Gambling against society
Published on 2025-03-24
I remember back when I was in like the ninth grade or something, you know, way too young to have serious opinions about this sort of thing, a friend and I were sitting in home room talking about investments. My friend thought he had a foolproof investment strategy: invest all your money in the broadest basket of stocks possible, representative of the entire global economy. His thesis was that since the global economy has tended to grow over the last hundred years, you were basically guaranteed to make money.
As I understand it things like this are fairly standard among low-risk investors, especially if you swap out "global economy" with, say, the US economy or the industrial sector. Of course, the main issue with this strategy is that baring a major recession, while you probably will leave in a year with more money than you started with, it's probably not going to be all that much. It might not even beat inflation for that year alone.
When I was a teenager I also thought I had a good strategy. It went something like this: put all your money into green stocks. In ten years, you'll either be rich (the world successfully transitioned to a post-carbon economy) or you'll have bigger problems to worry about.
As a slightly higher-risk-higher-reward version of this strategy: spend all your money on shorts against Shell and Exxon Mobil.
Had I done this ten years ago, I'd have lost a lot of money. Shell has had its ups and downs in recent history but overall its value hasn't changed all that much. Of course, that doesn't change the fact that oil stocks are still on track to be worthless if they don't adapt (and they really don't seem inclined on doing that). But, at the time I think I was being naive about where market forces actually come from.
The fact is that market activity is made up of the actions of a lot of people, and collectively just a handful of people have the power to drive most of it. These people aren't any more rational than you or I, and so a lot of their most influential decisions are driven by emotion rather than what makes the most sense in the long-term. Including but not limited to the decision to start blasting chemical solutions into shale bedrock rather than building out electrical infrastructure to accommodate the now cheaper solar panels.
Over the course of my life it seems like all of the highest performing stocks have been the ones responsible for the most injustice and destruction. In fact, if you used the BDS movement's list of companies to boycott as an investment guide five years ago you'd be in a pretty good place today. One thing the markets do seem to consistently favour is a willingness to be cruel. I suppose that's why they say you shouldn't let politics into your portfolio.
This is why I don't really believe in the markets anymore.
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