Should Morality Prevent You From Buying Blue-Chip Stocks?

One of the consequences of truly understanding what it means to invest in common stocks is that you come to appreciate that you are a part owner in the business that you select. Sure, someone with 100 shares of 100 Exxon Mobil won’t be able to show up at headquarters in Irving, Texas and successfully demand changes to the company’s capital investments, but he is one the many captains to whom the Board and management team is ultimately held responsible.

When you realize you are the part owner, the question naturally arises: Is what am I doing here moral?

I’m using Coca-Cola here as an example because it’s frequently pointed out that high consumptions of soda can lead to obesity and diabetes among other problems. I could have easily used Pepsi or Dr. Pepper as an example, McDonald’s with its Big Macs and French fries, and so on.

But for today, we’ll tackle Coca-Cola.

Like many large American firms, and frequently all that we discuss here on the site, Coca-Cola has a diverse set of products. Over five-hundred different brands in fact. When you collect your Coca-Cola dividend check, some of that profit comes from Dasani, Coca-Cola’s signature water product.

Almost every grocery store that I’ve ever visited, I’ve seen both Coca-Cola and Dasani offered. Whichever selection I pick, it goes to Coca-Cola’s coffers just the same (in fact, since Dasani is slightly cheaper for the company to produce, they’d probably enjoy it if a Dasani wave swept the nation).

Ahhh, you see, but most people aren’t selecting Dasani—they are choosing to drink regular Coke (and all its permutations like Chery Coke, Diet Coke, Vanilla Coke, etc.) and Sprite and Fanta and so on.

From there, a few questions arise. The first one: Is everyone who drinks Coca-Cola doing so in an irresponsible manner?

Of course not. Many people are able to drink soda products around the holidays, birthday, big games, and what not, and it is an entirely enjoyable experience, they should be denied that opportunity because some individuals can’t handle soda consumption responsibly?

If someone is drinking ten Cokes per day, is it really Coke’s fault? Every liter or twelve-pack contains the calorie information on it, and a very quick Google search will inform you of the health consequences of every drink. And if Coca-Cola didn’t exist, do you really doubt that Dr. Pepper or Pepsi would serve as their replacement? In that regard, you are blaming Coke for making the superior product.

So really, when someone asks “Is investing in _______ unethical” when it involves food companies, what they are really saying is this: Do you find it morally sound to own something that some people can’t help themselves in using the product to destroy their health, even though the company has fully informed them of the health information regarding the product, many consumers can use these products moderately without ill effect, and the company offers healthier options like Dasani that are more profitable and unquestionably good for you?

In my case, companies like Coca-Cola and McDonald’s don’t bother me morally because I have a strong disdain for the whole “this is why we can’t have nice things” mindset. I’ve seen so many times in my own personal life where a broad freedom to do something existed, someone had an accident or engaged in bad behavior that produced undesirable effects, and then the right was taken away from everybody. I choose not to participate in that.

Additionally, when you look at the companies whose morals we are debating, it’s not isolated to the company in question. Blaming Coca-Cola for someone’s obesity seems somewhat disingenuous: if a magical diary produced the behavior of someone who was obese or diabetic and consumed Coca-Cola, or do you really think Coca-Cola is the only bad habit you’d find in the daily log? If you’re exercising two hours per day on a treadmill at a high intensity, you’re probably not going to be medically obese. And if you’re eating grilled chicken and broccoli as the meals along with your Coke, your life is probably not going to be cut too short. My point is this: Do you really think Coca-Cola exists in isolation as the sole problem for someone who develops severe health problems, or do you think there are other lifestyle choices that of a questionable nature being made as well?

By the way, none of this should be read as an attack on those who suffer from any kind of addiction or are dealing with severe temptation. I understand and fully empathize with the struggle. But at the same point in time, when you walk in McDonald’s, you can choose whether to get a salad or a Big Mac? The salad goes for $5 a pop and makes the company a whole lot more money than a dollar burger, so they’d much prefer that you eat healthy. Trips to McDonald’s and down the aisle of Coca-Cola aisle can be done responsibly because they sell products that are healthy, and if you choose the unhealthy products, you can do so in moderation without harm as long as you have the rest of your life in order. And if you do consume Big Macs and large sodas regularly, both of those companies put you on notice with calorie information of what the consequences of consumption will be. Given my respect for the free will of individuals, and the recognition that healthy options exist and the unhealthy options ought to be handled in moderation, I don’t find a portfolio stuffed with Coca-Cola and McDonald’s to be immoral.

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4 thoughts on “Should Morality Prevent You From Buying Blue-Chip Stocks?

  1. StevePosting says:

    I don’t think this is the first time I have seen you post on purchasing a stock where there are possible moral/ethical considerations.

    It disappoints me to see people attempting to justify away these types of considerations.  I invest in soda/fast food/tobacco stocks knowing full well the potential pitfalls of the products they sell.  I consider the companies good investments, so I buy in.

    If someone wants to call me immoral or unethical for that, that is their business.  I’m ok with it, they have a point!

  2. frfrizzo381 says:

    I follow Benjamin Graham’s lead. He was a womanizer and probably a hell of a guy to party with, why do you think Warren looked up to him? Ben was everything that Warren wanted to be. As for morals, you can keep the fairy tales, are we really taking advice from cave dwellers that lived thousands of years ago? Any product that kills off humans saves the gov’t supporting them in old age, killing off the stupid and weak is not a bad thing. Last time I checked the planet is overpopulated, the last thing we need is more people living longer. Study a guy name Darwin he explains the survival of species pretty well. 
    The purpose of the human race is to procreate and hopefully get off the planet ensuring the species survival. No more, no less. Right and wrong is all subjective to the culture you grew up in. Travel and live in different cultures, you will see.

  3. Mlody Milioner says:

    I agree with your reasoning regarding high consumption of fast food or soda. I am curious if you’re extending it to tobacco stocks.
    I am not convinced that we can use the same arguments for them. Food and water are necessary to survive and companies like MCD, KO, PEP deliver them and I don’t have a problem owning them. Tobacco is different, it’s smoked for pleasure and we know it’s harmful, even in small doses. It’s like handing somebody a poison. I wouldn’t do it, even if I knew that that person is ultimately responsible for taking or not taking it. If the person takes it, i took part in it. For this reason, even though MO and PM may prove to be great investments I am not going to own them.

  4. KeithX says:

    I don’t invest in alcohol or tobacco for personal reasons.  My sister died in a car accident because she was drunk (but nobody else got hurt thank God) and my brother died of a heart attack after smoking 3 packs a day for almost 40 years.

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