Sunday, March 23, 2008


While living in Silicon Valley I joined investor groups to learn the fundamentals of how to invest. The American Association of Individual Investors (AAII) is a great organization that arms individuals with information and tools to invest in stocks. Joining the local group, I was able to learn from 70 and 80 year old investors that had been living off their investments for 20 or more years. Their understanding of the market and in some cases their painful learning experiences were a great gift to me. What I learned in the meetings and tutorials I attended over two years created the basis of my investment plan.

In the group, the younger investors (50 to 60 year olds) had been putting their assets into the Chinese stock market through individual stocks and other instruments. Their initial investments had performed incredibly well, so they had expanded their investment, in some cases up to 50% of their total assets, into the Chinese economy. I wondered how we could believe in capitalism and free enterprise and at the same time invest in a totalitarian government. Is our return on investment more important than our values?

Did the fast money in Silicon Valley made by juicing startups into IPOs and using exotic financial instruments destroy our belief in free enterprise being the engine to create wealth? They said the dollar is weak and that the US government no longer supports fast growth allowing them to generate the money they needed for retirement. But the fundamentals of capitalism, freedom, and free enterprise are not about the value of the dollar; they are about supporting an environment where we are free to retain the wealth we create by generating value in a free market.

Is the future of investment that if a totalitarian regime or despotic dictator gives us a better return, we will invest our money there instead of a company that creates great products and services, takes care of their employees and their community and the environment?


Kate said...

What a fabulous question! Thank you for starting a great discussion on investing according to one's values. We're huge fans of your blog. Keep up the great work!

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