The Ethics of Tobacco Investing Revisited

A great question from reader Joe left as a comment on a previous article:


This question isn’t directly related to this post but I’d still like to get your thoughts on an investing concern that has been on my mind lately. To what extent do you view your investing life as an extension of your personal life?By that I mean to what extent do the personal morals and ethical values of Tim the man govern the investing decisions of Tim the dividend growth investor?If you ask your typical dividend growth investor if they would be willing to invest in a lucrative but immoral venture, say selling child pornography or crack cocaine, the answer would probably be “absolutely not” regardless of the yield, valuation or growth prospects of the underlying venture.And yet, ask that same investor what their thoughts are about Phillip Morris and they would probably describe what a wonderful investment it is and go on about why you should own it.Do your personal morals ever come into play when buying companies, or do you compartmentalize your conscience, wall it off from the part of your brain that thinks about investments, and make your investing decisions based on the financial prospects of the company?The reason why I’m asking is that I keep identifying stocks of companies that I love from an investing perspective but despise on a human level.I cannot in good conscience own any piece of Phillip Morris knowing the impact that smoking related illness has on the families of smokers.You might say that the smoker made his choice to smoke so you don’t mind taking his money, but his children never made that choice and they are the ones who will suffer when he dies 20 years too soon. I can think of many other examples of lucrative and growing businesses that I cannot and will not own because their primary mission is immoral and destructive.

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If Your Employer Is Trying To Fire You

I was reading through one of my cases about a contract dispute between an employee and an employer, and there were a couple of things I picked up from the case that I thought would be worth mentioning to you.

The basic plot was this: A business owner promises his 82 year-old janitor that he can continue working there for the rest of his life, and when the business owner dies and leave his son the business, the son is looking for ways to get rid of the the janitor and wipe him off the payroll.

He cut the janitor’s hours, lowered his wages, and still couldn’t get him to quit. Eventually, the son that became the business owner was able to fire him. And here’s how he did it.

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