This will be what I like to call a curiosity post. There isn’t necessarily a message but rather a thought stream that I try to explore – rabbit holes appreciated. Hahaha. And discussion is always welcome, because I sure as hell don’t have any of the answers.
If you’ve watched “The Witcher” on Netflix or read the books, then you’ll be familiar with this popular quote by Andrzej Sapkowski:
“Evil is evil, lesser, greater, middling – makes no difference. The degree is arbitrary, the definition blurred. If I’m to choose between one evil and another, I’d rather not choose at all.”
Go ahead, take from that what you will. But what originally got me going down this path, was a simple question: what is the lesser evil in FI? I think at some point we’ve all grappled with this same question.
Does how I invest, have more of a negative impact on the world, people and environment than what positive actions I take in my personal life to offset my own carbon footprint? Where do we draw the line? But more importantly, where do you draw the line personally? What is your lesser evil?
I’ll preface by saying, that I’m all for helping the environment and improving our lives with reduced pollution. But at the same time, I know I consume way too much and contribute to the other side of the equation. I am not naïve as to what my personal footprint devours regarding nature. Does this bother me? No, on a day to day basis not really. Am I proud of that fact? No. But I understand it and admit it with eyes wide open.
I can be better. I know that. I will always know that.
So, what the fuck is my point? Well, I’m not sure I exactly have one because the topic I’m wading into, how do you feel about the companies you invest in, has a million shades of grey. Sure, individual stocks are easy to understand, but if a good chunk of your investments are in Mr. Market, have you ever thought about what that means? What kind of businesses you are funding, supporting or turning a blind eye to by buying index funds?
As I continue to watch this wild market see-saw back and forth, and I see companies lose 70%-80% of their market value, it reminds me of how important that life-blood capital is for them to survive. And who are the investors that are supplying it? Yes, hedge funds and institutions make up a majority stake, but even their funding always links back to individual investors.
Because I think my underlying question is that if you are an environmentalist (or fill in whatever term you want that makes you comfortable) or a minimalist, what exactly do you invest in? Sure, there are all these new funds that say they only invest in “sustainable” (we can argue all day long what that means) companies, but do you own mutual funds or ETFs?
It seems to me, and maybe I’m entirely wrong, but I get the impression there exist many environmentalists and minimalists in the FI universe. Obviously, MMM takes the cake as the most popular, delving out his face punches to all the lesser people in the world (like myself). But is there a hidden hypocrisy laying below the surface? Often, I see MMM promote VTSAX or VTI. And I’m only thinking out loud, but if you own the total market, what are you saying as an investor? Because by owning the total market, you’re probably supporting more worse companies than good ones when it comes to helping the environment. But hey, just my two cents.
And I’ll be the first to admit that I’m a hypocrite myself, quite often actually. And really that’s the whole point of this blog, I write what I am feeling that day. It can change from one hour to the next, hence why some posts may sound contradictory to others – because they are, and I’m okay with that. I don’t strive for consistent beliefs because I don’t see the point of it. I am a human being who will always be in a constant state of change. So why not embrace it and live life that way?
Now getting back to my original point, I like people who improve the world and the environment. That is beyond argument a great and remarkable thing. But what I don’t like, are people telling me what I need to do. And I think the main thought that I keep pondering is are these people doing more harm than good? Meaning, if these people are mostly investing in equities, then are they supporting all the companies that they say they are against? Is providing these companies with the very capital that they need to survive, harming the world more than any good one individual can accomplish?
If you’re asking me for an answer, I don’t know. But it’s an interesting dilemma that I am by far not the first to point out.
This brings me to my second point about human nature. A lot of people like to pick and choose when they want to play pretend. And I’m going to call the majority of environmentalists “pretend” (which might get me in a lot of trouble here, but, and this is just my personal experience, if we’re talking a “real” environmentalist then we all know they can’t live in a house, have running water, copper plumbing, own a bike because it’s composed of mined minerals, utilize any surface that is paved with asphalt or concrete… and we can keep going and going and going, etc. etc. You must be one hard core motherfucker to practice what you preach because it’s easy to make grandiose claims when no one is holding you accountable.)
So, the main observation I was trying to make after that long-winded rant, is that people like to put on their pretend hat when it feels good to do so and ignore it when they want to do something contradictory to that value. I do it. We all do it. It’s human nature, just like we overestimate how good we are at things, we overestimate how great of people we believe we are in our own minds.
And I’m good with all that. This isn’t a problem for me, it’s simply a fact of life. This is how people act.
But if I live on a homestead and practice sustainability (defined as whatever you think it means) but all of my investments are in the stock market supporting all kinds of fossil fuels and carbon footprint expanding businesses, what does that mean? Or does anyone really care?
Does the difference between what “you think” you stand for versus what you “do” stand for matter?
It seems to me, there would be an immense internal conflict here. Two opposite forces colliding in a I’m damned if I do and damned if I don’t scenario. So If this is you, or something that you struggle with, I’d like to know. How do you justify either-or to yourself? What do you tell your kids?
Have you chosen the lesser evil… or would you rather not choose at all?
-Q-FI
Another gem, my man and thanks. Definitely some comestibles for cogitation in this article. In all honesty, I’ve never really thought much about this conundrum, which, of course made me really think. While I’m still wrasslin’ with this knotty thing, here’s my semi-thought our reaction.
While I’ve never considered myself an “environmentalist” per se, I make a concerted effort to leave as little footprint as possible. Using fewer than normative resources of any kind is important to me and I have achieved that goal over my life. I am a staunch minimalist, anti-materialist, anti-TV/Newsist as well. Simultaneously, I am a capitalist, investor and opportunist. So, like you offer, how best to reconcile?
While I am not heavily indexed, I do have equity positions in all manner of companies including those who produce material goods, use up natural resources and produce media. I have made an effort to avoid investing in companies such as those who manufacture poisons, guns, war-oriented materials and whose published values run antithetical to my own, but even with an S&P index, I do own some. There’s no denying that.
I don’t know if reconcile is the correct word here, but I guess I get through my day (and this quandary) by knowing my individual actions are attempting to not deplete things as fast as others; that I’ve taken money earned in my investments to start social enterprises to positively impact lives and; (hopefully) will have a lasting financial legacy long after I am gone dedicated to helping others
Thanks for the thoughts Mr. Fate. Yeah, this was just something I’ve always thought about but don’t really have any kind of answer for. I’m a lot like you that I try to be minimal and help the environment when I can, but do own a lot of equities that might not be on par with that. I think as long as we enjoy our life and try to be as conscious as we can that’s all we can do. It all comes back to being happy with what you have and that’s enough.
Good insights as always Mr. Fate.
I’ve not only thought about it, I actively look through the list of companies my ETFs hold on a regular basis. I want to know exactly how much blood I have on my hands.
As I mentioned previously, I came to FI via the environmental path. So this is a huge and constant struggle for me. I am horrified by some of the companies my money has flowed into. I did investigate ETFs and mutual funds that promote themselves as being sustainable/green, but the more I looked into them, the more disillusioned I became. Textbook cases for greenwashing (while marking up fees) IMHO.
My current strategy (and bear in mind that my FI journey, like everyone’s, changes/will change over time) is to actively undermine the companies whose practices I abhor by not being one of their customers and/or protesting against them and/or telling everyone who will listen why they shouldn’t be supported, while still indirectly owning stock in these same companies. On one hand, you could argue that I’m cutting off my nose to spite my face because these actions would lower my returns. But if enough people boycott/protest, than the company(ies) will do worse and be dropped from the index. Well, that’s the theory anyways.
I am fairly recently FI’d so I’m being conservative with my holdings at the moment. As I become more comfortable with the idea of living off a portfolio (it’s harder than it sounds, at least for me), I hope to move towards impact investing. This year I dipped my toe in for the first time by purchasing a bond from a local non-profit organization that supports underprivileged youth. It’s a minuscule amount compared to the size of my portfolio, but it’s a start. Kind of like how my portfolio got started, all those years ago….
My definition of rich is being comfortable/secure enough to do 100% impact investing. If I ever win the lottery jackpot, that is what I will do with the winnings. Since I’m unlikely to win the jackpot, I will move in that direction as/when I can.
BTW, it’s important to know what your definition of ‘rich’ is. If you don’t define it, how will you know when/if you’ve reached it? A person’s FI number is not the same as being ‘rich’. I’ve hit my FI number. I consider myself financially comfortable, but I wouldn’t describe myself as ‘rich’. Not sure if that makes sense.
Thanks for the thought out reply Veronica. I forgot I wrote this one… haha, so it was good to go back and re-read it. I still stand by it and will be writing a follow-up post some time this year about ESG investing.
I’ve been enjoying your comments on past posts – it keeps me on my toes. =)
When it comes to “green companies” and ESG, I’m the same as you. It’s really just marketing and a bunch of bullshit. They’re capitalizing on how people like to feel good about themselves. It’s a sad sight to see, but the industry and funds are raking it in and I don’t see any slowing down anytime soon.
My philosophy on investing is actually the same as yours. I still hold these companies but try to do what I can in my own personal life to offset the damage. #1 – I think doing this gives you way more happiness and contentment by doing “good things” physically and concretely and #2 – if you try to pick only ESG companies, it’s a lie anyway. Most sustainability programs are marketing departments and have no idea what their operations are really doing. I work for a large corporation and we’re exactly this way. The sustainability people get one “green project” to highlight and market on social media while we’re still doing our normal destructive practices.
Always sad to see, but so goes the corporate reality. It’s not for the faint of heart.
I’m excited to see how your FI journey progresses and congratulations on hitting your mark! Now you’re in the real fun part of it – what do you do? Hahaha.
My definitions of value are always in flux. I think for me right now, “wealthy” is being able to control your time, and as you mention being financially comfortable. Being “rich” would mean to me I have too much money to ever even spend or think about. You’re talking about the “real 1%er’s.
Great comment Veronica and thanks for sharing! Much appreciated.
What do I do? Whatever I want.
I usually tell people that I’m on a self-funded leave of absence (or sabbatical if they are academics). I just neglect to mention that there is no end date for the absence….