JAMIE CARR: Ethical investing and the wages of sin
Is your portfolio as ethical and virtuous as a Scandinavian liberal? It comes at a cost for performance
Ne’er do-goods do best
There has long been a trend to ensure that one’s portfolio is as ethical and virtuous as a Scandinavian liberal. The theory is that because you buy organic, drive a Prius and are rarely spotted with anything but Birkenstocks on your feet, your investments should match your core values and be clean enough to eat your breakfast off.
However, there is compelling evidence to suggest that while this approach may salve your conscience and buy you considerable credit at the great reckoning, it comes at a cost for performance.
If you crunch the numbers for those companies that have added the most value this millennium in terms of market cap, the gold medal for the S&P 500 goes to Apple, but the bronze goes to Altria, the tobacco and booze giant that lets you spark up a full-strength Marlboro and wash it down with a large equity stake in AB InBev.
In the UK and Japan, the big prizes went to British American Tobacco and Japan Tobacco, with local hero SABMiller and quaff monster Diageo also sneaking onto the podium.
Ethical investing may salve your conscience, but it comes at a cost for performance
Fossil fuels also stick in a strong performance, with ExxonMobil, Chevron and Shell all breaking the tape in the top six of their respective markets.
St Paul’s epistle to the Romans suggested that "the wages of sin is death", which may indeed be true for enthusiastic consumers of the tobacco industry’s product, but he failed to mention that it can also do quite a lot to bump up the performance of your investments, leaving you with extra loot to do good in other areas.
Gold Brands still searching for flavour
This has been a truly momentous week in politics, with the good people of Zimbabwe finally suggesting it is time for the curtain to fall on the Bob and Grace show, and the president of Angola showing the red card to Isabel dos Santos, the former president’s daughter and Africa’s richest woman, at the state oil company Sonangol.
Fans of the theory that good things come in threes may be looking for last orders to be called at the Saxonwold Shebeen, or some other sign that the beloved country is getting back to the straight and narrow path.
However, in the absence of any such cause for celebration, the gaze wanders over to the travails of Gold Brands Investments and its continuing struggle to bring the wonders of the braai to the stomachs of the populace.
The quick-service restaurant market as a whole has been struggling due to the lack of disposable income in the consumer’s wallet. Gold Brands is no exception, with revenues tumbling a mighty 72.6% after widespread closures of nonperforming stores. The company reported a small loss, and going concern remains an issue.
Amid all the gloom, however, Gold Brands has announced its intention to open four ChesaNyama stores in the UK in the coming year, a move that could lead to linguistic confusion among the indigenous population.
In the local market it is set to launch the Latin American brand Las Iguanas and the French bistro chain Café Rouge, and it has acquired American-themed Ed’s Diner.
There’s a lot going on, but Gold Brands needs to get onto a sound economic footing.