Responsible investing - just a marketing trick?
"You are correct that, barring an equity capital raise, your money doesn't actually end up in the company. However, interest in their stock can help a company in other ways; Management/board members hopefully own shares or options themselves, thus knowing that ""green"" policies are favorable for the stock price (as your fund might buy shares) can be quite an incentive for them to go green(er).  Companies with above average company share performance are also often viewed as financially healthy and so creditors tend to charge lower interest for companies with good share performance.  Lastly, a high share price makes a company difficult to take over (as all those shares have to be acquired) and at the same time makes it easier for the company to perform takeovers themselves as they can finance such acquisitions by issuing more of their own shares. There is also the implication that money flowing towards such green companies is money flowing out of/away from polluting companies, for these ""dirty"" companies the inverse of the previous points can hold true. Of course on the other hand there is quite an argument to be made that large enough ""green"" funds should actually buy substantial positions in companies with poor environmental records and steer the company towards greener policies but that might be a hard sell to investors." A share is just a part ownership of a company. If you buy a share of a green stock in the open market, you now just own  part of a green company. Just like if you buy a house, the money you paid moves to the former owner, but what you are getting is a clear asset in return that you now own. Via mutual funds/indexes this can get a little more complicated (voting rights etc tend to go to the mutual/indexing company rather than the holders of the fund), but is approximately the same thing: the fund buys assets on the open market, then holds them, buys more, or sells them on behalf of the fund investors.
"There are obviously lots of complexities here, and there are rules against price or market manipulation that are somewhat interpretive due to the rules' inclusion of the manipulator's intent, but: Generally speaking, you can publicly promote the value of a company whose stock you own provided that you: Now, if you extol the value of a company publicly, and sell it immediately thereafter, ""pump and dump,"" the regulators might suggest that your actions imply that you didn't believe it was so wonderful, and were misleading the public to move the price.     That said, a fair retort might be that you loved it for all the reasons you said at [lower price], but thought it had run its course once it got to [higher price].   Again, if it can be demonstrated that your reason for praising it was to push the price higher, your intent may land you in hot water. This isn't legal advice or a full analysis, but if Fitty essentially declared his honest reasons for loving a stock in which he is invested, and discloses that investment, letting others know he is biased, he's probably ok, especially if he intends to hold it long term." The companies which define the major indexes do not derive profit directly from the indexes. They are typically brokerages, which use the indexes as a tool for discussing investment options with their clients and as a publicity tool to remind the public that they are long-standing, respected firms whom we might want to consider working with. Can't mention the Dow without being reminded of Dow Jones, for example. Likewise the Standard & Poor's 500 reminds us that S&P is still going strong. There may also be some slight market manipulation opportunities in choosing which specific stocks are included in each index, but since investors rarely follow an index exactly as originally defined I'm not convinced that's significant. And the mix included in each index changes relatively rarely and has to be justified by what the index claims to be representing. Agreed with the CEO that it is cases like this, encouraging people to live beyond their means, that popped the housing bubble.   But we can't mention that without also mentioning the, what? Maybe thirty-year drunkenly-stupid profits people were making off the underlying financial tool of packaging sub-prime mortgages together and selling them as securities, and the eventual concomitant derivatives of that foundational, and ultimately; bubble-causing tool.   I'd say it was a good model to all the hundreds of thousand of people that profited from it, and the thousands who each individually made hundreds of millions of dollars, and the many people that got out of the bubble on the way down.   That being said, and the obvious connotation that from their perspective long-running bubbles, like the specific one mentioned, are in aggregate good for the institutions that use them; then, simply using tools that cause bubbles to burst, isn't in itself bad, and is usually good, for the reasons I stated; on average.   The insidiousness that it's also a blog? Wow, very sophiaticated, almost machine-learning sophisticated. I really like this piece from that perspective. I mean, doctor OZ is a sophisticated infomercial, but this is possibly better (nah doctor OZ is a better con).   I'm going have to look up the criticism by those two newspaper heads you mentioned. And, yes good publicity, from multiple angles. This is a sophisticated weighted-algorithm... thing.   Finally, you know the negative connotations of this thing also work to it's benefit. It's a formula I've studied in mass-marketing, where you can rely on the law of large numbers; the things that are slightly grotesque increase efficacy. Once you see it you might well be horrified, like when you study Zombardo, Milgram, or Asch. The human in all it's magnificent grotesqueness.   The archetypal example; Walt Disneys Mickey Mouse. Seth McFarland ilucidated this fact when he literally pulled the gloves off a similar cartoon-mouse like character.   I saw it on a box of fruity pebbles too, it was in Barney Flinstones eyes. Perhaps someone has an investment objective different than following the market. If one is investing in stocks with an intent on getting dividend income then there may be other options that make more sense than owning the whole market. Secondly, there is Slice and Dice where one may try to find a more optimal investment idea by using a combination of indices and so one may choose to invest 25% into each of large-cap value, large-cap growth, small-cap value and small-cap growth with an intent to pick up benefits that have been seen since 1927 looking at Fama and French's work. Really? You don't understand how sometimes doing something that makes you feel good actually harms you in the long run? Like eating or drinking too much, or taking commission on HFT while HFT undermines the utility and value of your product for the majority of the market? "Technically, this doesn't seem like a scam, but I don't think the system is beneficial.  They use a lot of half-truths to convince you that their product is right for you. Some of the arguments presented and my thoughts. Don't buy term and invest the rest because you can't predict how much you'll earn from the ""rest""   Also Don't invest in a 401k because you can't predict how much you'll earn They are correct that you won't know exactly how much you'll have due to stock market, but that doesn't mean the stock market is a bad place to put your money.  Investing in a 401k is risky because of the harsh 401k withdrawal rules  Yes, 401ks have withdrawal rules (can't typically start before 59.5, must start by 70.5) but those rules don't hamper my investing style in any way.    Most Term Life Insurance policies don't pay out  They are correct again, but their conclusions are wrong. Yes, most people don't die while you have a term insurance policy which is why Term life insurance is relatively cheap.   But they aren't arguing you don't need insurance, just that you need their insurance which is ""better"" You need the Guaranteed growth they offer  The chart used to illustrate their guaranteed growth includes non-guaranteed dividends.   They invest $10,000 per year for 36 years and end up with $1,000,000.   That's a 5% return!  I use 10% for my estimate of stock market performance, but let's say it's only 8%.   The same $10,000 per year results in over $2 Million dollars.  Using 10.5% (average return of the S&P 500 over it's lifetime) the result is a staggering $3.7 MILLION.   So if I'm looking at $3.7M vs. $1M, It costs me $2.7 Million dollars to give me the same coverage as my term life policy. That's one expensive Term Life Insurance policy. My personal favorite: Blindly following the advice of Wall Street and financial “gurus” such as Dave Ramsey and Suze Orman got you where you are. Are you happy with the state of your finances? Do you still believe their fairytale, “Buy Term (insurance) and Invest the Difference”?  Yes, I sure do believe that fairytale and I'm prospering quite well thank you. :) While I don't think this is a scam, it's outrageously expensive and not a good financial choice." "Right, as I stated I agree that it will cause greater variance from the true intrinsic value for individual equities. To take this example to an extreme, traders can throw darts at a board of ticker symbols, purchase them, and still diversify away most firm specific risk. You're correct in stating that such a strategy will eventually cause systematic market failures if everyone does it, but the herd goes where they can make the most profit, and right now that is with ETFs.   When fund managers prove they have foresight enough to exploit any systematic failures that this causes, or can start beating ETF returns, the herd will flock back to them. I only meant to point out the reasoning behind why this is happening, not advocating one over the other, and also to point out that Paul Singer shouldn't whine. To re-purpose an old saying, ""Don't get mad, get even (by making your investors rich).""" "Wouldn't any rational person leave those decisions to the managers who have collectively positioned the company to be able to generate those profits in the first place?  I'm sure Carl Icahn and other ""activist investors"" would disagree but part of the reason for investing is you trust management to make a good ROI.  If as an investor I'm not happy with a 30 or 40 percent ROI then I should get out of the stock." I can't tell if it's very clever marketing or very foolish; I'd settle on a combination, especially since the former chief executive admitted that it is due to cases like this, where people were encouraged to live beyond their means, that took a needle to the property bubble in 2008.   It's quite dangerous, as you say, to present adverts as news. What's slightly more insidious in my eyes is in the way in which it's presented as a blog piece, which comes with connotations of informality and honesty, constructed to leave a feel-good affect on the reader.   The advert seems to have struck a chord with a lot of people, who were very vocal in their disappointment. Critiques of the article were leads in two of Ireland's biggest newspapers, The Irish Times and the Irish Independent. Either way it's great publicity for Bank of Ireland, I guess. Investing is when you seek to make money from owning things.   Making money from owning things is economic rent.    &gt; Investing is a valid practice that helps new businesses and, by extension, society as a whole.  Investing has good and bad effects.  The good is that useful capital is created.  The bad is that rent is created.  Corporate tax cuts are a disaster.  It's increasing the bad part of investment with a net negative effect on the good part. "Well, everyone knows that a lot of funds have a strict policy to own a market-cap based part of shares from all listed companies above a certain threshold.    Now, if I would go and inflate my share price and market cap, they would be forced to buy in; you can argue that this is ""just exploiting a weakness of the market"", but for me that's simply fraud." I do not know or care about their motivations. But if I KNEW that they were motivated by money – and most, but not all, stockholders probably are, and why not? – that would be a clue about how to make a pitch for clean energy. Is there a money-based case to be made for climate action? Certainly Michael Bloomberg, author of Climate Hope, thinks so. Along with the above reasons, the fact that DHA are under investigation by the Federal Police, should be a red flag to any potential investor. The Federal Police aren't called in over parking fines.  The rules that are in place for effective and appropriate management appear to have been compromised. I would like to see DHA's marketing people explain why the Department of Finance called in the Feds. To clarify further, with any investment, the potential investor must satisfy beyond any doubt whether there's a problem with an individual or with the way the organisation is managed as a whole. Look at the Big Four banks. To complete the research I suggest wait until DHA release an appropriate public statement (hopefully a sensible one that is honest- but don't hold your breath). I can see parallels with the recent scandal with HSU. When management is being led away in handcuffs it may be too late to change your mind. "Ah I got ya. I partially agree with you, but it's far more complex. I think that is simplifying the debate a bit too much. When people go ""passive"" you are making the assumption that they are able to stay fully invested the full time period (say 30-40 years until retirement when you might change the asset allocation). This is not a fair assumption because many studies on behavioral finance have shown that people (90% plus) are not able to sit tight through a full market cycle and often sell out during a bear market. I'm not debating you're point that passive often outperforms due to the fees (although there are many managers that do outperform), but the main issue with self-managing and passive investing is people usually make emotional decisions, which then hurts their long-term performance. This would be the reason to hire an adviser. Assuming that people are able to stay passive the entire time and not make a single ""active"" decision is a very unfair assumption. There was a good study on this referenced in Forbes article below: https://www.forbes.com/sites/advisor/2014/04/24/why-the-average-investors-investment-return-is-so-low/#5169be2b111a  Another issue is that there are a lot ""active managers"" that really just replicate their benchmarks and don't actually actively manage. If you look at active managers who really do have huge under-weights and over-weights relative to their benchmarks they actually tend to outperform them (look at the study below by martin cremers, he's one of the most highly respected researchers when it comes to investment performance research and the active vs passive debate)  http://www.cfapubs.org/doi/pdf/10.2469/faj.v73.n2.4  I guess what I'm trying to say is that for most people having an adviser (and paying them a 1% fee) is usually better than going it alone, where they are going to A. chase heat (I bet they always choose the hottest benchmark from the past few years) and B. make poor emotional decisions relating their finances." "I did once read a book titled ""How I made a million dollars on the stock market"". It sounded realistic enough to be a true story. The author made it clear on the first page that (a) this was due to some exceptional circumstances, (b) that he would never again be able to pull off something like this, and (c) you would never be able to pull of something like this, except with extreme luck.  (The situation was small company A with a majority shareholder, other small company B tries to gain control by buying all the shares, the majority shareholder of A trying to prevent this by buying as many shares as possible, share price shooting up ridiculously, ""smart"" traders selling uncovered shorts to benefit when the price inevitably drops, the book author buying $5,000 worth of shares because they were going up, and then one enormous short squeeze catching out the traders. And he claimed having sold his shares for over a million - before the price dropped back to normal).  Clearly not a matter of ""playing your cards right"", but of having an enormous amount of luck."