Scruples and Stocks: Say So Long to the Days of Dreadful Returns

Back when the sustainable and responsible investment, or SRI, strategy hit the scene, interested investors had to decide whether investing with their consciences was worth passing up some pretty sweet returns.

The focus then was about avoiding "bad" stocks -- companies like Smith & Wesson  (NASDAQ: SWHC  )  were kicked out of SRI portfolios because of their involvement in firearms production. But banishing Smith & Wesson from the list of qualifying companies also meant passing up the 444% gains it achieved in the last 10 years.

SRI investing has come a long way -- much to the benefit of those who want to align their investment dollars with their beliefs.

Today's SRI is about inclusion -- about identifying potential winners. It no longer requires a sacrifice of returns -- and may even help juice your portfolio's returns.

Consider Tesla (NASDAQ: TSLA  ) , which has appreciated more than 310% since its IPO three years ago. An SRI analysis would have found that this company was well positioned to benefit from issues such as climate change. Not only does Tesla's electric-vehicle technology reduce dependence on fossil fuels, but it may also be an important element of the next-generation electrical grid.

The Motley Fool recently hosted a Climate Change Summit for investors. In this video, Motley Fool contributor Sara Murphy talks about ways to make SRI investing a strong part of your portfolio -- and not a sacrificial lamb.

Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off and remain true to its SRI nature? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.

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  • Report this Comment On June 15, 2013, at 10:48 PM, jamesdan567 wrote:

    SRI has been around for millennia but its difficult to execute. A person may hate coal, but be attracted to public utilities that have coal plants. A church fund may avoid alcohol companies, but be invested in ADM, who could be moving grains to the alcohol companies. The list goes on and on. No coal = no railroads? If no railroads, then no GE (they make the engines).

    Tobacco companies grow tobacco. Boycott the fertilizer company or John Deere since they "help" grow tobacco? Boycott Exxon for providing the diesel fuel to run the tractors?

    The biggest weapons manufacturer in the world is the U.S. Government. Boycott Treasury securities or the banks that hold them?

    As an individual, SRI is at the very bottom of my list of important goals to achieve when investing. When I was a pension fund manager, SRI was at the very bottom then, too.

    Its the truth that Tesla wants to make great cars that are great for the environment. But people buy cars based on economics first. If the Tesla S model was a 90K piece of junk, few sales would result. Thankfully, the S is the best car ever made. Thats why it sells.

  • Report this Comment On June 15, 2013, at 11:29 PM, jamesdan567 wrote:

    Climate change is irrelevant to the average citizen. They neither understand that the wolf is at the door, nor care. They are too busy getting through each day. The rainforest is disappearing as we read. I didn't buy Tesla because their strategies could save the Rainforest. I bought Tesla because the S model is 300% more efficient than any ICE car. Some people think thats not great fundamental analysis. That quite surprising to me. Car efficiency is the bedrock, the marquis competitive advantage!

    It would very good advice for the author to only speak about stocks she owns or shorts. How can we readers place value in the words of a person who has nothing at risk and sits on the fence? Do you claim to be more objective as a result? A reminder....when your money is at stake, your ears are wide open to all the SWOT that are out there....

    Experience is worth far more than objectivity.

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9/26/2016 3:17 PM
SWHC $25.54 Down -2.02 -7.33%
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