Investing your money with the best possible moral outcome

[thebestofenergy]

Hey, been a long time since I was here. I hope everybody's doing OK.

I wanted to talk about the subject of investing money (whether it be investing in single stocks or in an index fund), and how to keep it remunerative while also putting your money where it'd do the most good.

What to do when you have set aside money?
There's three options:
You can let it sit there, and have it slowly rot away by inflation
You can donate it to effective charities
You can invest it

I think it's a good strategy to do all three, having some set aside in case of necessity, some to constantly donate to the most effective charity, and a good part to invest in stocks that do good in the long term.

For what regards the investing part, how do you make it safe and make sure your investments end up resulting in morally good consequences?
If one of those two things is already considered complicated by itself, then having both be true at the same time must be much harder. But I don't necessarily think so.

The two safest ways to invest money with minimal work required (so no real estate), is usually to either invest in stocks or in an index fund.
An index fund is like investing in stocks, except every dollar you have goes to support a multitude of companies.
While investing in a stock, you support the company of your choosing only.

So why would you invest in an index fund?
Because it's generally safer for your money. It's extremely unlikely all the companies in an index fund would crash, and even if one or two do, the other 100 in the index fund wouldn't, it so it'd be almost irrelevant. A good index fund has an average of 7% return per year, and if you include compounding interest over decades, you could make some serious profits.

However, what about stocks?
Shares of a company are more volatile, and while you can get a bigger reward, there's a higher risk. In fact, most professionals investing and trading stocks can't beat the safe return of an index fund.

But I don't believe that's the case for every stock.
There are a few stocks out there that will be performing increasingly and exponentially well in the near future, and it'd certainly be worth to investing in those and hold the shares for the next years until they blow up.
Two of those that I'm talking about are Tesla and Beyond Meat.

The main reason in doing this post, is to see if anybody is interested in helping me find solid visionary companies, whose goals are in the best interest of what's morally good. Because those not only would be remunerative in the long run, you'd also put your money where your mouth is and help the cause.
Investing in an index fund is safe, but not all the companies in it are perfect, far from that. It'd be ideal to find single safe companies to invest in that do good.

So far, Tesla is promising because they committed to being fully vegan from 2020, and of course it's clean energy.
Why would they be profitable? Because they have pretty much zero competition (everybody else is lagging behind a lot in affordability and efficiency) in what they're doing: electric, self-driving cars. And they also have solar energy, on the side.

What about Beyond Meat? Vegan alternative to meat, very solid business plan, has been exponentially increasing profits and is now looking to put their products in McDonalds. The impact should be huge.

What do you think?
Do you guys have any companies in mind that are very promising, both monetarily and morally wise? It'd be best to find a good number of companies, to diversify the investments and therefore having your money be safer and not as impacted by one company failing or losing money.

I'm looking into nuclear power and vegan companies right now, I think those are probably the ones with the most monetary future potential (unfortunately SpaceX is not publicly traded, and once/if Neuralink will be publicly traded, it'll be huge, but it's not for now).
And of course, vegan companies are probably the ones with the best moral outcome.

Please share if you have any ideas.

[Jebus]

What about Beyond Meat? Vegan alternative to meat, very solid business plan, has been exponentially increasing profits and is now looking to put their products in McDonalds. The impact should be huge.

Just because a company has a good outlook doesn't mean that it's a good idea to invest in its stock. However, if you think the market is underestimating the company's potential, then it might be a good idea.

However, given the history of stock performance, I would be reluctant to invest in any stocks. Especially at this particular time.

[thebestofenergy]

Just because a company has a good outlook doesn't mean that it's a good idea to invest in its stock. However, if you think the market is underestimating the company's potential, then it might be a good idea.

Yeah, certainly. But it's not just about having a good outlook. If it's a solid company with a good business model and increasing demand, it's not just outlook.
And I'm talking about investing long term. Not quick profit.
It might have its ups and downs, but how will it perform 20 years down the line?

However, given the history of stock performance, I would be reluctant to invest in any stocks. Especially at this particular time.

The history of stock performance is good, not sure what you're referring to. The average stock has a performance of 7%-10% annual return.
And yeah, there could be an economic crash around the corner (if that's what you're referring to), but that can always be the case. The chance is that by waiting for it to pass, you'd lose a lot of easy return, and helping those companies out. Besides, stock values go back up after a crash, it's not like you lose everything. You just have to keep holding for the long term.

What'd you suggest doing if not investing your money?

[Jebus]

it's not just about having a good outlook. If it's a solid company with a good business model and increasing demand, it's not just outlook.

This was exactly my point. It's irrelevant if the company has a good business model and increasing demand. If everyone is already aware of this it will be reflected in the stock price.

The history of stock performance is good, not sure what you're referring to.

Here are some facts to consider:

 Between Dec. 31, 1899, and Dec. 31, 1999 the Dow Jones Industrial average rose from 66 to 11,497 (http://stockcharts.com/charts/historical/djia1900.html)

This amounts to a gain of 5.3 percent compounded annually

However, when the 5.3% annual appreciation is adjusted for inflation, the real gain is only 1.64% (http://www.itulip.com/realdow.htm)

The 1.64% does not take into consideration frictional costs which according to Warren Buffet runs between -1.0 and -1.5 % per year annually (http://money.cnn.com/2006/03/05/news/ne ... /index.htm)

From 1899-1999 the Dow dividend yield was 2.3 % per year (0.71% after inflation adjustment) (http://www.itulip.com/realdow.htm).

The average capital gains and dividend tax in the U.S. in the 20th century was about 20% (http://en.wikipedia.org/wiki/Capital_ga ... ted_States)

Those stats were for the 20th century, the century with the largest economic expansion in history. Imagine if stocks had been around in the 4th or 14th century. Given the imminent global warming, I'm not overly optimistic about average annual appreciation from 2000 to 2099.

[thebestofenergy]

This was exactly my point. It's irrelevant if the company has a good business model and increasing demand. If everyone is already aware of this it will be reflected in the stock price.

It's not irrelevant, because almost never the market is exactly right on putting a price on a company, because of exponential expansion.
It may account present and near future, but almost all companies were valued less at the beginning for a reason - big or small ones.
If you believe it'd be reflected in the stock price, then clearly it's been wrong 100% of the times, since the stock price keeps changing for everything.
It can't account for the future. But you can estimate that for the future certain companies are going to perform extremely well, and way better than the current value they're put on. It might be correct for present evaluation, not future potential.

Here are some facts to consider...

The point remains that the more you had invested early, the richer you'd be by now, and it's going to keep going.
The market is not performing badly, and global warming could make some companies (like Tesla, vegan companies and nuclear power) perform really well.

But I ask you again, if you don't think investing is the best thing to do right now, then what do you do with money you save, that you don't donate?
Leaving them be is going to give you nothing, and certainly less than say putting them in an index fund.

[Jebus]

It's not irrelevant, because almost never the market is exactly right on putting a price on a company, because of exponential expansion.
It may account present and near future, but almost all companies were valued less at the beginning for a reason - big or small ones.
If you believe it'd be reflected in the stock price, then clearly it's been wrong 100% of the times, since the stock price keeps changing for everything.
It can't account for the future. But you can estimate that for the future certain companies are going to perform extremely well, and way better than the current value they're put on. It might be correct for present evaluation, not future potential.

I'm not sure I am following you here. My point was that to beat the market average, looking for companies potential is the wrong strategy. However, one could beat the market if one has knowledge about the company that is not public, but that, of course, is illegal.

The market is not performing badly, and global warming could make some companies (like Tesla, vegan companies and nuclear power) perform really well.

Again, just because the company is expected to perform well one should not assume that that gives the stock superior value. In case, the stock may be overvalued if the general public expects the company to do well.

then what do you do with money you save, that you don't donate?
Leaving them be is going to give you nothing, and certainly less than say putting them in an index fund.

I agree that putting them in an index fund is slightly better than doing nothing, but there are other ways of investing that are superior to stocks. I can't answer your question specifically because I don't know you and I don't know what you are good at.

[thebestofenergy]

I agree that putting them in an index fund is slightly better than doing nothing, but there are other ways of investing that are superior to stocks. I can't answer your question specifically because I don't know you and I don't know what you are good at.

Do you feel comfortable sharing those other ways you think are better? Are you talking about investing in property?
The point of why I made this thread was mainly to be able to exchange ideas.

[Jebus]

Do you feel comfortable sharing those other ways you think are better? Are you talking about investing in property?

If investing in stocks, I would put together my own portfolio rather than relying on the "expert'" advice of those who may have a different agenda. Personally, I have made a consistent profit from sports punting over the last 17 years. However, this is not something I could recommend as a vast majority of those who try sports betting end up losing money.

Although some people make a decent profit on property, traditionally real estate is even less profitable than stocks.

For those who have a bit of extra time, starting up a well-run company seems to be the best way to make money.

[brimstoneSalad]

I'm not sure I am following you here. My point was that to beat the market average, looking for companies potential is the wrong strategy. However, one could beat the market if one has knowledge about the company that is not public, but that, of course, is illegal.

An individual is never going to beat professional traders in the odds game since they're experts at reading the tea leaves, but you might benefit from taking the global warming regulation gambit. Kind of a Pascal's wager:

If we do nothing, we're all screwed anyway no matter what you bet on
If we do something, certain companies will quite reliably come out over others due to those regulations

So, putting it all on radical regulation giving certain companies a massive benefit on the market (because they're first to market and ahead on the R&D) could make sense even if in abstract isn't not going to give you better returns.
This is a rather unique situation.

However, the alternative to that might be prepping in the event that we do nothing and it all goes to shit. Putting it all into building a bunker...

[Jamie in Chile]

I found a couple of environmental funds (WHEB and Impax Environmental Markets) and invested in those. They are focused on sustainability in general, but seem to stick to big companies meaning there is a limit to how ethical they can really be, however at least it's a fairly stable fund.

The Best of Energy - it seems we have a similar train of thought because I thought about the same 2 companies - Beyond Meat and Tesla.

Beyond Meat - I contacted them last year directly and tried to buy stock, but it was prior to going public and they said I had to invest some silly high number to get in the game. When I heard that they were planning to float at $20 a share, I was going to buy at the price, but then the price went to $60 and I Iost interest. They are at $235 now which means that investors are betting that their future profits will be much higher than their current revenue. Let's hope investors are right. The only way that share price makes any sense (if you do the math) is if vegan meats are going to dramatically increase in the coming years, not by 10% or 20% a year but say trebling or quadrupling each year. A bit gutted that I couldn't get in at $20 a share.

Tesla - its stock price looks low to me given the future potential. To my mind, it doesn't allow for a moderate chance of substantially higher revenues and profits in the future, and the articles written by shorts all look plain dumb, which makes me want to get in the game. I haven't bought because my online broker is UK based and doesn't have the option yet, so I am sitting on the sidelines hoping they'll add it so I don't have to go to the hassle of figuring out for myself which other broker to sign up with to buy shares in Tesla as a UK resident living in Chile. If anyone knows a way to do it that will take only minutes I would probably do it now (would need to do some research first about the company).

Happy to consider other ideas.