INVESTING - BEING LIKE 'THE DISCIPLE'?

about 4 months ago
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Thank God we have some semblance of conscience. Making money from every opportunity is the business of the stock market but it is good that there are some limits to this ethos too.

On the Indian bourses, the pathological labs are scaling new highs consistently as they are flooded with RT-PCR tests and other Covid related tests. Maybe this is the best moment ever in their lifetime and it is clearly buying based on pure logic – more Covid, so more tests and thus more business.

But in the developed countries, cemeteries and funeral service providers are also listed and during the peak of the pandemic they were having a field day. Business had never been so good for them and those looking for an opportunity to make a quick buck, were quick to latch on. It comes under “death care business’ and four stocks, which did very well during the peak in USA were Service Corporation International, Hillenbrand Inc. , Matthews International Corporation and Carriage Services, Inc. Those tracking the sector then were bullish and said that though the funeral services industry is unpleasant by nature, the inevitability of death keeps demand for its services intact in general. 

Now this run-up in the pathology labs stocks in India and then this macabre but pragmatic way of looking at Covid induced demand, led us thinking – is there something like ethical buying during these pandemic times?

This thought was egged after watching the newly released movie on Netflix, The Disciple, over the weekend. It looks at the ethical angle of the music industry – the singer, the main protagonist’s constant fight to stay loyal to the beauty/truth of music vis-à-vis the compulsions of living and making music into a commodity. It’s a personal battle – for some, making money out of music is not a big deal but for many purists, peddling it like a commodity tarnishes its essence.

Ditto for many of us investing in the stock markets. We too draw a line as to which companies we back and which we do not. Its an undrawn ethical line. For some, the line is bold and ‘all-caps’ – no cigarette companies, no leather, no liquor and no ‘non-veg’ companies. Then for some these might be ok but what they cannot tolerate are companies making war equipments and missiles. Those who have the toughest ethical debate constantly raging are those who want to invest only in companies which do not pollute and are green. Now finding a company which is 100% clean and green is next to impossible. And then there are many who will not invest in companies where the promoters are known to be crooks or have always flouted rules.

There is nothing wrong in investing in an opportunity – be it funeral services or path labs. If the underlying ideal is to make money then he/she is true to her ideal.  

So being a purist, ethical investor might restrict your choices and also your returns. More importantly, ethics is a very subjective matter and the lines are blurred when it comes to making a choice. It would instead be wiser to ethically evaluate stocks. Like this Norwegian fund… it held a large chunk of Wal Mart shares. Once it came to light that Wal Mart locks up its employees in stores/warehouses to look after the goods, the state owned Norwegian fund sold its entire holding of Wal Mart. It was no ethical fund, it just was ethical when it came to judging companies it held in its portfolio; was more socially responsible.

Thus it is best to be ethical when choosing stocks and not choose ethical stocks.

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