[lukasLansky]

Does this actually make a diffence, from game-theoretical perspective? It seems to me that if substantial amount of investors start to bias in a certain direction, it will only create an opportunity for active investors to earn money by betting in the other direction, and these active investors will "fix" the "bad" price. Maybe it's not a coincidence those indices perform as well as the rest of the market, as you observed?

These active investors don't even have to realize their strategy is based on going against nice guys -- they might be led purely by statistical performance.

I'm not trying to be needlessly cynical. I like effective altruism for example. I'm just not sure stock market is a good battleground for ethics.

[arawde]

There's a solid piece about this from Clifford Asness over at AQR https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-...

[floki999]

I don't disagree with his thought experiement/model. Quite ironic though. Only five years ago I doubt Cliff would have invested time in thinking about this (I did work for him). The fact that AQR is paying attention and feels the need to express themselves on the topic speaks volumes.

[oarabbus_]

There is research suggesting that "sin" or "vice" stocks outperform, as many people refuse to touch them, therefor creating an artificially lower demand which corrects itself by those who don't have the ethical dilemmas being able to pick up greater amounts of undervalued shares.

https://www.robeco.com/en/insights/2017/09/research-reveals-...

[bcoates]

That link says the opposite -- that the vice premium disappears once you factor in their unusual capital structure.

Essentially, sin stocks are unusually well managed because they can't be used for empire-building by crappy executives.

[andy_ppp]

It depends if the people are betting that climate change is real and these companies will start to be treated differently are correct. Could be another 4 years before changes happen...

[lukasLansky]

I agree. If a smart investor notices that a company business model stops working the moment governments pass legislation introducing carbon markets, it's a good investment strategy to short the stock. But notice that it's the government that is doing the heavy lifting here, investors are just diligently passing the shock from the future so resources are not wasted.

If there is a climate catastrophe going to happen, but no government is going to punish companies responsible, it won't make sense to try to do that for yourself -- in the same way bad corporations are freeriding on climate, bad investors are freeriding on your efforts to punish such corporations.

[floki999]

We are beyond that point. Climate change is real - I think most sophisticated investors have done enough due-diligence to come to that conclusion, despite all the uncertainties.

Investors and traders eat uncertainty for breakfast, lunch and dinner. It doesn’t stop them from making trading decisions. It’s what keeps market ticking.

[benj111]

By choosing the ethical investment you are in a sense becoming an active investor betting against none ethical investments.

Trying to reason about whether the stock market is a good battleground. If you know I wouldn't want to buy your investment, surely that lowers how much you'd value it, as does the potential for having to pay a premium on bonds. As a CEO your share based compensation starts to look less attractive as does the whole idea of presiding over a company potentially on the wrong did of history. So I wouldn't say its a pointless battle.

Lets take Uber, on one level its worth billions, but it makes no money, if everyone avoided the stock and debt it would run into problems pretty quickly. It is worth billions only because sufficient people believe it is/ will be worth that much, if enough people avoid it, it isn't going to be worth that.