Should Christians Buy Stock In Immoral Businesses?
As a Christian would you want to financially support Playboy Enterprises or a major Las Vegas casino complex? These are the kinds of "baited" questions that are posed by those who call themselves "morally responsible" investment groups. This kind of investment screening originally gained popularity from environmental activists who avoided companies with poor environmental track records (the secular phraseology is "socially responsible"). For several years Christians have entered into their own brand of this philosophy of investing (usually called "morally responsible" within the Christian community). You can virtually name your cause and there is a mutual fund that espouses to avoid your area of concern within the investment markets. So what could possibly be so wrong with this kind of investing philosophy? In this chapter I will expose you to the real truth about this approach to investing as it applies to Christians, and open your eyes to what I believe to be the best perspective to have on this subject.

What Morally Responsible Investment Companies Will Tell You:

- You are actually giving your money to a company if you buy its stock.

- You will make outstanding returns following their investment-screening philosophy.

- They have a secret system that enables them to know each and every stock that is held inside any mutual fund.

- If you do not follow their philosophy, you are not honoring God with your finances.

- They usually claim to be the one and only place that you can utilize to invest your money morally.

Christian Money Trap: "Minimizing the Importance of Making Money with Your Investment Accounts

As a financial planner, what I find is most often the largest obstacle to proper financial planning is a lack of understanding of the relationship between present and future values. In every meeting I have with new clients, I begin by asking them about their financial plans for the future (retirement, college funding for children, etc.). At least 90 percent of the time they have no plans at all. Most often I am told, "We are saving as much as we can each month," or some other vague response. If you are 40 years old and need to save $750,000 for retirement at age 65, consider your options:

Average Annual Return Amount Required in Monthly Savings to Reach Goal











I hope you can see my point that you cannot accept lower rates of return. Most people are kissing good-bye any chance of having enough money for retirement by settling for six and seven percent returns, which will not be enough in most cases.

I have had countless Christians tell me that they were investing with a firm that avoided the "support" of non-Christian stocks and mutual funds. Some of the comments were along the lines of: "I am not going to give my money to Disney to support its Gay week or The Ellen Degeneres Sitcom or "My money is not going to be used to promote the sale of cigarettes and alcohol." I’ve also heard, "I am not giving my money to any company that would financially support Planned Parenthood." These statements make sense, don’t they? What Christian could possibly disagree with any of the above sentiments?


The problem is that this issue cannot be reduced to such a simple equation as investment good versus investment evil. Again, what we find are individuals with virtually no financial or investment background doling out financial advice at the expense of their uneducated and vulnerable followers. I have found companies that use this kind of marketing to almost always be very poor in their overall investment management abilities (not to mention the usual lack of credentials and experience in the financial field). This does not stop them; however, from attracting a huge following because of their "wholesome investing" marketing strategy coupled with the guilt they make you feel.


Christian Money Trap: "Allowing yourself to be Manipulated By Investment Firms That Use Guilt as Their Marketing Strategy"

Let’s look at each of the following stocks and what the "Christian" concern is:

A Major Credit Card Issuer and Financial Planning Firm

American Express, like most major corporations, gives money to a large number of non-profit organizations each year. Among the organizations it has financially supported over the years has been Planned Parenthood. Planned Parenthood is widely known for its "Pro-Choice" views. I personally do not agree with the philosophies of Planned Parenthood. Should I use this as the reason to avoid investing in the stock of American Express or any mutual fund that may purchase shares of this large multi-national financial firm?

A Multi-National Media Conglomerate and Theme Park Operator

My kids and probably yours (if you’ll admit it) love Disney and everything to do with it. Since we live in Daytona Beach, my family visits the Disney parks at least a couple of times per year. Each year when Disney hosts its "Night of Joy," the park is filled to capacity with young Christians coming to see their favorite Christian music artists. For one week (or what is really a three-day weekend) gays and lesbians from around the country converge on the Disney complex and engage in behavior that no one would want his or her children to witness. While Disney does not sponsor or endorse this so-called "Gay Week," it does not warn its guests with young children about it before they enter the park. This lack of disclosure has caused Disney to receive what I believe to be fair criticism. Disney has also been widely known to be a promoter of the idea of giving health insurance and other big company benefits to its employees’ live-in gay partners (benefits usually reserved for those individuals who are legally married). Disney is responsible for the first prime-time sitcom based on an openly gay character named "Ellen." Christians find much to disagree about with Disney. Do these concerns form the basis for a boycott of Disney stock?

A list of other industries which many Christian investors feel they must withhold their investment dollars to be consistent with their faith include:

Grocery store chains

Reason: Most sell alcohol and tobacco.

Major Media

Reason: It created television and cable programs, movies, magazines and newspapers that are in conflict with our Christian values. This would include companies like Time Warner Inc., and even General Electric, which owns NBC.

Book Stores Chains

Reason: Many of them sell Playboy and other objectionable magazines and books.

Internet Related Businesses

Reason: The Internet is riddled with pornography and unwholesome web sites.

Medical/Pharmaceutical and HMO’s

Reason: Many of these companies are involved with medical procedures we disagree with such as abortion.

Bank Certificates of Deposit and Savings Accounts

Reason: Your bank is lending money to the same businesses mentioned above. With whose money are they making these loans? With yours if you are one of its depositors.

Many of us could easily add companies that manufacture firearms or ammunition and even defense manufacturers if we object to the United States going to war. We could then go on to the issue of those companies that have poor environmental track records, etc.

I hope you get my point. We can find something to object to in almost every company in virtually every industry. If we cannot find a direct issue such as what they manufacture or sell, we can surely discover that they have donated money to an organization that we disagree with. If all else fails we may learn that the CEO or founder has different political affiliations than we do or has been divorced, is an atheist, or has been sexually immoral, etc.

While I do not mean to trivialize our need as Christians to stand for important values and virtuous standards, I think we must approach this matter with balance and reason. The result of this kind of morally or socially responsible investing has been disastrous to say the least. Virtually all of the mutual funds involved in this kind of screening of investment selections have under performed the market year in and year out. Most of them have had literally disastrous performance statistics. I believe the reason for this is simple: if an investment company has to spend most of its time deciding what not to invest in, it ends up having very little time or resources left to devote to finding profitable opportunities for its investors. Furthermore, these firms have to avoid so many of the best blue chip companies for the aforementioned reasons that they stand very little chance of being able to truly compete in the investment marketplace.

Christian Money Trap:"Believing That You Are Giving Money to A Company If You Buy Its Stock"

In 99 out of 100 cases when you purchase stock in a company you are participating in what is called the "secondary market." For example, if I were to go out today and purchase a used Ford mini van, I would be participating in a secondary market of Ford vehicles. In my example, would Ford receive even $1 of my money if I purchased a used Ford van from another individual? No. Likewise, if either you or I purchase shares of Disney stock through a stockbroker today, we are buying those shares from another investor and not from Disney. This means that Disney would not receive one red cent of our money. The only exception to this would be if you purchased shares of a new issue of stock. Being invited to participate in an initial or secondary offering of stock is a very rare occurrence. These offerings are usually made to a firm’s largest and best customers since they are almost always very profitable within a few hours of their issuance. The average man on the street will likely never have an opportunity to buy newly issued stock. He will end up like 99 percent of all investors, purchasing stock that has already been owned by someone else first. When you buy stock in a given company you are not giving it your money; you are simply becoming a shareholder by purchasing the interest of another investor.

Christian Money Trap: "Limiting Your Investing to Companies That Espouse 100 Percent of Your Values"

We Christians know that even within our various denominations there are profound disagreements about significant issues of our faith. How then can we expect a secular company to reflect our Christian values? Follow my 80/20 principle to arrive at a reasonable balance with this issue.

Even though I know that in almost every case my money is not going to actually "support" companies in which I buy stock, I still try to avoid any unnecessary associations with overtly objectionable businesses. Although this is not a scientific approach, I will generally read several analysts reports on the company I am considering investing in and apply my personal 80/20 principle. This principle simply asks, "Is the company doing business with more than 20 percent of its focus in areas objectionable to my beliefs and values?" This means that even though Kroger (a grocery store chain) sells alcohol and tobacco, it is not the main focus of its business. I would still consider buying its stock. It also means that since Playboy Enterprises focuses virtually all of its business activities on pornography, I would pass on the stock regardless of how "profitable" it looked. I would pass on casinos and gaming companies as well. I could still buy stocks like Disney, AT & T, General Electric, most Internet businesses like AOL, and media companies.

Furthermore, I could use my involvement with these businesses to try to effectuate change by writing letters to the board of directors as a "shareholder." I can assure you that this carries much more weight than being just a member of the general public. (Please note that I am not recommending any of the above companies. I am only pointing out that I personally feel comfortable as a Christian purchasing these stocks since no more than 20 percent of their business activities are inconsistent with my values and beliefs.) This is an area that is highly personal. I do not believe that it is my place to act as your conscience and advise you on a stock-by-stock basis which stocks could be ethical to invest in. My view would be to encourage you not to be overly legalistic about this issue and avoid only those companies that are blatantly in contradiction with your moral views.

Christian Money Trap: "Believing That Your Adviser knows Every Stock That is Held Inside Mutual Funds They Have Purchased For Your Account"

The debate on whether to buy certain stocks is very straightforward in the realm of an investment account that only purchases individuals stocks. The genre of mutual funds poses a whole different set of challenges. If you have not read any of my other books, a mutual fund is simply a company that the pools the money of thousands of investors and then goes into the financial markets and buys securities on behalf of the entire group. As a shareholder in a mutual fund, you own a percentage of the whole basket of stocks and/or bonds that the manager of the fund purchases. While it is true that more and more information is being made available about the holdings of each fund, most investors really do not know much more than what the fund’s top-ten holdings are. To put this in perspective, a mutual fund may own 150 stocks and these may change frequently. The fund is only required to make limited disclosure of its holdings on a quarterly basis. This means that for the most part no one (except the fund management) can know every stock that a mutual fund owns from day to day. Therefore, it is impossible to invest in most mutual funds without accepting the possibility that the fund may purchase stocks in companies that you personally object to. This is what I am referring to when I describe the application of morally responsible investing as impossible in real everyday terms.

I will never forget being extremely frustrated having a discussion on this matter with an individual who was seeking my advice on this very issue. He had narrowed his decision down to a company promoting itself as a morally responsible investment firm. I shared with him my view that to avoid every objectionable Christian issue would be impossible. Furthermore, I explained that he was not actually giving his money to these companies, only buying stock from another investor. I instructed him to call back the company and confront them with these facts. I was surprised to hear back from him that he actually did ask these tough questions. The firm reluctantly admitted that I was right and that he would not actually be giving his money to these companies. They told him, however, that it was still a bad idea to invest in companies like Disney or General Electric because many of the employees and the management own shares of the company. Consequently, this could benefit the management and employees since any purchase of Disney or GE stock could possibly cause the stock to go higher. This comment really reduced their strategy to nothing more than "grasping at straws."

I know dozens of Christian people who work for Disney in Central Florida. The idea that Christians must now bring punishment to the employee shareholders in cases like this is so arrogant and legalistic that it is literally beyond belief to me. In reality, the amount of money it would take to move a stock like Disney is so substantial that it is highly unlikely that Christians boycotting the stock would have any impact on its market value at all. This financial adviser also told him what I felt was an outright lie when they suggested that they had a system which alerted them to every stock that was owned by a mutual fund on any given day. What mutual fund managers are buying is a closely guarded secret for obvious competitive reasons within the industry. They only disclose their quarterly holdings when they are forced to, and they never offer an iota of extra information not absolutely required by the regulators. Furthermore, the stocks in their fund could change entirely the day following their quarterly SEC filing and no one in the public would know.

Needless to say, this couple said that they were going to "honor God" with their money and did not care if they ultimately made a profit or not. This was despite the fact that it was determined they had to average 11 to 12 percent per year to have enough money to retire by their mid sixties. The real tragedy here is that rather than focusing their attention on the important issues of the track record, education, and qualifications of their prospective adviser, they spent all of their energy caught up in a peripheral philosophical debate. Chances are that they will join the list of countless thousands who have lost their money because of a well-crafted manipulation that exploited their hearts’ desire to serve God.

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