Thanks for pointing out this craziness, and its roots in greed etc.
As a long time reader I would love to see you address a couple of related issues. One, what is the essential difference between investing and gambling? In for example a casino situation, the gamblers will obviously have a negative expected return, while the house has a positive expected return. Similarly somebody good enough at playing poker (relative to those they play with) can have a positive expected return. Do you make a difference between investing and gambling that doesn’t boil down to simply expected return and levels of risk?
It seems to me that the source of the return is an important factor in investing decisions. Stock dividends from a home improvement chain seem quite different from stock dividends from a cigarette manufacturer which in turn seem quite different from dividends from a porn company even if the risk and expected returns all pencil out the same. What is your take on ethical investment criteria?
Great questions, Marlin. I’ll address them in more detail in future posts, but I’ll touch on a few points right now. What’s the difference between investing and gambling? While the Bible encourages us to multiply the resources God entrusts to us, it teaches us to do so as faithful managers of God’s resources, to take a long-term “steady plodding” approach, and to diversify. Gambling does not seem to fit with any of that.
I agree that the source of return is an important factor in investing, although I would point to a distinction between direct and indirect involvement. Directly investing in a company that manufacturers cigarettes would not seem to constitute the wise management of God’s resources. However, I would not see an issue with investing in an S&P 500 index fund, for example, even though it is likely to own the stock of an objectionable company. When you work out your ownership stake in that company within the context of the billions of dollars managed by the fund and the hundreds of companies it invests in, you would own such an incredibly small portion of that company’s stock (one piece out of more than a billion pieces is a very realistic estimation) that even calling it incidental contact would be an overstatement.
There’s certainly more to unpack here, but I would offer up those initial thoughts.
Thanks for pointing out this craziness, and its roots in greed etc.
As a long time reader I would love to see you address a couple of related issues. One, what is the essential difference between investing and gambling? In for example a casino situation, the gamblers will obviously have a negative expected return, while the house has a positive expected return. Similarly somebody good enough at playing poker (relative to those they play with) can have a positive expected return. Do you make a difference between investing and gambling that doesn’t boil down to simply expected return and levels of risk?
It seems to me that the source of the return is an important factor in investing decisions. Stock dividends from a home improvement chain seem quite different from stock dividends from a cigarette manufacturer which in turn seem quite different from dividends from a porn company even if the risk and expected returns all pencil out the same. What is your take on ethical investment criteria?
Great questions, Marlin. I’ll address them in more detail in future posts, but I’ll touch on a few points right now. What’s the difference between investing and gambling? While the Bible encourages us to multiply the resources God entrusts to us, it teaches us to do so as faithful managers of God’s resources, to take a long-term “steady plodding” approach, and to diversify. Gambling does not seem to fit with any of that.
I agree that the source of return is an important factor in investing, although I would point to a distinction between direct and indirect involvement. Directly investing in a company that manufacturers cigarettes would not seem to constitute the wise management of God’s resources. However, I would not see an issue with investing in an S&P 500 index fund, for example, even though it is likely to own the stock of an objectionable company. When you work out your ownership stake in that company within the context of the billions of dollars managed by the fund and the hundreds of companies it invests in, you would own such an incredibly small portion of that company’s stock (one piece out of more than a billion pieces is a very realistic estimation) that even calling it incidental contact would be an overstatement.
There’s certainly more to unpack here, but I would offer up those initial thoughts.