Ethical investment is an area that all analysts must consider when determining exactly to what extent one is going to take advantage of a system that is structured so as to encourage lowest common denominator behaviour. The rewards for unethical and psychopathic profiles are so large that, inevitably, the wrong type of person is attracted to the marketplace. The willingness in business and markets to undertake destabilising, aggressive and illegal strategies is regarded as a competitive advantage and a rather unpleasant class of individual is being rewarded by our shareholder capitalist system in this rat race to the bottom of a barrel.
Is any investment or trading strategy strictly ethical? Well, certainly some of the alleged ethical investment boutiques are nothing of the sort but there are some operations out there who trade and invest within restricted self-imposed guidelines. It all depends on one's definition of the word "ethical". There are people who utilise religious thresholds in determining their strategies while others will take an anti-speciesist template. Fortunately, most houses that claim a moral high ground have the decency to publicise their respective mission statements which allows potential clients to see who they are getting into bed with. Beware though... Many unpleasant operations have subverted the term and, in some cases, ethical has come to mean that you might get paid your winnings on time! Think BP's rebranding as an environmentally aware Beyond Petroleum (Beyond Psychopathy?) before proceeding to rig the markets, bribe, lie to shareholders and flout safety regulations to the ultimate demise of their employees, for example.
This post is more concerned with the personal ethics of being involved in the marketplace. We all have to choose the level to which we are willing to be corrupted by our competitive system. We will look at sports and financial markets in turn.
By electing to create profit from sports betting markets, all traders must be aware that we are in a zero sum game ie there must be losers who are paying our wages. One can self-blinker and believe that the money we receive from our brokers and market makers is their personal money but it isn't. It's a combination of the money that they already grab from you through price scalping and transaction costs plus the remainder of your winnings that emanates from the wallets of the leisure punters. We trade almost exclusively in Asia and the victims of our success are other professionals who are out of their depth and I personally feel comfortable taking these individuals on head-to-head as they are almost exclusively significantly richer than me. It's simply a creative redistribution of assets. We do, however, undertake some late market trade enhancement and hedging around a selection of European firms. We rationalise that our limited Return On Investment (ROI) on these somewhat disinformational late book adjustments do not constitute an overly aggressive trading strategy although the key word here is rationalise - some poor individuals will suffer financial hardship by opposing one of our positions on the exchanges, for example. Am I comfortable with this threshold of abuse? No, not really. It is an accommodation of an imperfect world - I claim no kudos for my market input. Furthermore, however I define myself, it becomes an irrelevance when one commences consideration of the market impact of our early trading positions in the Far East. If the sports betting markets could be assigned a personality then psychopathic personality disorder (PPDs) would adequately describe the system. Our trades may be carefully placed but all brokers undertake cloning strategies where they analyse thoroughly the accounts of winning clients in order to enhance their own proprietary market input. This networking inevitably results in some unsavoury sorts benefiting from our presence in the market.
It might take a whole bunch of selective rationalisation to feel comfortable about sports market trading but this pales into degrees of insignificance when compared with the mind warp necessary to feel good about the global financial markets. Gambling addicts are victims, sure enough, but the victims of our financial edifice are continental in their range. Can there be any such thing as an ethical investment if such investment buys into this abusive PPDs system? Can we create a similar threshold of accommodation as we have with regard to the footie markets? How do we politicise this process? Indeed, can this process be politicised?
Firstly, there must be some market sectors that are not worthy of consideration due to the very nature of their business sectors and models. Our Trading Team have developed a list of such sectors that we will never, under any circumstances, support either financially, analytically or on an advisory level. The arms industry, for obvious reasons, is a no-no as is the pharmaceutical industry. Both these sectors are entirely abusive in their global strategies. Their success is dependent on geopolitical destabilisation and the privatisation of our health. Oh, and fear... The degree of PPDs in both of these areas is totally apparent - think cluster bombs; Big Pharma's attitude to HIV/AIDS in Africa; chemical/biological weapons; pharmaceutical support for charities that address areas of potential pseudo-medicine (like hyperactivity in children) in order to create a market for their products etc etc etc. The lobbying tactics of both these sectors also reeks of psychopathy.
Our Trading Team's threshold of willingness to get involved in international financial markets (IFMs) is highly selective and we won't bore you with the full details here but one point must be addressed. Almost every amateur trader on any type of market has a difficulty in compartmentalising their attitudes to being in favour of an event happening or against. For example, football betting markets are skewed by the major teams being overbet on a liquidity level. The psychological base position is that it feels more comfortable to be supportive of Manchester United at 1/6 (1.16) against Sheffield United than it is to sell Man Utd at -2.0 on the Asian Handicaps. Similarly in the IFMs. Additionally, the financial markets possess a built-in infrastructural bias in that a share, once purchased, may increase by 1000% or more whereas the same share, obviously, can only lose 100% of it's current value. It is against this unlevel playing field that we activate the main part of our trading strategy on the IFMs. Short-selling is the taking on an active market position against the interests of the business in which you are "investing". Effectively, a broker allows you to sell a share that you do not own in the knowledge that you will be able to buy that share back at a later date at a lower price after the market dynamics have punished the company for whatever it is that indicates that their market price is overvalued. It's simply a trade in reverse. The selective use of a short-selling strategy is profitable and politically beautiful. There are still unpleasant network effects resulting in cloned profit but analysts and traders are able to directly target businesses and sectors that abuse the global financial system. It is all a matter of timing.
All sectors and individual businesses have windows where they are particularly vulnerable to short-selling. Think insurance companies, reinsurers and airlines post 9/11 or accountancy and consultancy firms in the aftermath of WorldCom and Enron. Pharmaceutical companies are today's most interesting targets - they are being rightfully undercut by 3rd World firms that are simply by-passing the protectionist restrictions on generic drugs while, at the same time, their R&D is producing less blockbuster drugs in the pipeline. When a loss of competitive edge is accompanied by negative sectoral systemic changes, the sell sign lights up for all analysts. This is particularly critical when, additionally, public opinion ranks Big Pharma at levels not seen since they decided thalidomide was a good idea. Hence Big Pharma's current strategy of persuading us that we have illusory health issues... There are more holistic manners of dealing with your sexual performance than viagra, for example!
Unfortunately, some sectors rarely, if ever, produce realistic short-selling opportunities as such sector's success is built into the fabric of the global infrastructural hierarchy - the arms industry is one such sector where the military/industrial/financial complex enforces a profitable business strategy by the maintenance of a state of continuous war (see Orwell!).
Short-selling is, undoubtedly, political. It represents one of the very few routes available to directly undermine abusive areas of the business world. PPDs sectors and organisations have no interest in ethics or morals. No amount of argument or persuasion will impact on their PPDs strategies. The only campaign that will truly impact is one based on undermining their power via targeting their bank balances and share prices. Advising people to short-sell GlaxoSmithKline, for instance, has greater impact than any amount of direct action. Hit them in the pocket! But don't just take my word for it... After 9/11 there was considerable impetus in the US to ban short-selling due to it's "unpatriotic" nature! "How dare you short-sell our insurance companies while we are all flying our flags on our lawns". A more preferable angle would have been "how dare you impose a globalised slavery onto the planet so that you can have those lawns in the first place, pal". Learning to short-sell = proper ethical investment...
Comprendez?
