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Family life: an update to shareholders

Two years ago this weekend my wife and I took the most important investment decision of our life and opened up our home to a young girl in local authority care. Ten months later we formally adopted her and permanently added a new member to our family.

As we had a rare child-free weekend, we took time out today to assess the return on our investment.

In the debit column, raising a child is damned expensive at the best of times and our timing was not ideal. She eats us out of house and home and continues to grow out of clothes and shoes at an alarming rate. Our previously peaceful and serene existence is no more! This girl can talk for England and would argue with St Peter on Judgement Day. Personal privacy is a long forgotten memory. Everything in our home life is a bit noisier, a bit messier, and a bit more crowded than before.

But the credit column has already expanded to multiple sheets. We have been privileged to get to know the funniest, kindest, and most genuine young person imaginable and share in her sheer energy and thirst for life. I have a new buddy for cooking, reading, and swimming with; my wife has a companion for shopping and making art. I still remember vividly our first weekend together and buzzing with excitement for the next to come round after I had taken her back to her care home. Two years later, the excitement has scarcely abated and we can't wait to see her grow up into an amazing young woman.

I advise clients on how to invest their pension funds. Success is measured as a percentage return on capital. Sometimes I do particularly well, other times less so. Success usually cancels out failure and the world chugs along unremarkably.

How do we assess return on the considerable amount of financial and human capital we have invested in M? Doesn't fit neatly onto a balance sheet. We have a budding chef or PE teacher im our midst, but I am convinced that the real returns will begin to flow long after we have shuffled off this mortal coil. I love the idea that our profit will be shared and distributed widely.

Your country's GDP may grow at 0.5% this year, or perhaps a giddy 6%. Most of you will not notice because the flow of wealth in most advanced economies is directed towards the richest in society. You will continue to work harder and harder and yet feel ever more dissatisfied.

Make your investment instead in children and young people for unlimited returns that enrich us all. If you can't have children yourself at home, help out with small acts of kindness and support for a neighbour or relative. Pay taxes gladly to support schools and services for the young. It is the best investment you will ever make and we will all be wealthier, healthier, and happier for it!

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RedBaron · M
Buy Apple, Nvidia, and Berkshire Hathaway.
SunshineGirl · 36-40, F
@RedBaron Stock in Nvidia fell by 16% when the markets opened today . . the lemmings are panicking. Rethink your investment strategy.
RedBaron · M
@SunshineGirl This is just a liquidity sweep by hedge fund managers. Analysts have a $200 price target on it.

This is the time to buy the dip and hold for the long term. I bought 50 more shares a few minutes ago.
RedBaron · M
@SunshineGirl And it was back up 9% today, so I’m up more than $10 per share on those I bought under $118 on Monday’s dip.

The most foolish thing an investor can do is panic and sell into a vortex like what happened Monday.

I hope you don’t advise your clients to lose money like that.
SunshineGirl · 36-40, F
@RedBaron Slightly off topic though . . my original post was about making investments that go beyond financial returns.

I am a financial analyst for a pension fund. These stocks are too risky for our clients, even before Trump started rampaging. My colleague in London did however make a packet over the weekend short selling.
RedBaron · M
@SunshineGirl Financial investments are all about financial returns, as they should be. Volatility and risk, of course, are part of the equation for every investor.

Personal and social investments are, of course, not an apples to apples comparison.
SunshineGirl · 36-40, F
@RedBaron The idea of shareholder equity, in which "growth" is pursued at the expense of social utility and equity, is a recent one that has outlived any usefulness it may once have had. I think even Trump may realise this when he is not feathering his own nest. Global capitalism is in crisis. The only way to make it popular again is to spread rhe benefits of real economic growth.
RedBaron · M
@SunshineGirlSocially responsible investing is a great idea in theory but dubious in practice as it’s basically marketing hype.

1. Judging corporate behavior is tricky. For example, would a company be in or out of your portfolio if it:

- offers its employees excellent wages and benefits but builds military weapons that slaughter Palestinian children?

- is philanthropically generous but sells sugary drinks and salty snacks that are causing an epidemic of obesity and diabetes?

- produces life-saving miracle drugs but sells them at unaffordable prices?

- sells cool electric cars but promotes a plutocracy for the United States?

- sells cheap pillows but supports racists and demagogues?

- lowers consumer prices but does so on the backs of its employees and local communities?

- builds privacy-protecting electronic gadgets but does so in third world sweatshops?

2. As companies' strategy and leadership evolve, you’ll have to regularly re-assess the social responsibility status of your portfolio and that may mean frequent monitoring and trading of your investments.

3. Researching bonds and international stocks is more difficult and expensive.

4. You’ll incur additional fees to maintain this approach.

5. With tight screening requirements, you may end up with a smaller investment universe, lower returns, higher risk, or all of them.

6. With looser screening criteria, you may end up with a portfolio that looks nearly identical to a less costly and more diversified index fund.

There is no evidence that socially responsible investing has any effect on corporate behavior or social change.

Six of the top 10 holdings of Vanguard's Social Index Fund are Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia. Those stocks also are six of the top 10 holdings of Vanguard's Total Stock Market Index Fund, and five of them are part of my family's modest portfolio.

We should all want to make the world a better place, but your investment portfolio is not the most effective channel. As I said above, it’s a marketing gimmick. There are other ways to express one's conscience and social preferences.
SunshineGirl · 36-40, F
@RedBaron It has nothing to do with my conscience or social preferences. We invest in housing projects that create real jobs, real assets, and add value to communities. Compare this to the pyramid schemes promoted by Trump which create absolutely nothing and benefit only a tiny number of people. It is about making economics work for everyone and generating real growth.
RedBaron · M
@SunshineGirl Nothing wrong with that. But not everyone supports Trump, and different investors have different objectives and strategies.

But listen to yourself. Of course it has to do with your conscience and social preferences, or you wouldn’t feel so strongly about it.

That’s OK, but feel free to be honest with yourself.