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Which stock to pick?
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It's trickier researching for stocks for a family trust like the one I'm actually responsible for than it is for one's own portfolio. First of all, a certain amount has to stay in cash because you just never know when someone in the family is going to need to tap the trust. While the cash is a drag on returns, in a yoyo market like we've been experiencing, the last thing I want to have to do is sell on a very down day. That is really a drag! Example: In September so far there has been my mother's post-illness vacation Then there is the importance of the stock under consideration being of interest or potential interest to one or more of the trust beneficiaries. That's not something it's possible to run a screen for. And finally, there are family values. Our family's values. One of the benefits of communicating with family members about individual investment possibilities is that we get to understand each other better. Examples: Our daughter wants the trust to own stock in companies that help - And there are 16 people ranging in age from 12 to 88 who share with me and each other what they value and what they find offensive. For this competition, Bianca is representing "the family", so it's largely her values and mine that get discussed. Right now there are two stocks I feel have possibilities: o Ambassadors Group, Inc. (EPAX) is an educational travel company that organizes and promotes international and domestic educational travel and sports programs for youth, athletes and professionals. That's easy: Bianca would love to travel and daydreams about which countries she'll visit someday. o Wynn Resorts, Limited (WYNN) is much more problematical. It's a developer, owner and operator of destination casino resorts: one on the Strip in Las Vegas, Nevada, and one in China (Macau). Is it appropriate to profit from exploiting other people's vices? Should I even ask Bianca whether she wants to research this stock? I'm curious how others participating in Strategy Lab Open approach ethics in their investing. There are clearly a few (ssales is an example) who appear to be taking a deliberately anti-morals approach, if only tongue-in-cheek. What about you? At last the "comments" feature seems to be working. I'd love to hear your views! | ||
Comments (2)
An excellent question to pose Eileen, I like to think that I approach fund investing from a business perspective and leave out the personal biases, however I know well that particularly with morality issues it is nearly impossible to remove those 'filters'. I find the best approach is to recognize where my biases lay and either accept their filtering or if the business case is strong enough for a particular issue them bypass the 'filter' (some biases though are so strong they cannot be bypassed). Hope the family trust goes well.
Posted by Scot Strickland | September 12, 2007 6:16 PM
My brain tells me that whether or not I own the stock of a company has nothing to do with their business practices. Therefore, my gut reaction is 'if it's legal, it's on the table.' However, there are some industries I just don't feel comfortable investing in - tobacco for instance.
The twist you've got is having to consider others and that you're teaching a younger generation. I don't envy you having to deal with 16 differing opinions on what companies fit your family values.
If you and Bianca do decide to research WYNN, you could use it as a value lesson to demonstrate the costs of gambling. :)
Posted by Russ | September 12, 2007 11:49 PM