I’m wondering if the idea of investing in “good” companies make sense from a purely self-centered perspective.
Assuming there’s two types of companies: A and B.
Assume that you think a future in which the vision of “A” comes true is a good future and future in which the vision of “B” comes true is a bad future.
You can think of A as being whatever makes you happy, some examples might be: longevity, symbolic AI, market healthcare, sustainable energy, cheap housing… thing that you are very certain you want in the future and that you are unlikely not to want (again, these are examples, I am NOT saying I think everyone or even a majority of people would agree with this, replace them with whatever company you think is doing what you want to see more of).
You can think of B as being neutral or bad, some examples might be: MIA companies, state-backed rent-seeking companies (e.g. student debt, US health insurance), companies exploiting resources which will become scarce in the long run… etc.
It seems intuitive that if you can find company A1 and company B1 with similar indicators as to their market performance, you would get better yield investing in A1 as opposed to B1. Since in the future scenario where B1 is a good long term investment, the future looks kinda bleak anyway and the money might not matter so much. In the future scenario where A1 is a good long term investment, the future is nice and has <insert whatever you like>, so you have plenty of nice things to do with said money.
Which would seem to give a clear edge to the idea of investing in companies doing things which you consider to be “good”, assuming they are indistinguishable from companies doing things which you consider to be “bad” in terms of relevant financial metrics. Since you’re basically risking the loss of money you could have in a hypothetical future you wouldn’t want to live in anyway, and you are betting said money to maximize your utility in the future you want to live in.
Then again, considering that a lot of “good” companies on many metrics are newer and thus more risky and possibly overpriced I’m not sure how easy this heuristic could be applied with success in the real world.
Since you’re basically risking the loss of money you could have in a hypothetical future you wouldn’t want to live in anyway, and you are betting said money to maximize your utility in the future you want to live in.
Actually, this is backwards; by investing in companies that are worth more in worlds you like and worth less in worlds you don’t, you’re increasing variance, but variance is bad (when investing at scale, you generally pay money to reduce variance and are paid money to accept variance).
Actually, this is backwards; by investing in companies that are worth more in worlds you like and worth less in worlds you don’t, you’re increasing variance
If you treat the “world you dislike” as one where you can still get about the same bang for you buck, yes.
But I think this wouldn’t be the case with a lot of good/bad visions of the future pairs.
Example:
BELIEF: You believe healthcare will advance past treating symptoms and move into epigenetically correcting the mechanisms that induce tissue degeneration.
a) You invest in this vision, it doesn’t come to pass. You die poor~ish and in horrible suffering at 70.
b) You invest in a company that would make money on the downside of this vision (e.g. palliative care focused company). The vision doesn’t come to pass. You die rich but still in less horrible but more prolonged suffering at 76 (since you can afford more vacations, better food and better doctors).
c) You invest in this vision, it does come to pass. You have the money to afford the new treatments as soon as they are out on the market, now at 70 you regain most functionality you had at 20 and can expect another 30-40 years of healthy life, you hope that future developments will extent this.
d) You invest in a company that would make money on the downside of this vision, it does come to pass. You die poor~ish and in horrible suffering at 80 (because you couldn’t afford the best treatment), with the added spite for the fact that other people get to live for much longer.
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To put it more simply, money has more utility-buying power in “good” world than in “bad” world, assuming the “good” is created by the market (and thus purchasable).
I’m wondering if the idea of investing in “good” companies make sense from a purely self-centered perspective.
Assuming there’s two types of companies: A and B.
Assume that you think a future in which the vision of “A” comes true is a good future and future in which the vision of “B” comes true is a bad future.
You can think of A as being whatever makes you happy, some examples might be: longevity, symbolic AI, market healthcare, sustainable energy, cheap housing… thing that you are very certain you want in the future and that you are unlikely not to want (again, these are examples, I am NOT saying I think everyone or even a majority of people would agree with this, replace them with whatever company you think is doing what you want to see more of).
You can think of B as being neutral or bad, some examples might be: MIA companies, state-backed rent-seeking companies (e.g. student debt, US health insurance), companies exploiting resources which will become scarce in the long run… etc.
It seems intuitive that if you can find company A1 and company B1 with similar indicators as to their market performance, you would get better yield investing in A1 as opposed to B1. Since in the future scenario where B1 is a good long term investment, the future looks kinda bleak anyway and the money might not matter so much. In the future scenario where A1 is a good long term investment, the future is nice and has <insert whatever you like>, so you have plenty of nice things to do with said money.
Which would seem to give a clear edge to the idea of investing in companies doing things which you consider to be “good”, assuming they are indistinguishable from companies doing things which you consider to be “bad” in terms of relevant financial metrics. Since you’re basically risking the loss of money you could have in a hypothetical future you wouldn’t want to live in anyway, and you are betting said money to maximize your utility in the future you want to live in.
Then again, considering that a lot of “good” companies on many metrics are newer and thus more risky and possibly overpriced I’m not sure how easy this heuristic could be applied with success in the real world.
Actually, this is backwards; by investing in companies that are worth more in worlds you like and worth less in worlds you don’t, you’re increasing variance, but variance is bad (when investing at scale, you generally pay money to reduce variance and are paid money to accept variance).
If you treat the “world you dislike” as one where you can still get about the same bang for you buck, yes.
But I think this wouldn’t be the case with a lot of good/bad visions of the future pairs.
Example:
BELIEF: You believe healthcare will advance past treating symptoms and move into epigenetically correcting the mechanisms that induce tissue degeneration.
a) You invest in this vision, it doesn’t come to pass. You die poor~ish and in horrible suffering at 70.
b) You invest in a company that would make money on the downside of this vision (e.g. palliative care focused company). The vision doesn’t come to pass. You die rich but still in less horrible but more prolonged suffering at 76 (since you can afford more vacations, better food and better doctors).
c) You invest in this vision, it does come to pass. You have the money to afford the new treatments as soon as they are out on the market, now at 70 you regain most functionality you had at 20 and can expect another 30-40 years of healthy life, you hope that future developments will extent this.
d) You invest in a company that would make money on the downside of this vision, it does come to pass. You die poor~ish and in horrible suffering at 80 (because you couldn’t afford the best treatment), with the added spite for the fact that other people get to live for much longer.
---
To put it more simply, money has more utility-buying power in “good” world than in “bad” world, assuming the “good” is created by the market (and thus purchasable).