Imagine for a moment that you’re a successful venture capitalist.  You’ve spent your career finding small companies worthy of investment.  You know how to spot a good company worth the money you manage.  This has been a lucrative career for you and you’re fortunate enough to retire early enough to take up a cause.  What do you do?

Naturally, you assume everyone has the skill and money that you do and recommend that they do the same thing you do.

Well, you’d do that if you were a self-righteous ass with more time than brains.  Meet Woody Tasch.  Woody sets his loins on fire with socially responsible investing now that he’s retired from his days as a venture capitalist.  Socially responsible investing is the idea of investing your money in worthy causes instead of chasing the maximum possible return.  In Woody’s case the cause is organic farming.  Imagine you have the choice between investing in the S&P 500 for a return of 10% or loaning your money to an organic farmer at 5% and you get the idea.

There’s nothing wrong with Woody standing up straight behind socially responsible investing (I’m sure it helps him sleep better at night) but the problem is his angle.

He wants you to disregard the risk that comes with investing in small companies.  He wants you, the person that struggles even to make 10% a year and wonders if that will get you to retirement, to trade in those equities for funding organic goat cheese.  He wants you to ignore the liquidity that comes with investing in the stock or bond markets and instead lock up your money for many years with no real idea of what the return will be.

That is the wrong way to get people’s attention.  His branding on the new investment philosophy is even worse “Slow Money Investing”.  Now we all know we can’t get rich over night, but Woody here is concerned about billions of dollars “zipping” through the markets, not get rich quick things.  In fact, by his own complaints, he feels the markets are too liquid.

So, what we have here is a guy who thinks you should ignore the less risky, higher returning, and immensely more liquid equity and bond markets for the high risk, low return, and illiquid world of socially responsible investing.

Woody, I got no problem with you promoting socially responsible investing.  I wish I were rich enough to go do something like that.  But you can’t bash traditional investing and expect us to trade in the S&P for returns that manage to match inflation, before tax.

All that and I didn’t even talk about how organic farming isn’t sustainable for the masses.  I’m not sure if I should be proud or disappointed of myself.

Photo: iLoveButter

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categories: business, environment, investing