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People Power and Stock Performance (Part 1)

21 February 2008 - Features - Editor

Do not choose to move to Somerville in Texas. The town has a 60% higher cancer and birth defect rate than any other place in the United States. It makes no sense to hold on to stocks of the rail road which burns toxic materials in this area, because town folks have taken the company to court. It is even more significant, from a stock investment perspective, that the public has approached Warren Buffet. He owns most of the railroad stock. The town folk expect him to provide relief from the poisons this company releases in to the town air. Communities, especially Aleutians and farm labor, have lived with pollution for decades, so the Somerville movement seems to be new.

This article follows an earlier piece entitled “Environmental Scanning for Stocks from the Business of Education”. New trends in sectors and industries are not the only fruits of Environmental Scanning. There is money to be made in spotting new trends in how people think and behave. We normally associate young people with rebellious behavior. Somerville is different, with older adults in the battle front-lines. How will stocks be affected if citizens demand social accountability of companies?

The Green Business Route to Tomorrow’s Top Stocks

Concerns about the environment and pollution are hallmarks of this century. There used to be a divide between making money on the stock market, and respect for nature. These lines have begun to blur. Some of the most exciting stocks are managed by people with very green images. Al Gore has not just won a Nobel Prize; he is also a highly paid resource for an investment company. You can love nature and make money at the same time! What does this trend mean for stock investment? There are two important implications:

1. Environment and social impacts of business: do not buy any new stocks without understanding the effects of the industry on environment, and on people at large as well. Look for management teams that balance future needs of all categories of shareholders. Favor stocks that respond actively to concerns voiced by groups which are hurt by the business. Apple’s determined actions to reduce waste, and to encourage recycling, are ideal examples.

2. Liability and insurance: think of new class action litigation that could force a business to fork out large amounts of cash far in excess of provisions and insurance. Union Carbide and its successors escaped paying for the Bhopal disaster of the 1980s, but your portfolio could melt overnight if you have such toxic stocks in this information age.

People Power and Stock Performance (Part 2)

 


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