Soon decisions like this won't make headlines because it will be normal not to invest in industries based on increasing suffering.
Do we support investing in blood diamonds, no matter how profitable?
Do we support investing in blood diamonds, no matter how profitable?
Till there's a global solution to the energy problem we'll need oil. Existing solutions are nowhere close to being sufficient, therefore divestment will have no impact on the amount of oil burned. It's ridiculous to think that clicking a sell button on some assets will fix global warming, that's not how the world works.
https://en.wikipedia.org/wiki/World_energy_consumption
As Bill Gates says, we need to fight two fronts of misinformation: a) that global warming is not a problem, and b) that it is an easy problem.
A nuance is that you don't want to buy into these stocks while people are moving away from vice stocks.
However, once the trend is stabilised and there are no more marginal investors to adopt a vice-free portfolio, then you should buy all the vice stocks as they will have a more favourable discount rate.
Timing the exact bottom is hard.
That worked out well.
Unfortunately, following up that success by buying into TEPCO once it had dropped by half after their accident turned out not to be a good move.
However, one may console oneself that it was a public service in providing some cash to the Japanese pension funds, proverbial widows and orphans and whatnot that were selling at that time.
It's ridiculous to think that reduced demand for some stock will not reduce its price.
More concretely, the more banks and people make gestures like this, the easier it is for politicians to reduce subsidies / increase taxes for fossil fuels, which will definitely reduce the amount of oil burned.
The second part is true, it is shaping the narrative somewhat. We'll need much more hardcore stuff than just twiddling the narrative, though.
P/E is either backwards looking or based on estimates of future earnings, and the future often changes.
I can't say who's got a more accurate view of the future, but the Aramco IPO suggests that the Saudis are anticipating people getting serious about global warming before too long and they want to at least test the waters.
But my point still stands - humanity needs energy.
Also, of course, this is not an investment advice! You may lose 100% of money yada yada.
That's the point. Stocks are priced according to discounted future earnings. if the price goes down but the future earning prospects hasn't changed, it means I can get future earnings for cheaper. In other words, my rate of return has improved.
Is it possible for an industry to increase suffering in a free market? Blood diamonds involve slavery and coercion so that is not really the same. If free people are making free choices to engage in a transaction, it would make sense that they would both only choose things that decrease their own suffering.
Consider grocery stores in a typical moderate-sized city and suburbs, where there are 3-4 major chains. You might assume this is a pretty competitive situation, and they should have prices that are pretty close to each other. But the equilibrium seems to be that each one has a different (and frequently changing) set of products that are noticeably cheaper than the others, and a complementary set that are significantly more expensive. A logical explanation of that would be that as long as they guard their prices closely so you can't compare them easily online or whatever, once you go to the store, you are not completely free. If you are buying one thing because it's a good deal, it's easier to buy other things there as well.
The above is something I've noticed first hand, but it's also something I read about years ago from some economist' research paper.
Everything in business is about figuring out how to deny customers freedom at some level. Arguing that the lack of freedom is trivial in a particular example is missing the point that it's a continuous spectrum from trivial inconvenience that makes you spend a dollar more, to brutal slavery, depending on where business activity is bounded by ethics, mores, regulation, etc.
What I'm trying to say is that the term "free market" is always burdened with all sorts of unstated assumptions, so you can't communicate very well by assuming people interpret it the same way.
I'm not sure about the grocery store example. I can think of several different grocery stores near me that have wildly varying prices for similar items. Whole Foods is a lot more expensive than Aldi, for example, and they don't really hide it. They're catering to a different market and offering a certain social cachet in addition to the food that some buyers appear to feel is worth it, as they are free to do.
> A logical explanation of that would be that as long as they guard their prices closely so you can't compare them easily online or whatever, once you go to the store, you are not completely free. If you are buying one thing because it's a good deal, it's easier to buy other things there as well.
Of course you're still free while you're at the store! Being mildly inconvenienced is not an impingement on freedom. Freedom doesn't mean everything is handed to you at maximum convenience. It means it a choice that you can make.