Unloading Guns From A Portfolio


Quick disclaimer:  I can’t recommend that readers perform the actions I’ve taken, so be aware while reading I’m not suggesting that everyone should follow my lead here. Please don’t, at least not before carefully thinking through the implications. Most people implement alternate solutions to solving their own moral dilemmas caused by index investing.  (There are tons of good suggestions in the comments.)

Another mass shooting here in America occurred last weekend, the worst ever, half a hundred dead, a like number wounded, all caused by one crazy asshole unleashing not exactly unimaginable horror on innocents.

Of course, it’s not unimaginable because it happens all the fucking time in this country.

People want to know what they can do to help.  Some people are giving blood.  Obama is writing his congressperson.  (For the record, you probably should too.)

I have removed major gun manufacturers from my portfolio, to the best of my ability.  The trigger for me to do this wasn’t the latest mass murder in and of itself.  Nope. It was the news that their stocks are surging in the wake of the tragedy.  And I realized that I am indirectly making money off of this horrible event.

I will not waste much time talking about my particular views on guns, or gun control, other than to make a few basic statements.

  1. Allowing regular citizens to purchase rapid fire weapons which have been designed for one purpose only — to create holes in people where previously none existed — is ridiculous.
  2. All major gun manufacturers fully support the NRA both rhetorically and with large monetary donations.  The NRA, in turn, opposes any and all adjustments to gun laws which the majority of U.S. citizens support.  Examples include the creation of a national gun ownership registry or maybe not allowing people on the FBI’s terrorist watch list to purchase weapons of war which can take out an entire crowd of humans in less than a minute.  The NRA dumps large amounts of cash into a) television advertising to advance their agenda and b) lobbyists who then directly influence our congressional representatives.  And that influence is much, much greater than your own, because:  Money.

Enough of that.  You already have your own opinion on this, no doubt, and most likely nothing you read is going to change it, because it’s very, very hard for our type of animal to go back and update previously set beliefs after we’ve made our mind up about something.

You may think I’m getting all political, but I don’t see it this way.  This is a public safety issue, plain and simple.   I don’t subscribe to this country’s use of identity politics and so just because I’m upset about this issue doesn’t mean I’m digging at either side of America’s two-party system, R or D.

I’m simply fed up with seeing innocent people die and our government’s subsequent inability to do anything at all about it because: Deadlock.  This is pretty much the only thing I can do — to vote with my dollars — so I’m doing it.

At any rate, let me just get to it.  If you want to build a portfolio that excludes certain companies, you have a couple of choices.

Exclusion Options

Option 1 is to painstakingly check the holdings of your mutual funds to see if they invest a percentage in the stocks you want to move away from.

If so, you’ll have to find a comparable fund to move into which doesn’t own shares in those companies.

Most of my holdings are with Vanguard so I’ll work through through the process I followed with them.

  1. First I made a list of the companies I desired to move away from.  Mine looks like this:
    • OLN – Olin Corporation
    • RGR – Sturm, Ruger & Company Inc.
    • SWHC – Smith and Wesson Holding Corporation
  2. Then I cross checked these companies against the stock holdings list of your mutual funds.  I have had significant money in Vanguard’s Total Stock Market Index (VTSAX) which aims to capture the entirety of the US market, so I was pretty sure I would get positive hits.
  3. Finally, I located a comparable fund that doesn’t contain these funds.  For example, the companies I listed above don’t earn enough money to be in the S&P 500, so I performed a simple exchange.  (Let’s hope that these companies never crack the top 500… I hesitate to imagine such a world.)

We have a match.  Fuck.

Note:  Be sure to evaluate any tax implications of your exchanges prior to execution so that you don’t have a huge bill next April.  Most people hold stocks in their taxable accounts, so if your holdings have gone up significantly and you make an exchange, this will count as realized gains that will generate a tax bill.

Luckily, if you are still in the accumulation phase of your retirement journey, the solution is much simpler: From here on out, push your retirement contributions into mutuals that more closely align with your values.

If your own funds are with another provider — say, Fidelity or State Street — and you are having trouble finding the exact holding list for your funds on their website, you can give them a call and speak directly to a customer service representative.  Mutual funds are required by law to disclose a complete list of holdings on a quarterly basis and make this information available to investors.

You can also look up holdings via the government’s EDGAR database which allows you to search via ticker.  Here’s the VTSAX holding list via EDGAR, for example.

Option 2 is to ditch index investing and pick individual stocks.  I can’t wholeheartedly recommend this approach because a) I don’t believe individual stock picking is a successful investment strategy for your average person and b) you lose the benefits of diversification across a large number of companies.  However, some people successfully people do it.  Check out the DRIP crowd, for example.  Personal hero Brave New Life took this approach to make his own early retirement dreams a reality, and I don’t see a single gun-related stock in his portfolio.

Despite my personal misgivings, this approach would definitely take care of your ethical issues. You could go all-in on Starbucks or something.

Some bonus reading if you’re looking for additional guidance: The Campaign to Unload. This is an organization that advocates removing firearm manufacturers from your portfolio.

What does this do to my potential earnings?

You tell me.


Nearly identical over the last 10 years.

Can I Invest in Socially Responsible Funds Instead?

First, let’s get this out of the way:

The Vanguard socially responsible fund (VFIAX) continues to invest in gun manufacturers.  I see OLN, RGR and SWHC all on the list, under “Leisure” holdings.  I can only guess this is because so many mass murders occur in places of leisure, such as houses of worship, movie theaters, shopping malls, and dance clubs.  </dark humor>

So, okay, VFIAX is not a solution to this particular problem.

But what if you don’t particularly care about companies that produce firearms? What if you’re looking to divest yourself of other corporations that you personally consider evil? Might you consider looking into socially responsible indexes to avoid pumping your own dollars directly into companies that make, say, nuclear weapons or cigarettes?

There are two major problems with this.  The first is that you can’t directly control which companies you exclude.  Some researchers have concluded the standards by which companies are held out are too lax and also prone to corruption and manipulation; they aren’t entirely objective.

Then there’s the earning problem.  The Flannel Guy ROI says that a typical socially responsible portfolio will be worth 30K less than a normal indexed portfolio over 10 years, assuming 25K/yr invested.

That’s not chump change.  He makes a strong case that it’s not worth it.  I wanted to fact check him.

Luckily, Vanguard makes it fairly easy to do cross-fund comparisons so we can do our own analysis.

Let’s take a look at our options — investing in our socially responsible fund (VFTSX), versus the S&P 500 (VFIAX).


The socially conscious fund lags, winding up at about 18K over the 10 year period.

Let’s look at it a different way.



Here you can see the 10-year return on VTSAX (Total Market) versus VFIAX (S&P 500) is a paltry .03% — statistically insignificant, at least over that span.  Since inception is another story – the total stock market has outperformed the S&P 500 by half a percentage point over the long haul.

The lower earnings risk grows much larger when you compare either of those funds against their socially responsible counterpart.  That gap is at least 1% over the past 10 years, and even more when you go back further.

Going with the Flannel Guy’s example (25K/yr invested per year over 10 years), my math says the difference between earning 5.65% and 4.65% annually comes out to about 18K. And that number will just get bigger and bigger as the years go by.  In addition, 1% appears to be best-case, so that 18K may wind up being closer to the 30K that Mr. Flannel stated in the first place.

Ultimately, I wound up with the same conclusion.  Investing in the somewhat more-socially responsible VFTSX is almost certain to result in a significant drag on your earnings.

For the record, socially responsible funds are supposed to avoid — and this is according to investopedia — companies that have been fingered in causing a great deal of environmental or personal harm.

Pasted from the website:  

… tobacco companies, manufacturers of nuclear weapon systems, manufacturers of whole weapons systems, companies involved in producing electricity from nuclear power, and businesses involved in the mining or processing of uranium…

I suppose automatics don’t qualify as “whole weapons systems” even though they are functionally “hole weapon systems.” (Ha.  Ha.  Not.  Actually.  Funny.  Because: Real human lives.)

I contacted Vanguard directly to ask if they would consider the removal of firearm makers from VFTSX based on the above criteria.  After four days of waiting for the email response that never came, I finally made the decision to call and push the issue.

And I’m really glad I did, because it gave me the opportunity to engage in a number of awkward conversations with reps that were not equipped to handle these questions.

Rep:  Hi, my name is <low level moron>, thank you for calling Vanguard.  What can I help you with today?

Doom:  I’m interested in divesting from mutual funds which contain stocks in major manufacturers of guns.  I have a list of tickers I’d like to exclude.  I’m wondering if Vanguard has any guidance in this area.

Rep:   Have you checked out our socially responsible index fund?

Doom:  Yes.  I found that your fund — that’s VFTSX if you care to look it up — invests in companies I want to exclude.

Rep:  And what funds are those?

Doom:  Let me read off the tickers:  OLN, RGR, SWHC.

There’s a full minute pause as, presumably, the rep checks the holdings for VFTSX.

Rep:  Yes, you’re correct, VFTSX has holdings in the stocks you’ve mentioned.

Doom:  So does Vanguard offer any guidance for people like me that desire to no longer have anything to do with these companies?

Rep:  I’m not sure.  Can you wait on hold while I conference a more senior person into the call?

Doom:  Of course, no problem.

I wait a minute, then the call resumes.  I’m now speaking to the rep that originally fielded my call and what I can only assume is his supervisor.  I’ll omit the greetings and get to business.

Supervisor:  I understand you have questions about fund holdings.  Although I’ve been briefed I’d like you to re-state your concerns.

Doom:  I have significant holdings in VTSAX.  This has become a problem for me as I’ve recently discovered that the total stock market index fund has holdings with major U.S. gun manufacturers.  Does Vanguard have any guidance for investors who do not wish to invest in firms which produce firearms?

Supervisor:  Have you checked out our socially responsible fund?

Doom:  Yes.  I’m surprised you’re not aware.  Your so-called socially responsible fund has holdings in all of the companies I wish to divest from.

Supervisor:  And what are those?

I repeat the ticker list.

Supervisor (after a pause):  You are correct, VFTSX has holdings with those corporations.

Doom:  So what’s Vanguard’s guidance for people like me that want to remain invested in Vanguard’s U.S. index funds but can’t tolerate the idea of profiting off of these companies?  I’m sure you understand why I’m asking these questions.  I believe in index investing, but I can no longer allow these companies to hold my dollars.

Supervisor (after another pause):  You should check holding listings and invest in funds which don’t contain stocks you disapprove of.

Doom:  Why doesn’t VFTSX divest from these companies?

Supervisor:  I’m not sure off the top of my head.

Doom:  What is the criteria the socially responsible fund must meet?

Supervisor:  I can’t offer that information other than to quote the prospectus.

Doom:  OK.  So what I’m hearing is that Vanguard doesn’t have any real guidance here. No canned response, no ready alternatives.

Supervisor:  Correct.  I’m sorry I can’t help you further.

Doom:  Fine.  Please make a note of my concerns and escalate to anyone internally that might care, if you’re able.  I’ll fix the problem on my own, as you suggested. Thanks for your help.



I’ve long since come to terms with the fact that investing in indexes means that I’m effectively rooting for a lot of rotten businesses to continue to increase profits at the cost of human misery and additional environmental damage.  It’s not a great thing to live with, but there it is.  Monsanto, Philip Morris Altria, most big energy companies (which have been pumping money into climate change denial lobbies, despite absolutely knowing the science behind it.)  The list goes on and on.

I will continue to live with this, mostly because I’m capable of just not thinking about these things very much.  I’ve also come to terms with the idea that we’re all hypocrites.  We lead lives that are not always in perfect harmony with our ideals – and some of those ideals and goals are, at times, in conflict.  We’ve got to choose which ideals carry the greater weight.

I also don’t buy into arguments from fellow bloggers who attempt to rationalize profiting off of capital markets despite the damage the underlying companies are doing to the world.  I simply cannot make myself feel all right about it. Instead, I mostly ignore it and do my best to manage the accompanying guilt.

The truth is I’m using these companies for a selfish end — to generate passive income so I don’t have to work anymore.  It’s that simple.  I am willing to live with some of the collateral damage.

This is America’s retirement plan after all:  Compounded growth through investing in our corporations.  Unless you think you can live off of flat government bond returns or the absurdly low social security payouts, you must have a percentage of your savings in publicly held companies in order to retire, and many most of them do bad things. Pension plans have been gutted, employers are less and less loyal to their workforce as the years march on, you are likely to be a victim of ageism as you progress through your allotment of time of this planet — what options do you really have available anymore?

This is pretty much it, in my opinion.

But I must draw a line.  I need to feel as though I’m doing something to combat this epidemic. There’s a breaking point for everyone, and this is it for me.

At this point you may say a few things.  Like:  Why guns?  Why now?  There are so many other awful businesses in the S&P500.  Where does it end?

My response to that point would instead be that I’ve been more recently asking myself the opposite question:  Where does it start?

Well, I’m starting here.

You might also say that I’m making a potentially costly emotional decision based on recent events, and investors should never make emotional decisions.  We should always make the decisions which result in a maximum return, right?

And to this I’d reply I am making a rational decision.  It’s based on the incredible number of shootings in this country.  These are not recent events — these are on-going events. They are not anomalies.  The United States of America is 10X over the firearm-death rate of other developed countries, and the trend lines show that things are getting steadily worse. I cannot to support these feckless, greedy asshats, even if it is indirectly, even if I lose future returns.

No more.

Note that I may reconsider this decision if these companies stop funding the NRA, stop lobbying congress to continue to make it easy for suspected terrorists to purchase firearms and oppose national gun registries or increased controls (e.g. background checks) around purchases at gun shows.  They must admit that their behavior is part of the problem, and begin to take real corrective action.

Look, I’m also uncomfortably aware that retailers like Wal-Mart sell guns and ammo too, and I can’t exactly remove them and the like from my index fund portfolios. They’re enormous, they’re in the S&P 500, etc etc.

At the same time, I see that they have at least taken steps to stop selling semi-automatic weapons.  They don’t donate to the NRA.  And they don’t produce firearms themselves.

I know that what I’ve done is very little.  It won’t bring back the people that have been lost.   It won’t stop motivated humans from buying weapons and using them for what they’re for — to end lives. (That is, after all, what these goods have been designed to do.)

My actions do little to fix the systemic problems that result in the now regular massacres that occur in the States.

Despite this, I hold the belief that it’s better than doing nothing at all.


It’s a start.

How do you personally resolve the moral conflict between your desire to build wealth and being indirectly tied to companies you don’t approve of?

06.22.2016 Update: I received a response from Vanguard via mail which further addresses their stance and wanted to share it.

Hooray for incredible customer service. I didn’t expect to hear anything back after our phone call from the week before.

Vanguard is deeply saddened by the tragedy in Orlando and can understand concerns about firearm safety and access. Many of our clients have voiced similar concerns.  We engage in discussions with hundreds of our portfolio companies and relay the concerns of our shareholders.

However, we believe that mutual funds aren’t optimal agents to address social change. As a fiduciary, Vanguard is required to manage our funds in the best interests of shareholders and obligated to maximize returns in order to help shareholders meet their financial goals.

At the same time, we recognize that our clients would like to know their options. We offer more than 100 domestic mutual funds that have no direct holdings in firearm manufacturers such as Smith & Wesson and Sturm & Ruger.

Let us put our investments in another context. With $2 trillion in assets under management, our funds are the largest holder in many companies. We own at least a small stake in nearly every publicly traded company in the country. Most of the Sturm & Ruger holdings for example are in index funds, which are obligated to track their index. Smith & Wesson and Sturm & Ruger holdings represent less than half of one percent in most of the funds in which they are held.

If you have additional questions, please call us at … . You can reach us on business days from 8 a.m. to 10 p.m., Eastern time.


 <Rep Name>

 Registered Representative

 Vanguard Retail Investor Group

I responded with a warm thanks for taking the time to both outline Vanguard’s position again and re-state their workarounds for people who have hard and fast exclusion lists.

In the end, Vanguard’s position mirrors that of many of the folks in the comments section. This is, paraphrased: The purpose of index funds isn’t to question the underlying activities of the holding companies. If you want to enact social change, it might be best to consider other avenues.

These are good points, and I understood them prior to writing this blog post. They still do not change what I felt to be necessary action on my part.

About livingafi

Posts about financial independence, geek stuff, and an intense dislike of office life. http://livingafi.com Age: 37 Location: East Coaster
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90 Responses to Unloading Guns From A Portfolio

  1. Sim says:

    unsubscribed, sorry – blaming tools people use every day to save their life is crazy. promoting killing fields (aka gun free zones) and gun control is morally evil you may have as well blamed Hillary, democratic party (wasn’t this again a registered democrat? where is the apology from their leadership same as demanded from Islam each time crazy lunatic commits mass murder). I thought better of you. good luck

  2. livafi says:

    No problem. I’m surprised this article upset you so much. I’m just a dude on a typewriter expressing opinions. Hope you find what you’re looking for.

    • Adios says:

      Wow, I’m following Sim to the exit here. This was a pretty ignorant post, and you’re response to a valid criticism highlights your own closed-mindedness.

      You might want to get rid of airline stocks too, since airplanes killed thousands of people on 9/11- and don’t forget about removing any car manufacturer stocks, since cars kill thousands and thousands of people every year. Next, be sure to remove the stock of any company that burns fuel, since that creates pollution which has been shown to hurt people after excessive exposure. I’d then remove any healthcare or pharmaceutical stock because doctor malpractice and drug overdoses have been proven to kill people too… see how ludicrous this becomes very quickly?

      • livafi says:

        How exactly is this post ignorant? I performed research, sourcing news articles from valid suppliers. I went to great lengths to acknowledge that I don’t approve of many actions of other companies which I invest in. I explained that I had to draw the line somewhere — I drew it here. Other people may draw that line somewhere else. I may eventually stop investing in indexes entirely as I continue to think things through.

        The sticking point I have with gun manufacturers is their circumvention of the democratic process. If you believe in polls, they tell us most Americans support common sense gun laws. We have for a while. But we can’t get anything done because of the lobbyists and money involved.

        I’ll add that explicit purpose of an airplane is not to kill other people. The same goes for automobiles. And the burning of fuel. And medicines which are then sometimes abused.

        On the other hand, the purpose of assault rifles is to kill people. This is not a hunting weapon. This is not a practical home defense weapon or something you carry out to the shopping mall to protect yourself in case something crazy happens. It is a weapon of mass murder, and it is doing it’s job far too often in this country.

  3. Justin says:

    Blast you Dr. Doom for making me think about the ethical implications of my portfolio choices.

    My short answer is I’ll do nothing. I switch between SP500 and total market index for tax purposes occasionally, and only have access to total market index in some accounts.

    The long answer is, resistance is futile. I own Kraft, they make people fat. I own beer/liquor companies, they make people drunk, stupid, and die in alcohol-caused car wrecks. Big oil pollutes our air and water. Banks are evil and exploit financially unsavvy suckers. Apple enslaves millions in China for pennies per hour to make $700 toys for us Americans. Google invades our privacy, sometimes on behalf of the government. AT&T is, well AT&T is a piece of crap and they suck.

    My point is that I would have to be very selective to get rid of all bad or somewhat bad firms. Even gun firms do good (cops and soldiers possess guns from those big publicly traded manufacturers you mentioned).

  4. Greg says:

    Wow, amazing how in your world view people are not responsible for anything at all. Guns commit crime, Kraft makes people fat, Chevy makes people buy idiotic cars. Truly sad to see intelligent people bent like this. Reminds me of old days in Moscow.

  5. Mike says:

    I appreciate your standing by your convictions and being open about it. I have some thoughts.

    I can’t imagine indexing will work. You mentioned getting rid of arms manufacturers as a start, which would seem to require an S&P-arms fund. Then if later you wanted to remove Big Oil you would need an S&P-arms-oil fund. I’m not sure what Vanguard could have done for you, other pass the information on to the fund manager about his investment decisions. It seems like over time you will need to white-list stocks instead of blacklisting them. Maybe something like Motif would work (I haven’t tried it yet).

    I thought your post was well written, acknowledging the struggles we all have to face investing in capital markets full of nasty corporations. I needed the kick in the pants. Thanks

    • livafi says:

      >>It seems like over time you will need to white-list stocks instead of blacklisting them
      Yes, this is the same conclusion I’m gradually reaching.

      I didn’t actually expect Vanguard to do anything, for the record. Still, I wanted to give them a chance to address my concerns because: you never know. Gotta give people a chance.

  6. Dee says:

    Thanks for this post….reminding those of us who want to stop gun violence in America that we can vote with our investments.

    • livafi says:

      >>we can vote with our investments.
      Yep. I just wish it was a little more straightforward to do something about. Maybe we’ll get there.

  7. Mr. RIP says:

    Ethic complains about investing is the today’s number one issue I have while explaining my FI goal & plan to close friends.
    I still hadn’t found the right reply to “you’re evil because you fund evil people”. I tell myself that I just invest in top500 US and top600 EU companies, and I hope good companies will be able to kick evil companies out of the top (like the Leicester in UK soccer Premier League), but today my money goes with the evil ones.
    Problem is that broad investing (mutual funds or ETFs) is very hard to keep ethic and individual stocks are risky. It’s a very very hard problem to solve.

    Thanks Doom for raising this discussion to a higher level.

    • livafi says:

      >> I hope good companies will be able to kick evil companies out of the top (like the Leicester in UK soccer Premier League),
      Nice analogy, and good points. Thanks for the comment.

  8. Dorf says:

    I am really inspired by your thoughts and actions today. I, too, have looked into Socially Responsible funds, but came to the conclusion that my definition of SR differs from that of the fund managers. However, glad to know my S&P 500 doesn’t include gun manufacturers. Thank you for showing us the divestment process in action.
    I feel sorry for US Americans and the culture of fear they seem to live in. Gun control contributes to a better quality of life. Murder by gun has not been eliminated in Europe (RIP Jo Cox, MP), but it is not as omnipresent. Armed citizens– no. I don’t want to live in that kind of a world. I wonder when/if the US is going to feel the financial consequences of poor gun control in loss of int’l tourism or investment dollars.
    Thanks for the thoughtful post.

    • livafi says:

      Yeah I saw the story about Jo. Shocking and very horrible that some people think violence is the answer to political problems.

      As I mentioned in this post, motivated people will continue to find ways to get their hands on the weapons they want, even if it’s illegal.
      >>, but it is not as omnipresent
      Yep, the rates are an order of magnitude lower in EU and even lower in AU

  9. Anato says:

    Thumbs up. I’ll be moving cross the pond for work in the next few months and will make use of this bit of info while stashing away for FI.
    Pretending it’s pointless to do anything at all since so many other corporations are screwing us up all the time anyway (true) it’s like saying let’s not follow up on any crime since there will be anyway so many left unpunished. Total BS.

  10. I haven’t been following your blog for very long, but greatly appreciate you putting this piece together. Like Justin, my immediate response is ugh, now you’ve made me think about the ethical implications of my investments. I am just as angry as you are about the mass shootings and frustrated by an inability to do anything about it. I can’t fathom profiting from the gun manufacturers, just like I have no desire to profit from Altria.

    I’m not sure divesting in any particular company is workable for many of the reasons that you go through in your article.

    Do you think it would be possible to isolate the profits from a select group of companies? I’d be more than happy to donate all profits I receive from gun manufacturers to anti-gun lobbying groups, although that strategy obviously has its flaws as well.

    • livafi says:

      >>Do you think it would be possible to isolate the profits from a select group of companies?
      Yes, it’s possible, but it’d be a painstaking manual process involving reviewing quarterly holdings of a particular fund, checking values, tracking # of shares, and doing math.

      >>although that strategy obviously has its flaws as well.
      Yeah. I have trouble with the ‘offset evil’ arguments, even though I actively practice some of them. Let’s say you’re concerned about carbon emissions — i.e. your carbon footprint has become an ethical issue for you. Is it all right to completely stop worrying about the things you do that contribute to it — just normal, everyday life things like driving around, burning electricity, taking a flight somewhere to visit family — as long as you’re donating to some carbon-offset charity? And if you increase that donation, does it free you up to, say, buy a Hummer that gets 8mpg and drive it everywhere, as long as the equation balances out?

      The answers to these questions are highly personal

  11. Lucie says:

    Hello Doom,
    I deeply agree with you. I too, have asked myself about trying to invest with more humane values, but truly, other indexing funds haven’t given me a real opportunity yet, as you tell yourself in the article. I sure hop Vanguard will create a good and efficient “moral” fund in the future.
    @Greg: Sure, people are responsible for their actions. But selling war guns to mentally ill people draws a line (no sell restrictions at all is bound to create dramas). That’s where lobbying must be stopped.
    Anyway, thanks again for the great article and sharing your experience (the conversation with vanguard made me laugh, you really should do a book).

  12. Emily says:

    Thank you for starting to think this through and sharing your research. Right there with you- this is just the beginning of making my money match my values. And I think we have a lot more options than all or nothing- the northeast has a thriving set of socially responsible businesses we might invest in, etc. But it might be a little work to figure it all out 🙂

    • livafi says:

      Now that I’m not working I have more time to think about these things, for better or worse. The decision I made 13-odd years ago to just go all in on the market, moral implications be damned, doesn’t feel quite as hot as it did back in 2003 for some reason. It’s strange – they say most people become less idealistic as they grow older. It seems the opposite may be true for me.
      Congrats on committing to continue to investigate making your own investments match your values, that’s great!

  13. Marc says:

    Hi Doom,

    Europe talking here.
    I fundamentally agree with you on the political and ethical argument.
    At the same time, I am also a big believer in indexing.

    So what can we do ?

    1. I don’t believe in the bullshit of most socially responsible funds, and your example right here with Vanguard is just another proof. I am also in line with RoG, many companies are not doing good things for the world around us, and each and every one of them has negative impacts that matters more or less to every one of us. So I won’t invest in those index, because they will likely not use our money in line with our values.

    2. I think the approach to hit these companies where they will suffer the most is one of the right ones. But I think you’ll make much more damage to their bottom line by boycotting or encouraging the boycott of their product. I “don’t mind” receiving dividend of evil doers as I am suffering from their evil doing, so at least let’s get compensated. It does not mean that I will ever buy a gun, or that I will not try to but the most efficient MPG car, or even go electric and hopefully one day not receive dividends from the “bad guys”. Channeling these dividends towards expenses that are, in our opinion, socially responsible, will help the companies making “good products” became heavier participants of the indexes. Of course if there are many morons buying the bad products, aka, our boycott/ our promotion of boycotting acts does not work, then there is a last option.

    3. Because of advertising, manipulation of weaker minds, etc bad companies can strive. In that case, the way to take them down financially is, and you might not like it, political. If 90% of Americans are in favor of the ban of assault weapons, then let’s fight politically to have a vote on this. And if only 20% are in favor, let’s try to debate, to counter argument, to present scientific evidences etc etc to convince the other 80%. Political fight does sometimes bring results, it is not easy, but in the end the world made many progress politically in spite of violence or position of force (civil rights movements, break up of telecom monopolies, of big oil or big banks – another round should be on the table at this time………, regulations on water, environment etc etc etc).

    Now, if the other 80% does not want to read facts, but just leave in its imaginary hell, where they need M16 guns to defend themselves when they go to the supermarket, while entire continents in other parts of the world do not need them, well fuck them, and let me at least get the counterpart for them not willing to improve and let me receive my dividend and use it responsibly.

    What do you think ?

    Many thanks for your tremendous blog, it has been a delight to read it during several months. You guy has a gift with writing, maybe you can use it also politically or in a newspaper or as a book author etc to make things better in this world.

    Keep up the good work man.

    • livafi says:

      Thanks for the awesome remarks.

      >>let me at least get the counterpart for them not willing to improve and let me receive my dividend and use it responsibly.

      You’re not the only one that feels this way — looks like several other people expressed similar views with their own comments. It doesn’t seem to help me personally but I understand where the sentiment is coming from.

  14. xatlasm says:

    The problem with socially responsible funds is that someone else is making the decision on your behalf for what counts as “socially responsible” and will be charging you for doing so, to boot. If you want to make a portfolio that matches your own personal ethics, the best way is to do it yourself by picking individual stocks. Of course, this incurs substantial costs in trade commissions and risk/volatility from under-diversification.

    Not to mention that (as Flannel Guy ROI states in his case against SRI) buying and selling shares of unsavory companies does very little to hurt/harm their bottom line because it is so far removed from the actual issue of interest. He concludes that it is far better (from a improvement-to-the-world-per-dollar-spent basis) to use your earnings to donate to organizations that directly support your cause of choice.

    Finally, once you are FI, you then have the ability spend as much of your time and effort as you wish to support your cause of choice without concern for making a living yourself. If some small fraction of your earnings comes from unsavory businesses, but it enables you to dedicate a portion of your life to making the world better, I believe that it’s a worthy trade-off. After all, the quicker that we can make more socially-responsible people wealthy/powerful, the better off we all will be.

    • livafi says:

      All great points – I touched on a few of them in the post but you have re-stated them very clearly.

      >>Not to mention that (as Flannel Guy ROI states in his case against SRI) buying and selling shares of unsavory companies does very little to hurt/harm their bottom line because it is so far removed from the actual issue of interest… far better (from a improvement-to-the-world-per-dollar-spent basis)

      I completely understand this but I decided that I had to make a change based on personal ideals.

      >>you then have the ability spend as much of your time and effort as you wish to support your cause of choice without concern for making a living yourself.
      Yep, it helps. I started volunteering at blood drives in the area and it’s very easy to do now that I’m not working.

      Thanks a lot for the thoughtful comment, I really enjoyed it.

  15. Nooj says:

    Strongly agree with you. I wish there is an easier way. The silent majority can’t wait to ROAR in November!

  16. edifi says:

    There should be a buffett-style vtsax with check boxes of what to invest in:
    Conservative- Guns, carbon, oil, sweat shops, nuclear, defense contractors, countries, Murdoch,
    Liberal- “mass” media, tesla, medical device co’s selling to planned parenthood

    Also, there might be satisfaction in taking dividends from gun stock and sending it to Hillary’s campaign. Or flip side, a gun owner taking his wages from Whole Foods and buying ammo.

  17. Brian says:

    Wonderful! I’ve been thinking of taking action for a while now, but your post finally provided the impetus for me to do so. After years of responsible gun ownership, I’ve finally decided to join the NRA. Thanks, Doom!

  18. Smith says:

    Great post, Doom. You’ve done what you could, and that may sound small, but it isn’t. Weapons companies do not look favorably on those who divest. Plus, it ticks them off. Excellent.

    • livafi says:

      >> Weapons companies do not look favorably on those who divest. Plus, it ticks them off. Excellent.
      Apparently some gun owners don’t either — I just received an extremely nasty note in my inbox via the contact form on the blog.
      It’s strange that it’s such a hot button issue. I wouldn’t bat an eye if someone else decided they were going to take steps to move any company or list of companies from their investment portfolio. Personal choice and all. Thanks for the comment.

  19. A hat-tip to you good sir. Somebody who is prepared to put their money where there mouth is.

    As a UK based investor gun crimes like this just do not seem to occur because of our very strict gun laws. I therefore shake my head every time I hear of one of these incidents in what should be a civilised society. The vast majority could just so easily be prevented.

    My ethical play is a disdain for cigarette companies. I invest in a UK HYP (high yield portfolio) where the stalwarts hold Imperial Brands and British American Tobacco because of their high dividends, non-cyclical behaviour and wide moats. I hold neither.

  20. David says:

    Good for you. Funny how some folks have already started interpreting this as a full-on attack on guns. All or nothing thinking like that is exactly why we can’t have intelligent conversations about these issues.

    News flash: it is OK to have a nuanced opinion on gun control. You can even *like* guns and still not support unfettered access to military grade hardware for any asshole who wants to buy it.

    That said, it is obviously impossible to own a broad index and not profit off gun violence in some way. Media companies? Check. Mining companies? Check. Major retailers? Check. And on and on it goes.

    Still, I support you trying to do what you feel is right, even if you are still going to have to plug your nose at the end of the day.

    • livafi says:

      >> Funny how some folks have already started interpreting this as a full-on attack on guns.
      Yep. If they did, they didn’t make it to the end of the post where I went so far as to say I’d consider moving back if they stopped obstructing our democracy via the NRA.

  21. John D says:

    Hi Doom, if you haven’t heard of them, you may be interested in Motif Investing (www.motifinvesting.com). I’m unaffiliated and have not used them, but your post made me think of them. In essence they allow for easily creating a “motif” (a basket of stocks and ETFs). There are sample ones on the site, and some folks have used it to create different values-based portfolios. If you picked out certain ETFs (whether capitalization-, location-, sector-based, etc.) that reflected portions of the market you found most acceptable, you may still be able to capture a lot of diversification for a good price. You could probably achieve the same thing elsewhere, but maybe their platform would be especially valuable here.

    It seems like people have thought about this issue on Motif as well. While I didn’t spot a motif for avoiding guns & ammo, I did ironically find one that focused exclusively on that part of the market.

    It does seem like one of the biggest problems today with passive indexing is integrating it with one’s personal values. Some people resolve that conflict with the conclusion that, while they may feel uncomfortable profiting from certain companies, they’ll just pinch their noses, accept the returns, and try to do something good with the money (live their life in a way that better helps society, spend their dollars on causes and companies/people they support, etc.). Other folks ultimately determine that there are just too many complications and compromises that one must make, and hence they limit investing to individual stocks they support, or even get out of stocks all together and invest elsewhere (local real estate, etc.). For me… I’ve thought about it, and ultimately I have no idea… It’s not the most satisfying result for a person who wants a simple answer. I guess for now I’ll just focus on investing in a way that makes fiscal sense, doesn’t horrendously violate my personal beliefs, and try to live a good life and make the world (and my own life as well) better with the returns. Maybe some day I’ll come up with a better answer.

    • livafi says:

      John – thanks for the suggestion to check out Motif, and also using the word ‘ironically’ correctly.

      >>I’ve thought about it, and ultimately I have no idea
      Same. You can see from my post and the resulting comments that there seem to be more questions than answers.

  22. Pam Phillips says:

    I’m surprised you didn’t mention the grand-daddy of SRI funds, the Domini Social Equity Fund.
    Now that Vanguard has switched over to brokerage accounts, you should be able to buy that, if you decide to go that route.
    I’m also surprised that the Vanguard reps couldn’t pull up a prospectus and find what rationale goes into the Vanguard SRI Index. They’re pretty clear about the components for their other index funds.
    I have also thought about trying to invest responsibly, and while I do hold index funds, I’ve decided that they are not a good vehicle for moral judgements. But when I buy individual stocks, it has to be a company that I feel is doing the right thing. I might be missing out on high yields by avoiding oil, tobacco, or for-profit colleges, for example, but I am also avoiding the risk of disasters and lawsuits.

  23. Steve (NWOutlier) says:

    Hi Doom, I may not agree, but I also will not leave the blog because you have an opinion of your own. I appreciate the opinion and the fact you took time to write it out! 🙂 .. An option could be to still profit from your VTSAX, but drive the profit into things that are positive (use their money to build something more meaningful). For example (extreme example) let’s say I made 18 million a year on dividends, I would use those dividends to lobby for every gun turned into a single shot lower calibur 5 second to reload – (this would take years, decades and even if succeeded, there are still millions of weapons already out there)

    One thing I’ve seen recently is people posting how easy it is to make a weapon (e.g. shot gun from home improvment store parts) this is why I don’t believe a ‘law’ would fix or even reduce the problem we have now.

    Something else I’ve considered is, if all gun companies were closed today – 100% of them and it were illegal to own a gun. it would take more than 100 years to see the benefits of fewer guns on the streets – and people would just adapt to something else, knives, bats, bombs, etc..

    it’s tough, I see your point – but I can’t blame the weapon, it’s people. If that type of weapon didn’t exist, us people would just find another way.

    In short, I don’t know the solution, but – you’re doing what you can do, or what you feel you can do, and that’s important.

    The problem is people.

    Thanks Doom! I’m still a continued reader!

    • livafi says:

      I appreciate this response, Steve. I’m not looking for agreement so I won’t debate the points you’ve made other than to clarify that my primary beef is with assault weapons. Although people can and will find a way to kill other people, most of those ways don’t enable them to mow down so many of us in such a short period of time. I imagine it’d be very difficult to execute a mass-knifing, for example.

      Just wanted to say thanks for keeping your cool and also for reading.

  24. Classical _Liberal says:

    I can’t say I agree 100 percent with livafi guy here, but I certainly respect the opinion and generalized rage against evil. It’s awesome to see someone who can recognize their own hypocrisy (profiting from previously mentioned evil) and become willing to act on it. When I purchase an unneeded consumer good that was ridiculously cheap because it was made by a 10 year old Chinese girl who works 18 hours days at slave wage, I join the ranks of Western hypocrisy as well. Unfortunately, it’s near impossible to completely opt out of the broken system. I suppose one could buy a small piece of land and go off grid, but then all the good of modern society (and there is much good) is lost as well. Perhaps there is a middle solution, one in which we try to give as much as we take and end up with a net zero on evil promotion. If someone’s passion is preventing these massacres, invest the free time indexing provides into organizing community based efforts for gun control, or changing the mental health system (most of the shooters are untreated fucking crazy). Also devote a portion of assets (like 5 or 10 percent) specifically for personal belief based social investing. Invest in companies who are in direct opposition to the problems one sees. Sure, returns may be lower, but having an otherwise index portfolio weighted towards companies in opposition to the things one feels is unethical can help tilt the balance to net zero.

    • livafi says:

      Although I see where these suggestions are coming from — “these suggestions” being to offset evil through charities or causes — I still hesitate to heartily endorse them. I’d really prefer to have nothing to do with the initial acts.

  25. CP says:

    I appreciate your significant thoughtfulness on this issue. I have never evaluated the ethical extensions of my passive investments to any great length so this post was excellent food for thought. As for some of the reactions in the comments, I don’t think that has anything to do with any errors in thought on your part but instead is representative of the institutional resistance that one faces in our culture when trying to talk about solutions to this problem.

    I think you bring a truly unique voice to FI topics, and this post is such an example. I look forward to reading more of your blog.

  26. Steve says:

    I don’t understand why guns are so easily available in America. It’s bizarre. So stupid and this happens so often.

  27. PaulH says:

    Absolute trash, waste of times. More garbage from liberals.

    • Steve says:

      Yep. Of course guns aren’t the problem. We all need assault rifles. It’s the liberals that are the problem. We should shoot them all.

      Can you imagine if we got rid of all the guns. That would mean no more mass shootings. We couldn’t have that.

      • PaulH says:

        If everyone owned they’d be defeinding themselves from the crazies that commit crime, that’s the solution.

  28. whynotnow says:

    Hi Doom,

    Thank you for this thoughtful post on this topic as I struggle with these ethical issues as well. I’ve reached the conclusion that for now, I’m going to have to make peace with my uneasy hypocrisy in which my money does not always align with my values. This may not mean much in the grand scheme of things, but I attempt to compensate for this a little in my other personal choices (voting, volunteering in my community, practicing kindness, etc.).

    I’m not surprised by some of the vitriol in a couple of comments earlier- you’ve obviously hit a nerve, but I think it’s great that you aren’t shying away from this important (and painful) topic and sharing your thoughts and analysis with the rest of us.

  29. Hey Doom! As a Libertarian who wholeheartedly supports guns and responsible gun ownership in this country, I absolutely LOVE this post. While I don’t necessarily fall in line with the belief that divesting yourself of gun stocks will solve the “CRAZY” problem, I recognize that you are doing what ALL people should be doing – putting their money where their mouth is and making decisions that they feel is in the best interest of themselves and our nation.

    I guess I’m a little confused by some of the nastiness in these comments. I understand that some people don’t agree with your approach (and like I said, I don’t either), but you’re also taking it upon yourself to do what you feel is best rather than simply whine to the government or bitch about gun control laws like most people, contributing to the uselessness of this entire debate. Personal responsibility…I would think that the pro-gun side of this debate would respect that, not trash it.

    You’re doing what everyone *SHOULD* do – you’re making choices and putting your money where you believe it is best suited. Money talks, after all.

    Good on you, Doom – and I will certainly continue to be a loyal reader of yours.

    • livafi says:

      Hey Steve –
      Exactly: One of the many ways we’re allowed to express our freedom through our investment choices. This doesn’t manifest in the same actions for everybody because we hold different beliefs, but we have the ability to do it if we suddenly need to.

      >> supports .. responsible gun ownership in this country,

      Responsible gun ownership doesn’t bother me in the slightest and I never stated otherwise in the body of this post. (If I gave anyone that impression, it was a failure of my writing. I didn’t see the need to explicitly make the statement – It appears I’ve misjudged this.)

      If nothing else, writing this post has taught me why bloggers tend to stay away from politically charged subjects.

      >>I guess I’m a little confused by some of the nastiness in these comments.
      Honestly, I’m not. I knew it’d bother some people. I decided to publish it anyway in an effort to spark discussion. And although I have the ability to remove those comments, I’ve made a decision to let them stand.

      Thanks for the even-keeled response and friendly disagreement.

  30. ryanrbradley says:

    You’re spitting into the ocean to stop the tide on this one, Doom, but at least you recognize it.

    We all live within unjust systems, all the time, that we can’t change. How does one person stop their country from going to war? How come stores only sell shirts made by poor people in Bangladesh making pennies? Why do we have to work 40+ hours a week for 40 years when our productivity is 4x what it was in the early 1900s?

    This is what it means to be human, and be stuck in society.

    Something bigger and more rare (like the FI idea) is needed. One proposal: raise enough capital from people with your point of view to buy a controlling stake in every US firearms manufacturer. I very roughly estimate it would cost less than $3b which is a lot of money… but actually not that much money. George Lucas could do it, as an example.

    For myself, I put a portion of my portfolio to whitelisted investments (wind turbine manufacturers, local businesses, etc.) and a portion to the economy of the society I live in (good and bad).

    • livafi says:

      >>For myself, I put a portion of my portfolio to whitelisted investments (wind turbine manufacturers, local businesses, etc.)

      I like this compromise and may implement it. Thanks for the comment and great idea.

  31. Kevin Lewis says:

    Glad to see you writing again! I agree with you wholeheartedly on your views on gun control. However, I think that the approach of divesting your investments which invest any portion in gun stocks isn’t the best way to spend your time or effort. As long as there is a demand for assault rifles, gun manufacturers will meet that demand. They will not have trouble, because money for expansion will come from 1) actual gun sales and 2) capital flowing to them once the returns become higher than the rest of the market. If every person who reads personal finance blogs divested from gun manufacturers right now, I don’t think it would cause more than a momentary blip for the companies. Trading firms would probably buy up the stocks as soon as they dropped and they would be roughly the same price within a week. You’d likely have more effect if you took the earnings from the gun stocks and sent it to a gun control lobbying group.

  32. P says:

    Here’s my problem with this whole thing. Sure, mass-shootings are traumatic, visual, emotional even as a casual viewer from a distance. But, what you don’t see everyday in the news are the thousands (millions?) of lives ruined by the rest of the corporations in the world. Big pharma for example – quite happy to get as much of the population taking as many pills as possible. Oil, fast-food, alcohol, tobacco, health-care. It goes on and on – and literally KILLS people through the power and actions (inactions) of these corporations. Would be interesting to see the death-count by cause of say.. drunk driving vs. gun violence. My hunch is medical “inefficiency” in our system likely kills 1000’s every single day? You just don’t see it on the news and have an emotional reaction. Many other corporates are almost unquestionably evil, without directly killing people (predatory lending, child-labor in other countries, tax structuring to pay no taxes at all, environmental abuse, blatantly biased news). Corporations are self-maximizing organisms, that will do whatever they can within the existing laws, and use power and influence to change the laws in their favor. I really don’t blame gun companies for producing and selling products that people want to buy and that are entirely legal under current law. You ask “where to start?” I moved to Europe and voted with my feet!

    Great blog and thanks for all the thought and energy you put into your writing. Have enjoyed following your journey these last few years, and congratulations 🙂

  33. DW says:

    Pleased to see another post from you.
    UK reader here; I’m unsurprised by the hostility from some readers as this seems to be an emotive issue in the USA – it’s one of the reasons why I will never visit. Not that I think people shouldn’t have guns at all, it’s just the ease with which they are available with seemingly minimal checks.
    I’ve recently experienced something similar as my wife wanted help choosing a fund when her workplace changed their pension scheme. We were weighing up between Global and Ethical. There wasn’t enough detail on the Ethical fund so I pointed out that their version of ethical may not coincide with hers… She went with the Global in the end.

  34. Mr. SSC says:

    Damn you for making me think about what my investments are invested in, GAH!!! You bring up some good points though, and I have had similar internal debates about investing or not investing in companies. For instance, I wanted to put some coin into a stock, and Altria (Philip Morris) came up. I googled to see what they did and thought, “Yeah, people love to smoke and that’s not going away anytime soon.” I just couldn’t bring myself to purchase shares though and went with Rubbermaid instead – people need to keep their leftovers fresh too, lol.

    Like you said, it’s all personal, and while I won’t be going through the pains you did, good for you for doing something you want to do with your money, that makes you feel better about what it is and isn’t supporting. There’s a reason it’s called PERSONAL finance. 🙂

  35. Loving the comments section here. Way to kick a hornet’s nest! But seriously, I can disagree politely. I think it is noble you are driven by things other than money. Do what lets you sleep at night brother!

    • livafi says:

      Thanks FV. I don’t mind me some friendly disagreement.

      The purpose of this article wasn’t to convince people to follow suit, or even to seek validation.

      It was simply to prompt people to think about the ethical side of investing, and also to perhaps understand how other people resolve these sorts of conflicts. I made an effort to make the post about more than just firearms. I fully acknowledge that the issue(s) that rile me up are not necessarily the same that issues that bother other people.

      At any rate, the answer I’m hearing more than anything else is: We don’t resolve the ethical issues. We justify and and live with them.

      Somehow it was easier for me to do that back when work was making me actively miserable. Now I’m looking for solutions that work a little better.

  36. Adam says:

    A third potential option: why not hold the broader index fund if you want to, but then directly short the funds you don’t want to hold? That way, your net exposure to them could be zero (or hell, negative if you want). Of course the transaction costs would be a little higher, but once a year or two to rebalance them wouldn’t be too expensive. It would be a relatively small holding anyway. And if there are any other companies you feel are evil enough (tobacco manufacturers maybe?) you can add them to your short basket.

    I sympathize with your feelings in this post, and I think the action you took, while small (which you freely admitted), is obviously working toward a better end. I can’t understand the harsh criticism from some of the commenters. I really hate to be someone who can’t understand both sides of an argument, but this one is just so clear-cut that it’s very difficult or impossible to be impartial here.

    Of course I’m speaking as a Canadian. Sorry.

  37. Matt Ellis says:


    I’m a Brit.
    We are not allowed to own handguns by law – period.
    Rifles – you had better prove you have a need for one (eg hunting on your own land) or you will not get a license. Ammo, bolt & gun must be stored separately in locked metal boxes secured to the wall.
    Shotguns – easier to get a license but again you must prove you have a use (eg pest control) and it must be stored securely.

    In short no one has a right to own a firearm.
    Most Brits think that your right to own firearms is madness.
    Guns and poor mental health do not mix and the net result is tragedy.

    You could track the UK Stockmarket

    My own investing bug bear is tobacco but I have your problem of most mutual funds being exposed to these problem stocks. I dont invest directly in tobacco but that is as far as it goes.

    How many more shootings before things change in your country?

    • livafi says:

      >>How many more shootings before things change in your country?

      After we did nothing re: Newtown — this was a mass shooting in which someone killed 26 people in an elementary school, mostly children, just 10 miles from the town I grew up in — I came to the conclusion that nothing will change, at least at the national level. Perp’s weapon of choice? A semi automatic, purchased legally.

  38. FireLane says:

    Great post. I admit, I struggle with this.

    I’m just as frustrated as you are about gun violence. If everyone divested from gun stocks, those companies would feel the pressure and would have to change the way they conduct business. Hey, it worked with apartheid. But if I sell my stocks and no one else does, all I’ve done is to divert that income stream to someone who may not care about this as much as I do. I don’t know. I wish I had a better answer.

    On another note, I’m amused by the gun nuts who are yelling and screaming about this post. I guess they don’t realize they’re talking to someone who’s financially independent, which pretty much means you don’t have to give a shit what anyone else thinks.

  39. Thanks for the post Doom. While I agree with the sentiment behind what you say I’m not sure how this really changes anything in the real world. After all you are purchasing these stocks on the secondary market which doesn’t directly or even really indirectly contribute to funding these companies (as opposed to an IPO). In an efficient market someone will buy those shares and the value of the company and stock will be what they are. In this case there is probably little cost to you based on the index funds you are trading, but what if your only choice was to invest in a socially responsible fund that earned you much less money? I would argue that it is to your best advantage to earn as much money in the capital markets as you can and then use that money to have influence in greater ways (through purchasing decisions, political actions, charity contributions, etc.). I need to write a post on this because the whole socially conscious investing fad I feel has a dark side to it, and a huge opportunity cost that many people don’t appreciate. Someone is always on the other side of the trade as they say.

    Regardless I enjoyed the post and commend you for taking a stand on something you believe in.

  40. Mrs. ETT says:

    I’m not quite in the market yet, but this is something that has been on my mind as I begin to formulate my investment philosophy. I’m wondering if I might start with a small % ethical investment, then increase those holdings yearly.

    The thing is, yes, you’ve taken a tiny step, and to many it might seem like nothing. However once many people take the same tiny step, change does happen. I use the example of free-range eggs in Australia. 5 – 10 years ago, nobody cared. Slowly, more and more people have indicated that they do care, and the industry has taken notice. Granted, there are still huge issues on definition of free-range etc., but “the people” want it, and they voted with their $, and now sales of free-range have outstripped cage eggs. Ethical investing could be a similar beast.

  41. L says:

    If you don’t want to profit from a specific company contained in an index fund, short the underlying stock thereby creating a neutral position.

  42. Stockbeard says:

    Hey LivingAFI. Despite your well researched post I see you attracted the “pro gun” crowd to your comments section, don’t worry too much as it seems these people are everywhere on the intertubes. Weapons in the US are basically a religious matter at this point and people won’t change their mind on it. It’s just sad that pro-gun people in the US don’t look around in other countries to see that they are the only first-world nation with such a (large scale) third-world country problem nowadays.

    Bonus points for the moron who compared guns to airplanes, as if commercial airplanes were designed primarily to hurt living creatures.

    Back to your actual topic on how to invest in a “socially responsible” way. I tried that a very long time ago, when I first started investing. The financial advisors where just baffled. “What if there are some specific stocks I don’t want to invest into, for personal reasons”, I asked. “Oh, you mean underperforming stocks?” was the question I got in reply. Once explained more in detail, it was clear that there was no good solution. I made the conscious choice to not hurt my entire family’s financial future just for my personal beliefs. Investing in an ethical way is complex and as such goes against some of the bogglehead principles, as you explained.

    And maybe that’s hypocritical, but I’m in the “where does this end” group. I might as well choose to not invest in monsanto, tobacco manufacturers, car manufacturers (cars kill lots of people too), energy, plastic (have you heard of the plastic continent?), the list goes on and on. I’m not being cynical here, this is really what I think: there are not so many businesses that I find truly “ethical” from my perspective: the human race generates lots of useless crap for the sake of growth.

    It sounds to me like a more appropriate alternative could be to choose a business you favor, and funnel some of your money into it. conversely, target some specific evil business more efficiently by funding a lobby that fights them? So you still invest in gun manufacturers, but use some of your wealth to fight them specifically.

    Good article, makes me think a lot, I think whatever I end up having in “excess” is what I’ll think of investing more ethically.

    • Steve says:

      Like you state the problem is that guns are for some bizare reason basically a religious issue in the US. Logically you can’t justify gun ownership as it occurs in the US. The evidence is overwhelming in relation to the number of mass shooting crimes that occur that this US policy is one of the dumbest policies that mankind has ever implemented. You can’t justify this rationally or factually.

      I don’t think though Doom’s approach to the issue is something that is actually workable or at least not for myself. At some point hopefully a politician is voted in that will do something about it. Until that happens though I think these events will continue unabated.

  43. EllDee says:

    Thanks for the post, Doom. People have very strong feelings about this and it takes courage to talk about it. While it’s obviously hard to make all the right choices when it comes to investing and life in general, we can all make little changes when it’s feasible.

    I live in a rural area where hunting is prevalent, so I understand that guns have a place in our culture. What I don’t understand is why it is necessary that US citizens have the ability to shoot machine-gun-style and use bullets whose only purpose is to cause as much damage as possible. The only way to really curb this mania is to have more voices of reason talking about it, to counter the fear-mongering that so many people listen to.

  44. Ray MacDonald says:

    As a Canadian I have less of a dog in this fight. We have funds like Ethical Growth here but:
    -they don’t always conform to my notion of ethicality
    -they underperform (active management – about 50 companies in the fund.)
    -they charge high fees
    Better in my view to “tax” your unethical index return and donate a percentage to something like Coalition for Gun Control or equivalent US based organization.
    Where I live you can get an AR-15 but it takes months and you can only use it legally on a rifle range. Also the magazine size is lower. However 10 rounds is enough to do serious damage if you’re a nutbar. We’ve had a few incidents too.
    I don’t own firearms personally but I grew up with them and my uncles always used them responsibly – rifles and shotguns for hunting.

  45. Lucky Girl says:

    Just wanted to jump on the bandwagon and show support for your post, Doom. Guns are a very politically charged topic, and I am considering volunteering for pro-gun control groups after I RE. Newtown was a turning point for me as I have young kids.

    Socially responsible investing is not an area I have thought about since college, so I appreciate you forcing me to think about it. We already invest almost entirely in the S&P 500, but I was considering putting new money into the Total Market Index to change our exposure a little. Now you have made me reconsider.

    I have worked for non-profits for all of my career, and the idea of one small step is a powerful one. We should not give up or fail to do something just because our own actions will have limited impact. Small actions by thousands of people collectively become powerful movements for change.

  46. Ryan says:

    Hey Doom, longtime reader and big fan of your site. I understand the position you’re coming from and I certainly think this is an interesting issue. I’m not sure where I stand on all this but I appreciate you bringing it up.

    What disappointed me with this post was your characterization and overall conversation with the Vanguard reps. To put it bluntly, you were a pain in the ass and borderline rude (“anyone internally that might give a shit”) to that rep and his or her supervisor. And to what end? How much influence do you think those two people have over VFTSX fund holdings? And, after your conversation, do you think they’ll want to even try?

    There are better way to get your point across. Write a well-written letter to the portfolio manager(s) of VFTSX. (It looks like this would be William Coleman and Gerard O’Reilly.) I’ve worked in customer support (including a call center – not in the financial industry, however) and you would be surprised how high up the food chain a physical letter gets. Of course, your letter may not accomplish anything, but if you’re going to tilt at windmills at least tilt at the right ones.

    Lastly, calling the first rep a low-level moron is just a cheap shot and I think you know it. I’m still a fan of your work and I plan to keep reading but I think you’re better than this.

    • Stockbeard says:

      Hey Ryan, Having been following LivingAFI for a while now I can tell you that what he writes needs to often be taken to the second degree. His writing is extremely cynical, and I am pretty sure that:

      1) He was actually polite with the representatives, and his writing here is a “re-enacted” version, a “director’s cut” or “artistic vision” of what actually happened, representing his frustration, not what actually happened word for word.

      2) him calling the CS representative a “low-level moron” in the article does not necessarily represent what he thinks of that person, but what the company and society as a whole thinks of that kind of job. It’s a bit “meta” and I’m not sure I’m making my point easy to understand here, but when I read “low level moron”, what I understand here: “sorry buddy, I have a very precise question, and I know that you are put by your company as a shield between me and higher-paid people who don’t want to deal directly with customers, but I also know that you won’t have the answer for me because your company has only trained you to answer very simple questions and be nice to customers, so we should just skip that part and let me talk to a manager asap”

      Also, Dr Doom is fundamentally evil. Calling us petty corporate workers “low level morons” is what I expect of his articles.

    • livafi says:

      Hey Ryan

      Truth is, I alter conversations to keep content realistic while spicing up the interaction, mostly for entertainment purposes. In real life, I did not at any time swear at the reps or show disrespect. I am calling them asking for their time to help me with an issue, and they are doing their best to help me to address it — I see these calls as us working together to solve a problem, as best as we can. To that end, they were very helpful.

      I also received a very detailed response from Vanguard via email on Tuesday of this week, so it turns out that the supervisor took it upon himself to follow up on my concerns. In the end, I honestly couldn’t have asked for better service. I’m appending the post with their written response so you can check it out. This whole interaction actually affirms my belief that they’re the best mutual fund provider out there.

      Appreciate you challenging the apparent rudeness. The world would be a better place if we called assholes out more regularly. I’ve held customer facing jobs myself and I know that it’s tough to handle certain types. Not just saying this — I outlined some of my experiences a while back in the ‘job experience’ set of posts. I’m a battle scarred veteran when it comes to handling people who behave exactly as the fictional Dr. Doom behaved here, meaning: Like a dick.

      @Stockbeard, I just saw your comment — Dude, you appear to know my personality and writing style too well. Your guesses were a tiny bit too close to the truth for my comfort. Do you know where I live, too? 😀

      Locking the comments on this one. Folks, if you read the entire post (plus all of the comments), and you still feel you have something unique to add please send me a note via the contact form and I’ll get ‘er done for you.

      Thanks to everyone who shared their views, except PaulH.

  47. Pingback: Church of FI – Gun Rant and Living a FI | The Jolly Ledger

  48. Pingback: How To Divest from Specific Stocks in Wealthfront – Evgenia Got Free

  49. britinkiwi says:

    Here in NZ there are some restrictions to supporting companies involved in tobacco, nuclear weapons, cluster munitions and landmines manufacture (eg https://www.radionz.co.nz/news/political/313342/minister-no-need-to-change-weapon-investment-laws)

    So much so that that we have our own Vanguard fund – Vanguard International Shares Select Exclusions Index Fund (VISSXU) which has a cost of 0.2% and 0.26% if currency hedged.

    Whilst I’m not fully with you on some of your thoughts around nuclear power, agri-chemicals and energy companies (it will be interesting to see how the court cases work out) you make some good points around the downright lunacy of gun ownership in the US. And NZ is hardly as gun restricted as Australia or the UK (both tightened gun law following significant mass shootings – Port Arthur; Dunblane and Hungerford, respectively) but proportionally we don’t have events happening month in month out like in the USA.

    Will divestment make a difference? Possibly not in the short term but as a statement of societal change it plants some seeds……and that’s important in a democracy.

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