To Hell With Responsible Investing
How very intriguing that the American Medical Association has urged Americans not to invest in cigarette companies. One presumes these are the same ethics-obsessed sawbones who plotted day and night to kill the Clinton administration’s universal health care plan.
How long has the AMA been providing investment advice? Last time I checked, my stockbroker wasn’t performing appendectomies.
Actually, I don’t have a stockbroker. I rely on my own good instincts when playing the market, which is why I’m still waiting for IBM to come back to 145. But the AMA’s kooky pronunciamento did remind me of the one solid investment idea I ever had: the Satan Fund.
The idea behind the Satan Fund is marvelously simple: We invest solely in bad actors.
Union Carbide after the Bhopal, India, hecatomb was a classic Satan Fund play. (It’s still in litigation, so my “buy” recommendation holds.) Exxon after the Valdez, South Africa under apartheid. I spent many a sleepless night rolling atop those Krugerrands stuffed in my mattress.
Doing well by doing ill takes on added allure as the so-called “ethical investing” movement, led by firms such as Boston’s Franklin Insight and the San Francisco-based Parnassus Fund, continues to gather momentum. The idea here is to put your money exclusively in companies that abstain from doing naughty things such as clearcutting the rain forests or making sneakers with slave labor in faraway countries which don’t grant visas to American reporters. (Did someone mention the Reebok Human Rights Awards?) In other words, the key goal of “ethical investing” is to lose money.
In contrast, the Satan Fund worships lucre, and we don’t care who makes it and how.
We are very much in agreement with stockbroker-to-the-stars James Cramer when he lauds Philip Morris, the highest-yielding stock in the Dow Jones industrial average, in the current issue of New York magazine for the company’s steady income, solid growth and a balance sheet that a BMW-driving, AMA-certified plastic surgeon could learn to love. Wall Streeters call the stock “Big MO” and for good reason.
Other key Satan Fund picks:
Environmental despoilers: Maxxam, a timber and metals firm, looks like a strong performer in this category. The doubtless agenda-free Council on Economic Priorities accuses it of over-harvesting old-growth redwoods. Indeed, any vertically integrated pulp and paper company could be a Satan Fund “three-bagger,” to borrow a phrase from lengendary investor Peter Lynch, who never burdened Magellan Fund clients with his ethical musings.
Why pulp and paper? Easy: 1.If successful, these companies are deep into clearcutting. 2.More often than not, they pollute the water and air. 3. Price collusion is the rule, not the exception, in the lucrative newsprint business, as hundreds of laidoff newspaper employees can attest.
Merchants of death: Or do you think war has gone out of fashion? Today’s freedom fighters wouldn’t dream of taking the field without a full complement of easy-to-use Stinger missiles; last time I checked, Raytheon was the sole supplier. Lockheed Martin makes the Stealth bomber and Rockwell International makes the B-1, both key components in the arsenal of democracy. Read Aviation Week for the hot new play in shoulder-mounted nuclear delivery systems.
Merchants of death II: I’m loading up on Pepsico, the multifarious Temple of Doom for America’s nutritional yearnings. Forget for a moment the noxious price-supported corn sweeteners suspended in the Michael Jackson-endorsed cola swill. This is the same company that changed the name - but not the menu - of its Kentucky Fried Chicken subsidiary once its customers realized fried foods are bad for you. Driving to KFC? Have some Pepsico-made Doritos! Just can’t get enough of that dipotassium phosphate, disodium inosinate and artifical colors yellow 5, red 40 and blue 1.
Corrupters of youth: NewsCorp’s Fox network, Viacom’s MTV and the hideous new “TV Land”; even Disney makes dirty movies under its many corporate aliases. Was “Beast” the worst miniseries ever made? Since Monday evening, I’ve loaded up on General Electric-NBC, which aired the show. If Peter Benchley were a stock, I’d devour him.
Who snags dolphins in their tuna nets? Is there a “pure play” in pornography? Our research analysts are working like the devil to find out.
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