Is investing in the stock market ethical?

[Egalitarian]

Fundamentaly, I've never liked the concept of making money off of other peoples labor and this is what corporate stockholders represent to me. Am I wrong?

[burrowowl]

1. It is legalized gambling

where the house (the superrich, i.e., after every depression in the U$ they have gotten richer) always comes out on top and steals the poor buggers money in one way or another.

[zmdem]

2. Yes you are

I make money off of my labor and my boss does too. If he didn't he'd be a damn fool to retain me, not to mention that he'd go broke.

[Egalitarian]

5. Not necessarily so.

If profit from labor was not a motivation, then you would neither increase your boss' wealth, nor cause him to go broke. He or She would carry their own weight and together your would prosper or fail.

[sandnsea]

12. That's not investing

If *I* were making money because your boss was locking you in a room 12 hours a day and not allowing you to go to the bathroom or eat; would you think *I* was making my money ethically?

[Colorado Blue]

3. I've wondered about that too. I think one can look at it

a number of ways - investing can give opportunity for others to make a living and create, so that's good.

On the bad side, investing in industries such as oil and automobiles is obviously harmful to the environment and geopolitically destabilizing. Also, these companies suck up such enormous capital and have so much power that alternatives, which would help our economy AND our environment prosper, can't get rolling.

It's the latter that worries me (among other things) about the SS plan of stealing taxpayer money and sticking it into the market. It would, I think, tend to favor these old-line businesses and make it even HARDER for new blood and ideas to attract money and therefore, opportunity.

This, of course, may be part of the Bush Co. idea - to keep control of money and power over a long period of time. They've already had it for decades, now they want to project it into the future. It's breathtaking, really, when you see the scope of the idea.

[ultraist]

4. It depends somewhat on what you invest in

We make money off our employees.

We live in a capitalist society, is capitalism really ethical? NO!

[Egalitarian]

6. Probably I should start researching

ethical investing.

[qwghlmian]

8. Do a search on

"socially responsible investing" in google. You will find a bunch of different mutual funds that do the screening for you.

Just to warn you: since such funds take into account data other than potential financial performance of investments, I would presume that they would underperform other investments that are not limited by that consideration. The comparisons I have seen show that such funds in the studies performed approximately inline with S&P, but with a caveat that they deliberately waived some fees in order to achieve that performance.

http://www.socialinvest.org/areas/sriguide/mfpc.cfm?mf_type=&order=mf_inception_dt

The above link is to the list illustrating the performance of most such funds. Frankly, it is not very impressive.

[sandnsea]

10. Here's an article

SRI mutual funds and investing. But according to this article, you still need to be careful. I don't see how anybody can claim to be a liberal and invest without any care of what those corporations are doing. It's nice some people are concerned.

http://www.csmonitor.com/2004/1115/p13s01-wmgn.html

[alittlelark]

7. You nailed the crux of the problem.

Capitalism, without restraints, is no more that 'survival of the fittest' - but, the 'fittest' are almost always the ones w/ the largest inheritances.

Adam Smith stated that his 'Capitalistic' theory would only work with Gov't oversight.

[coffeenap]

9. Make your own exchange--get together w/ friends--or use Calvert.

[sweetheart]

11. What really happens by investing in the stock market.

Does the company have more money when its stock goes up?... no. The
stock price is, in investment terms, the present value of the sum of all
future profits the company will earn. This is like saying that your
money-value is the total of all the money you will ever earn in your
life. If you become disabled and cannot work, your future revenues
may drop depending on your profession, and in the stock market, your
present-value would drop accordingly, as analysts from various "research"
institutions calculate your value on their spreadsheets.

The thing is, that the only way the stock market bidding affects the
company, is indirectly, by giving it more collateral to borrow against
its share-capital, and by punishing/rewarding executives who are paid
by share performance. So buying stock, actually invests nothing in to
the business directly. You are merely an owner, displacing another
owner of a small share of an enterprise controlled by the larger owners.

Given that, your investment is a confidence bet in the wall street
consensus... and you can make your own ethics judgement about the morals
of that lot.

That said, then it clearly is a form of gambling, as another poster said.
THe only difference, is the house is not las vegas based, and has
"different" mafia ties... jargon and games. So what makes it ethical?

What makes it ethical is that you must win, and use the money for
the benefit and well being of yourself AND others. If it is purely
to enrich yourself, then the moral position is rather small, same
as that of a professional gambler, as noble as that is, and as petty.

The myth of the stock market, that it supplies money to businesses
innovating and such, is a load of crap. The truth is that a business
on the public markets, can't innovate strategically, as it is held
to quarter-by-quarter profitability focus (short term), and to innovate
takes long term focus, that the market denies such businesses. So
to achieve innovation, busiensses must either be private (see carlysle
group), or be HUGE, that they can innovate in one area whilst earning
enough fat to cover the innovation gap. Consider that microsoft
did most of its innovation before listing, and after listing used
its cash cow of the BASIC/DOS license fees from clone makers, to
launch windows and crush innovation in the operating system and
web marketplace.... so in effect, the stock market was used to create
a monopoly, not innovation.

When businesses innovate, they are usually in the early stages of
development, pre-stock market. In this area, you have venture
capital, business angels and other areas where you can provide capital
to inventors and people who think they've got a winner, but don't
have the cash to make the business come together without investors.
This sort of innovation happens off-market, and is the area where your
cash can most influence technology... but is making new technology
ethical? Are the makers of LED flashlights that get more light per
the battery used, are these makers MORE ethical?... or just richer.
In this regard, it might be dangerous to mix the myth of progress
with the concept of ethics. Does providing wind up radios to africa
make you more ethical. Does taking your money, making piles of
sandwiches and feeding the homeless yourself make your investment
ethical? To define ethical purely as helping the poor is to not
make a profit, and ... is not investing, is it... so then you're
asking is it ethical to make winnings from betting.... obviously yes,
and so much then depends on what fuels your impulse. Who are
you helping, and we're back to the question of what drives your
motive for wanting to earn.

Some would say that feeding all the homeless in the world, whilst a
very "good" karma, is not enlightenment... and that, after doing such
a great thing, you'll be no closer to enlightenment than before you
started. It might be that, as enlightenment is already present,
that any action to achieve it, takes you away from it... and if
we're splitting hairs about ethical, squeezing in a bit of
enlightenment in to the equation couldn't hurt. Then, maybe with
the superior intent, you'll get lucky with whatever you do in life
and you'll be happy and everyone around you will be happy... and
investing is more a matter of intent than action.

[aneerkoinos]

13. No

Corporations or companies with ownership by limited liability (LTD), are legal persons that fullfill all the qualifications of a sociopath, their very structure forces them to maximize profit and externilize all costs of harms caused to the society and enviroment, and are thus extremy harmfull beings working againt the common good.

It's a long fight, but if we wan't to go radically to the root of the problem, the strategic target must be banning ownership by limited liability, ie. stock market in it's entirety. Bring down the Wall Street!!!