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Is investing immoral?



Hello Cullen.  I love reading your work.  I have always been fascinated by stocks and owning a piece of a company etc.  But recently I have had more friends and co-workers than I have ever heard from before tell me that investing in stocks is "immoral."  Their view is that when a company becomes public, most of the time they stop caring about the employees or really even about their customers as much as they care about doing whatever it takes to make the numbers the analysts want this quarter and next.  And if that means laying off people, cutting benefits or whatever, they will do it just to make those numbers.  My friends say if companies weren't public and working quarter to quarter then they would take a longer term view and would be more employee and customer friendly.  What say you?

Hi @jalanlong,

This is a version of the "short-termism" view that is often used to criticize corporations. It doesn't make any sense. A corporation that sacrifices the long-term over the short-term will eventually fail. And new firms will take their market share. So, if these firms are behaving badly then firms that are behaving well will put them out of business. This isn't immoral.  It is a good thing!

Now, there are obviously firms that take advantage of employees and don't operate morally. I am not making excuses for firms like this, but there's nothing immoral about investing in the most basic sense. After all, a public company is just a big company that has provided a lot of value to a lot of people over time. What's immoral about providing value to people and eventually selling your firm to other people who then can benefit from the value your firm creates?  Seems like a win win to me.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche