The novice enters the stock markets looking for a quick buck. Many quick bucks. The investors who have been burnt before, approach their investment portfolios with more caution.

“Going fast”, said my son as he rubbed his eyes “is not a bad thing.”

Those were his first words of that day.

He must have dwelt over the discussion we had the previous night on how fast he can ride his scooter.

“Speeding”, I had cautioned, “is not a good thing. You can get hurt, break your bones, and then no more scooter-riding for a long time.”

But that is the classic clash of a generational gap: the bravery of youth versus the caution of age.

And so it is in investments. The novice enters the stock markets looking for a quick buck. Many quick bucks.

The investors who have been burnt before, approach their investment portfolios with more caution.

Yes, it is enjoyable to zip down the slopes with the wind breaking through your hair, but….where are the stones along the path? Where are the bumps that can throw you off balance? Where is the other scooter that can come zipping down from any other side and zap you?

What if…oh, so many things can go “wrong”?

A seasoned investor is a worrier. But he can still be a warrior - brave enough to head out into the battle and seek investment opportunities.

And there are many investments out there which will make investors a lot of money.

Each have their risks, each have their bumps.

Assess them yourself - or pay an advisor or mutual fund manager to assess them for you.

Of course, everyone will make mistakes as we seek returns from our investments. That is the natural order of things. But, do we learn from these past mistakes? And have fewer errors of judgements in the future? Or, are we investment managers rolling the dice based on some “I still win, no matter what happens to your money” attitude.

External morality

“Where did you park your car” I was asked by my host - a “player” in the financial markets in New York where he worked for one of the largest financial firms in the world. He was in Miami, Florida for a holiday and had invited some friends over for dinner.

“Outside the building at a parking meter - but I need to go and fill in coins later”, I replied.

“Oh, that is okay - the fine for parking illegally is only USD 15 here. In New York the fine is USD 75, so I am more careful there”, he rationalised.

A good assessment of risk-return - and a price tab on doing the correct thing.

It is okay to park illegally in Miami because the fine is “affordable”.

It is not okay to park illegally in New York because the parking fine is higher.

And so it must be with many of my colleagues in the field of investments.

The advice offered could be based on, “what can I get away with?”

Not based on: what is the right thing to do.

But, is there a place for morality in investments?

The role for morality in investments.

I heard the Chairman of ITC give a very interesting speech on how ITC is helping the farmers and local people in villages. It was fascinating how ITC was trying to change their lives.

And then there was a question from a member of the audience: Sir, how do you reconcile the fact that ITC makes profits from selling products that are known to kill and hurt people and then using some of those profits to help some farmers?

The response was: ITC is doing less of tobacco products and we are diversifying into making food and other products. If we were to stop selling tobacco items, there would be hundreds of thousands of people without a job and no means of earning any money.

In essence: ITC cannot stop doing a bad thing because it is bad and its “badness” is pretty popular.

True, there is no law that stops tobacco items from being sold. In fact, governments around the world collect taxes on tobacco products (and liquor and gambling) and, in some sense, rationalise the “sin” of producing a “bad” product.

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