Responsible Investing With Your Own Personal Values

Our personal values are incredibly important to successful investing. Almost no one talks about how to connect your values or your heart to where your money is going.

I think it is the most important vote in your life to invest your money into the things that you value and that you want to see in the world 20 years from now.


The Importance of Investing in What You Value

Remember that wherever you’re putting your money is what is going to grow in the world.

I know that you don’t think you’re going to change the world by investing your $1,000, $10,000 or even your million dollars given that the stock market is something like $15 trillion. Think about this, we as a group as small investors have 85% of the money in the stock market. The California Teacher’s Retirement Fund is one of the biggest investors in the world. All of those teachers have about $180 billion invested in the stock market. It’s unbelievable how powerful we can be when we vote our money in the right direction.

By making the decision to invest based on our personal values, we can change the world radically. Probably faster than any single thing we could do is to vote our money where our values are.

What Are Your Values?

Now how do you know what your values are? Your values are what you do. Your values are not what you say you’re going to do.

What you say you are going to do, are called our intentions. When we talk about our values we talk about the things that we are promising ourselves to do. We promise ourselves to be honest, we promise ourselves to buy companies that we really want to see in the world.

Related: “Socially Responsible Investing” Using Rule #1 and Thinking for Yourself

Don’t Let Someone Else Invest in Their Values

Let me explain something really important. If you’re investing in a mutual fund, you’re handing over your values to some fund manager who doesn’t have the same value set. He’s investing in his values and his values may be, “I’m going to invest in Altria because they make cigarettes, and maybe that’s a company that may go up in price, and maybe we can make some money.”

But, you’re making money doing something that maybe you’re telling your kids not to do and if you think about it, that makes you a hypocrite We don’t want to be hypocrites to our children right?

If we say, “Hey look, don’t be smoking, its not a good idea.” But we own a piece of the company that makes cigarettes, that’s an incredibly hypocritical point of view and our kids get tuned into that.

I also think that what goes around comes around and you get to get results from your karma. If your mutual fund manager is buying companies that you personally think are really bad, that’s kind of bad karma here.

For example, I think Whole Foods is a wonderful business. They’re out there changing the world and every time I can buy the company on sale I’m going to do it because I want to invest in my values and in what I want to see in the world in 20 years.

Rule #1 investors are owners and, as owners, with a responsibility for what the company does.


If you can learn Rule #1 Investing, you can do the same thing and put your money where your heart is, invest your money in your values are and lets change the world together.

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About Phil Town – Phil Town is an investment advisor, hedge fund manager, two-time NY Times best-selling author, ex-Grand Canyon river guide and a former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence. You can follow him on google+, facebook, and twitter.

  • Joe R

    Garrett, it’s always a lot of homework to determine if the story changed or if the stock is being brought down by emotions/market weakness. Knowing the difference in stock piling can turn thousands into millions or thousands into less thousands …
    I know ur a BP fan, but ever looked at the Buffett owned NOV ? More of a equipment manufacturer but their big four growth numbers look awesome

  • Joe R

    Garrett good rules. On stockpiling on way down, I think a good rule is if the whole market is bringing it down (stocks being treated as a commodity) or a rare event type incident that doesn’t change 4M then stock piling is fine. If stocks are hit on weak earnings and doing bad for no reason probably not a good time to keep buying on way down.
    For example, buying on last months mega dip. Good companies got taken down just like bad ones.
    Buying due to speculation drops IE “reports” of Apple production problems or a few bad articles.

  • Garrett

    Mark Vesper,
    WFM is interesting, isn’t it? LOVE LOVE LOVE John Mackey. This guy is the real deal. I just don’t know about WFM as a “just one” for me.

    You can see from WFM’s chart that “The Big Guys” are just waiting to get in or get out based on their November 5th earnings report. There’s a lot of uncertainty. Which reminds me of something I just mentioned in a separate email to Phil. If you can get CERTAIN about WFM’s future, then other’s uncertainty is an opportunity for the Rule #1 Investor.

    Buffett said “Face up to two unpleasant facts: The future is never clear and you pay a very high price for a cheery consensus.”

    My position on WFM has been…wait. Just like with Bed Bath and Beyond. I didn’t want it bad enough that I was willing to go through a few earnings reports to see if it gapped. The risk was it might have gone up without me. The other risk was that I could have bought it to soon and had to sit on a loss.

    I’m waiting to see if WMF drops below $30.

    To Your Wealth!


  • Moncho


    I have been keeping tract of CLF over the years and watching its downward spiral into the low I/O pricing abyss along with all the drama that has unfolded. Well, the new CEO in charge has laid down some harda$$ ground rules with what he believes is a clear path to saving the company.

    I am first to say that I have been snowed by CEO’s in the past. What I believed was forthright I discovered later that was completely wrong. That upset me so now when a new CEO comes on board, I am a little skeptical. After reading the transcript of CLF”s recent conference call, I am a little less skeptical of the newest CEO as he “seems’ to be telling you his thoughts in a straight forward manner.

    With all that said, I am currently at a crossroads. I have mentioned in the past that analysts bug me but sometimes they can be right. As Phil has stated, “We are not that smart and they are not that dumb,” but what happens when we cross an analyst with a forward CEO? You get a response like this:

    “Stan Dubinsky – Wells Fargo
    Great, thanks. Thanks for taking my question. Just in the Q3 looks like pricing was pretty good in the U.S., better than I thought based from the [indiscernible]. Was there any higher price carry returning from the first half, just because I know there were some supply disruptions that pushed H1 into Q3 a little bit. Then I have a couple of follow-ups.

    Lourenco Goncalves (CEO of CLF)
    Stan, I appreciate you saying thank you for taking your question, but I’m not going to answer your question because you already know everything about my company. You have a $4 price target and you think that we can’t sell assets, so I’m going to take the next question, I’m not going to answer you.”

    Neither the analyst or Mr. Goncalves are getting a free pass as I will need at least the next two quarters to figure out who is right and/or wrong. This could be VERY interesting in the future.


    • Garrett


      That’s pretty funny! “…”You have a $4.00 price target…I’m not going to answer you”

      On the other hand, what if Wells Fargo analyst Stan Dubinsky is right and the CEO just slammed him for speaking his mind and looking out for us…the little guy?

      I’ve lost so much money being stupid and taking on too much risk that I just don’t know about CLF. I suppose that hypothetically if I bought CLF today and I ended up making money it would only be due to the fact that I got lucky buying at what really turned out to be the bottom.

      To Your Wealth!

      • moncho


        I agree that Goncalves could end up sticking his foot in this mouth. Currently doing some digging on him to see if he was successful in his past adventures. Also, I read the entire transcript and, compared to other CLF CEO’s in the past, it seems he laid out a concise/clear path of where he wants CLF to go and WHY he believes all will be well in time. It seems he also has a plan B in another folder somewhere and that I really like.

        Another excerpt from the call that caught my attention was his explanation of why they want to set aside $200M for buybacks:

        Goncalves – But the buyback was put in place quickly because I had no idea what would happen with the stock price. Let’s assume that anxious people will drive my stock price to a very, very low number. I would use the buyback. Well, apparently, this situation of misunderstanding is behind us. It doesn’t mean that I would not use the buyback, I may use the buyback. But the buyback is kind of a loaded gun that I put in my side table at night. It doesn’t mean that I’m going to shoot and it doesn’t mean that I’m going to kill anybody. But the gun is there for my protection.

        I like that he is thinking about a $10 bill for $5. If the shorts want to drive it down to $5 ( I am guessing that have been his target as $5-6 sees reasonable based on charts, news and possible EVENT drama unfolding over the last few months) he was ready to use the money to buy back shares when they were dirt cheap based on his homework.

        We will see what happens in the next few quarters. I did a small $8 LEAP in JAN 16 and that was about it.


  • Garrett


    BP posted earnings so there are lots of Seeking Alpha articles to read along with the quarterly transcripts.

    I generally like to wait a few days to let the “Big Guys” digest the data and the smart people write all those articles/opinions. Then I decide what I’m going to do.

    However, I like this tid-bit of information from one of the bullets:

    Q3 Operating cash flow $9.4B vs. $6.3B in 3Q13.“BP’s operational momentum continues to deliver results”. “Growing underlying production of oil and gas and a good downstream performance generated strong cash flow in the third quarter, despite lower oil prices. This keeps us well on track to hit our targets for 2014.” BP said.

    BP has a lot of Capital Expenditures that they will need to pay for. One concern was that BP wouldn’t have sufficient cash flow to pay for all that stuff AND deliver shareholder value – pay the div, buyback shares and continue to grow the company.

    Lots of stuff to read. But this is how we get an “inch wide, mile deep”

    To Your Wealth!


    • Josh

      Operating cash is huge. This is allowing bp to increase the div and do more buy backs. I like it a lot.

  • Garrett


    Today we had an interesting email stream going back and forth with some of my fellow Rule #1 Buddies. Some of us manage accounts for our family and we’re all very conservative with what we do in those accounts because we don’t want to lose our parents money!

    You can imagine that if you were managing your parents money, you’d probably feel a significant responsibility to make wise decisions.

    What was interesting was that the three of us who are managing other people’s accounts we all said we managed risk better and did significantly less speculating. And the result? We ALL had better returns in the accounts we were managing for others than in our own accounts!!

    I’ve had significant six figure losses in my accounts over the years and the only reason I don’t give up is because I know you can make the money back. You just have to stick to Rule #1 Fundamentals.

    And a few key lessons:
    1) Stick to the 4M’s
    2) Manage risk. Risk is eliminated/reduced when you do the 4M’s. Low RISK =’s HIGH RETURNS! The Financial Services Industry tells you just the opposite. They say, “High Risk =’s High Returns”…that’s such a stupid statement only the government could come up with it and make it a law to say it.
    3) Mitigate losses early -I.E. avoid violating Rule #1. If “The Story” changes for the worse, then “get out”…IBM is an example in my opinion. I was bullish on IBM up until the last earnings report. I don’t really know where they’re headed anymore. And I wouldn’t be surprised if the CEO gets ousted. I got out of IBM before the earnings report only because I wanted to store up cash and get out at/near a top. Just lucky, I guess.
    4) Don’t stockpile something on the way down thinking “I’m getting it at a better price” if “The Story” changes for the worse and you can’t get clear on when it will get resolved. Even Buffett makes HUGE mistakes sometimes. Read about his investment in Tesco.
    5) Manaage YOUR money as if it were YOUR PARENTS MONEY!! You’ll avoid being speculative and end up with better returns! At least that’s what my Rule #1 Wealth Buddies and I have learned over the last few years.

    To Your Wealth!


  • Hanno

    I like this karma thing. I believe in that too. Great!
    A piece of idealism you want to teach within here. I miss idealism today. We gotta lot of it in the 80s and 90s. It died out afterwards. I like these things. It needs critical point of view and the ability to take responsibility. Important thing.