Wait for some really interesting comments on this point 
First time in my life I heard complaining about BRK. There are lot of fanboys on this thread maybe
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BRK contains airlines but also primarily mining. The business model is to grind mountains until they are transformed into dust, then into toxic mud.
Transforming entire mountains into dust takes phenomenal amounts of oil, which makes mining by far the most polluting industry of our time, and BRK the largest shareholder of the most polluting industries of our times.
Return on investment in BRK is directly derived from burning the planet, and will be directly responsible of the scale of the migration events that will happen when hundreds of millions will starve.
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Iâm a holder and a fanboy, yet I donât kid myself that BRK is not directly or indirectly bad for the planet.
Itâs an interesting thought, for me at least, whatâs the counterfactual situation if BRK didnât exist? Probably nothing given their business model and function as a holding company? Edit: as in âthey donât create anything other than shareholder value, the vast majority of people out there have zero idea about them, but - especially in the US - a lot of money spent finds its way to BRKâs coffers sooner or laterâ.
On the face of it Google, Meta, Amazon, and their shovel seller nVidia are more damaging right now, if theyâre not damaging the planet directly theyâre damaging our minds, so the counterfactual is easier to see. Iâve come to terms with the idea that while passive index investing is not a zero sum game, compensation for taking on risk is sketchy considering that most for-profit organisations screw someone over, somewhere, at some time. Itâs just that TINA (thereâs no alternative) in todayâs world of rising prices, job insecurity, dying/unreliable public pensions.
The counterfactual situation to consider is probably not whether BRK exists, but whether you buy their shares or not.
If you donât buy it, it just means somebody else owns it. It doesnât change what BRK does, or have an ESG impact.
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What I meant was âfor the worldâ.
Just to complement.
BRK was blamed to pollute earth.
What should we do with AI energy needs and water consumption?
This is a common argument that is, in its generic form, incorrect. It is easy to disprove recursively: if it were true for any one person, nobody would own BRK, and therefore BRK wouldnât exist.
What people that employ this argument probably mean instead is that the amount of shares that the common mortel owns (of BRK or whatever) is going to be negligible and not make a difference. That is certainly true for you and I, but when a large amount of people apply that thinking, it is not necessarily valid anymore.
Investing is different from buying a sandwich.
If you donât buy the sandwich, nobody else is going to buy it. With some good management it just wonât be produced instead of thrown away.
If you donât buy Philip Morris, someone else will, because they will stomach a bit of concentration for higher return. If many sell for moral reasons, someone immoral will become rich the moment it starts to actually work lowering the price.
If it works lowering the price, shouldnât it affect the growth prospects of the stock and its P/E multiple? I donât have experience with it so you guys probably understand it better than I but Iâd guess employees paid (partly) with stock compensation are paying attention to the growth prospects of the stock? Wouldnât that affect the ability of the company to attract talent as the most qualified professionals may turn toward companies with better prospects?
That would be only if enough people boycott the stock and prop other stocks so it would not happen on an individual basis. Am I living in a fantasy land?
Yeah if thereâs widespread avoidance it makes raising capital harder.
Buying simply transfers ownership from one person to another.
A sale of shares transfers ownership from one person to another.
Not buying a share doesnât cause the shares to disappear and leave no owners.
Again, if you donât buy the shares, they simply remain with the current owners. Not buying it doensât cause the shares to disappear.
Iâd argue that there are no real moral reasons for owning or not owning a share, as simply transferring ownership doesnât impact the operations of the company.
In fact, the contrary is true, we saw that activists actually can have more power by buying shares and therefore gaining the power to attend AGMs and lodge motions to influence the company as shareholders.
Lowering the price doensât impact the operations and growth prospects of a company. It actually makes the company more attractive from an investment point of view as you can buy the shares more cheaply.
Out of favour industries are ones where you might be able to buy at a discount. Things like tobacco, oil, coal/mining and defence have at various times had very low prices/very high yields.
Stock compensation becomes more attractive as you get more shares for the award amount.
Of course, if it would work lowering P/E, raising capital through new equity would be worse for shareholders. But there are other ways to get capital e.g. debt. But letâs say enough capital avoids such businesses on all channels, such that they have worse conditions to raise new capital.
Letâs also asume two companies. They are really similar in everything except one works in a moral part of the economy and one works in an immoral part of the economy. Moral company (MC) has a P/E of 20 and immoral company (IC) has a P/E of 10.
If you have a 100 bucks in either company your return will always be the same, except if they ever pay dividends. You get double from IC over MC.
If IC needs external capital, existing shareholders get a worse deal. But you could also be the one providing the capital and get a better deal. You could also buy the whole IC for half the price of MC. And they are basically the same company, working different parts of the economy.
So it probably depends a bit on the needs of the company we talk about. But investing in underpriced companies is profitable even if they stay underpriced.
Yeah, âbuyâ is not quite correct. I probably should have said hold or buy.
Youâre taking the efficient market hypothesis too far, or not far enough! The part that youâre missing is that there is often information associated with a buy/sell decision. You can bet that if an investor owning 9.9% of BRK liquidates its position with a market order, the market (=some non-negligible amount of other BRK investors) will consider there is information associated with this sell, and the price will go down.
If there is indeed market-relevant information that reduces the share price, then this is bad for the company, also long-term.
I guess my point is: donât fall for strawman arguments. None of this is that easy.
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(Notice I did not say that ethical considerations are market-relevant or not, this can be discussed I guess. My point of view would be that they are relevant on the long term, given that I would expect non-ethical behaviors from companies will be gradually discouraged by society, for example via legislation)
Short term yes. Until the market notices that this investor just very much disagrees with the eye color of some spokesperson on ideological grounds (they prefer grey over green). There is no actual problem with the company and opportunistic investors will start buying the now underpriced BRK.
Yes, youâre arguing that the information is not there/not market relevant. If that is the case, I agree. But for ethical considerations, I do not think it is that clear cut in general (and so the reality would be somewhere in between).
Yeah, but thatâs what we are arguing about here: That just not owning a business can actually damage it in any significant way.
I argue: No, you need to actually impact the business. You could put up more regulations. You could not buy their products. You could be an activist investor. Naively just not owning a business will in the best case do nothing and in the worst case make people you disagree with rich.
And I guess what I am arguing is that you cannot disassociate those two things, except in strawman cases lilke you mentioned