Thursday, May 31, 2007

Unemotional Investing: a Boring Goal!

It's a basic tenet of investing: don't get emotionally attached to a stock, or you'll hold on to it too long. I subscribe to this for the vast bulk of investment. To say I am not emotionally attached to our mutual funds is an understatement - I can't even remember their names. The nuances of these various funds are known to professionals, but since I never read any of the annual reports which dutifully arrive, I have taken to receiving them electronically - so I can delete them. True confessions. Have any of you out there ever read a Mutual Fund's annual report?
I do take umbrage with the idea of being completely emotionally detached from one's investments, though. I think it's good to own stocks in companies you admire. I like to reward good corporate behavior, and I want to invest in companies which provide win-win solutions. I hope they will make me money over time, but also I like being part of the solution, and not just benefiting from the old paradigms, even if my return is lower. And I actually look at their Annual Reports and enjoy learning more about their plans, challenges, and approaches. Starbucks, one of "my" companies, even sends me coupons for free coffees along with the report.
Yesterday I invested in such a company, Metabolix. I read about it in Sierra club's magazine and learned they manufacture plastic from plant material. That means it doesn't require petroleum to produce it, and that it is biodegradable - sounds like a growth industry to me, at least I hope so. This from their website:

April 20, 2007

Cambridge, Massachusetts. According to a nationwide online survey released today, 72 percent of the American public does not know that conventional plastic is made from petroleum products, primarily oil. The survey was conducted by national online market research firm InsightExpress for Telles™, a joint venture of Metabolix, Inc. (NASDAQ: MBLX), a company using bioscience to provide clean solutions for plastics, fuels and chemicals, and Archer Daniels Midland (NYSE: ADM), one of the world's largest agricultural processors and the world leader in BioEnergy.

Plastics are everywhere and most Americans have come to rely on plastics in all aspects of their lives. However, very few people realize that plastics are made from oil, further contributing to the problems of energy dependence, greenhouse gas emissions and depleting resources. In fact, nearly 10 percent of U.S. oil consumption - approximately 2 million barrels a day - is used to make plastic.

The survey also revealed a misunderstanding about another important characteristic of traditional plastic - it never goes away. Despite the fact that petroleum-based plastic will never biodegrade, 40 percent of respondents believe that it will biodegrade underground, in home compost, in landfills, or in the ocean. Plastics will not biodegrade in any of these environments. In fact, the only way to rid the planet of existing plastic is by incineration in those cases where it can be recovered.

"Everyone knows about our country's unhealthy reliance on oil and the impact that petroleum use has on climate change," said Jim Barber, President and CEO, Metabolix, which has developed a brand of fully biodegradable Natural Plastics. "Similarly, people see a lot of plastic waste in the form of litter. But the fact that so many people are unaware that plastic is made from oil and that it will persist in the environment for thousands of years, shows the need for education about the impact of plastic on the environment and the various alternatives made from renewable resources."

I don't recommend investments, of course, though this one was flagged by some pros. I just think it's important to not be completely wishy-washy about what one invests in. SRI screens are a more detached way to do this, but becoming a direct shareholder is up-close and personal. What do you all think? It is crazy to be impulsive and mission-driven for at least some of your investments, or not?

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