund.” is a philosophy that I just simply DON’T agree with.
The S&P Index Fund is full of companies that are all about profits without regard to the environment, ethical corporate governance, or standing up for human rights.
No doubt, investing in an index is a simple way to get diversification but it is NOT a way to use your money while aligning with your own true self.
If you are a vegan, do you really want to buy stock in Tyson?
If you are an environmental activist, do you want to invest in ConocoPhillips?
If you are LGBTQIA+ or a person of color, do you want to invest in AT&T who donates millions to get anti-gay politicians or politicians who have low ratings from the NAACP?
If you invest in the S&P 500 Index you will be.
It takes away your voice.
True, it IS simple but NOT a way to honor who you are or what you believe unless you align with all 500+ companies.
For that reason, I cannot support is opinion that investing this way is best for most Americans. Your money is an extension of you. To be true to yourself, there are better ways than these index funds.
Oh, and side note he is the CEO of Berkshire Hathaway, which also happens to be in the S&P 500 Index Fund. Come on, Warren.
So what do I suggest?
For those of you who are passionate about keeping corporations accountable for their impact on the environment, transparency in their relationships with employees, and transparency in ethical business practices you should consider investments labeled, ESG.
There are multiple companies out there who have mutual funds, ETFs, or entire portfolios dedicated to this type of accountability.
Another term used is Sustainable Investing.
You can do research on your own, you can find a financial advisor to guide you, you can go through a financial planner or financial advisor to have entire portfolios developed and managed for you.
When I first got into this industry the main concern people had who wanted to invest in this way was lack luster performance. Now there is evidence to prove the performance is not an issue any more.
Morgan Stanly analyzed nearly 11,000 mutual funds and ETFs from 2004 to 2018. Their results showed there was no financial trad-off in returns for sustainable funds vs. non sustainable funds.
It also revealed that sustainable funds showed a lower downside risk when there was market volatility. (They appeared more stable). In 2020 the Sustainable Funds outperformed Traditional Funds.
You can read for yourself here. https://www.morganstanley.com/press-releases/morgan-stanley-sustainable-reality-report-reveals-u-s--sustainab/
So my opinion, is most people should be holding these corporations accountable with their investment dollars and not just blindly investing in them.
Corporations have done what they wanted for far too long. It's now time to use your money as your voice. Our planet and our people deserve it.