Tobacco. Assault weapons. Oil — and any other product or company that contributes to climate change.
That’s the list of industries so-called ethical investors typically avoid, preferring to put their money into stocks of companies that do no harm.
But a couple of new names have joined the toxic list, according to Toronto-based ethical investment advisor Tim Nash.
“The top two companies that tend to get flagged these days as ethically questionable are Facebook and Amazon,” said Nash.
Reports of Amazon’s poor labour practices have made headlines while Jeff Bezos’s billions have grown, and Facebook. “has stoked the division around very contentious issues, whether it’s Black Lives Matter or climate change,” he said.
Tim Nash advises clients on how to align their personal values with their financial investments. (Submitted by Tim Nash)
Add the recent antitrust report by American lawmakers that said big tech companies including Apple and Google abuse their “monopoly” power, and some investors are turning up their noses.
According to TD Securities, 2020 will be a record year for exchange-traded funds that track companies focused on ethical factors such as the environment, social impact and corporate governance. More money was invested in them in the first quarter than in all of 2019.
Worst offenders
Nash’s clients are keen to invest in the stock market, he said, but are choosy.
“They still want profits. They still want to be able to save and earn money for their retirement. However, they want to avoid the worst offenders.”
Nowadays, those “worst offenders” include Big Tech.
In Killaloe, Ont., Duncan Noble and his wife, Mary Crnkovich, are approaching retirement age. Despite how well tech stocks are performing, they aim to keep them out of their investment portfolio.
“Facebook was in the news a lot in terms of influencing the 2016 election in the U.S.A., and I started reading more about how Big Tech can be a negative influence on our society,” said Noble. “It happens at the personal level also, in terms of people getting addicted to social media and becoming radicalized through various processes that technology enables.”
Noble said he and his wife also avoid the oil and gas sector. They don’t believe they’re losing money by avoiding specific industries.
“Our investments have done really well this year,” he said.
Duncan Noble and Mary Crnkovich are pictured on holiday in Nunavut. The couple have decided they don’t want to invest in most technology stocks. They believe many Big Tech companies exert a negative influence on society. (Duncan Noble)
But others argue that it’s possible to find an ethical concern with almost any company, and that it’s foolish to not take advantage of the best performing sector in the stock market.
Not ‘dastardly’ billionaires
Financial advisor Barry Schwartz of Baskin Wealth Management says the technology category has been a superstar.
“It hasn’t been a winner for this year; it’s been a winner for the last 10 years,” he said. “The 10-year compounded return on the NASDAQ as of Sept. 30 has been 18 per cent, including dividends.”
Schwartz adds that rate of return has “smashed” every other class of asset.
He also points out that Mark Zuckerberg of Facebook is donating billions of dollars to worthy causes, while Amazon’s Bezos is funding journalism along with space exploration.
“These guys are not hoarding their money,” he said “They’re not these dastardly billionaires you see on TV that are out to crush society.”
Another point in their favour, said Schwartz, is that both Facebook and Amazon have been creating jobs and adding wealth in a number of ways, both for workers and for investors.
“That improves the economy and adds value,” he said.
‘Dirty’ money
That argument doesn’t hold water for Samantha Early, a labour organizer in Toronto, who is one of Nash’s newest clients.
At age 27, she says her investments aren’t aimed at retirement, but at giving her a financial cushion in the years ahead.
“I think for folks of my generation, the expectation is that we will spend our working lives in a very precarious situation, that jobs will turn over, that we could see long periods of joblessness and have to switch careers,” she said.
Despite that insecurity, she says her moral compass is just as important as her finances.
Labour organizer Samantha Easy of Toronto is seen during a Zoom interview. The 27-year-old only wants to invest in companies that align with her personal values. (Dianne Buckner/CBC News)
“I have already taken losses to switch up my mutual funds and withdraw all of my investments, to switch over to this new system I’m working on with Tim,” she said. “And that’s just something that I’m willing to do, to make sure my money is invested ethically, so I can feel like my money is not dirty.”
Excellent, ethical returns
Money decisions are by their nature very personal, but Nash is eager to point out that it’s possible to earn excellent returns with mutual funds custom-designed to appeal to ethical investors.
“What’s been really interesting during COVID is these sustainability funds have outperformed over the last year, quite significantly,” he said. “So even some of these funds that have excluded companies like Amazon and Facebook are clearly finding other companies that are just as profitable.”
Nash consults a variety of indicators, including the Morgan Stanley Capital Index, and a firm called Sustainalytics in order to find ethically acceptable options for his clients.
It may strike some as odd that companies involved in such seemingly innocuous activities such as online shopping and social media can be seen as morally offensive as cigarettes, assault rifles and pipelines. But for a growing number of investors, societal harm can take many forms, and they want to be careful not to contribute to it.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
