Monday, September 8, 2014

Is green the new "in the black"?

NOTE: The search function on the blog seems to be acting up again. If you're trying to find a specific entry, I'd recommend either using the labels in the word cloud at right or looking for the title in the list of archived articles. Sooner or later Google will get it sorted out, but there's little I can do to make them fix it any faster.

Every so often, as a reward for taking online surveys, I'll be offered a free or nearly-free magazine subscription. I'm probably confusing the heck out of our mail carrier, because my monthly mail currently includes Mother Earth News (which I actually paid for), the highly intellectual monthly The Atlantic, the almost entirely vapid Redbook, and Kiplinger's Personal Finance. This last one was a sort of impulse purchase; I feel like I'm already pretty good at saving money, but I wondered whether a finance magazine could help me get better at getting my savings to work for me. I have already branched out a bit beyond "stick it in the bank and forget about it," which isn't really a viable strategy when the best annual rate you can possibly get on a savings account is less than 1 percent, but I know I still have a lot to learn.

So far, my reaction to the magazine has been mixed. I find some of the longer articles, like this month's cover story on "How Much You Really Need to Retire," quite interesting and at least somewhat useful. However, most of the articles in the "Investing" section are way too specific to be helpful to me. They tend to focus on which individual stocks are the best choices, while overlooking the rather glaring fact that most investors shouldn't be trying to pick individual stocks at all. (Indeed, as this Forbes article points out, even most professional money managers can't do it well enough to beat the performance of the market as a whole.) So usually, I just skim the articles in this section.

This month, however, I happened across a piece of advice that made me stop and take notice. It was in an article called "7 Stocks for the Next 15 Years," which is all about specific stocks that are good picks for investors who like to "buy and hold" (i.e., buy a stock and then just sit there and collect dividends, rather than wait for it to go up so they can sell it again). What struck me about it was that two of the seven picks were companies with a green focus. Whole Foods Market, according to author James K. Glassman, is poised for growth as "organic, fresh and local food goes mainstream," while Chipotle Mexican Grill, which uses locally sourced veggies and organic pork and chicken, is "growing like crazy" and still has plenty of room to expand further.

Given that so few large companies have a strong focus on sustainability, why is it that such a large percentage of Glassman's favorites for long-term growth fall into this category? He offers a hint in saying, as an intro to his recommendation for Whole Foods, "I love companies that forge an emotional connection with their customers." A company like Chipotle doesn't just sell burritos; it sells ideals. People who eat there aren't just buying lunch; they're buying an image of themselves that they can feel good about. (The company is obviously well aware of this, as its marketing focuses on the ways in which it's different from other big food distributors like its former parent company, McDonald's.)

Seeing these stocks on the best-picks list is encouraging in two ways. It's good to know that this financial expert thinks these two particular green companies are likely to grow and thrive, but better yet is the possibility that seeing the edge they gain from their "emotional connection with their customers" will encourage other big companies to adopt more sustainable practices too. Even if their efforts are no more than greenwashing, just a hint of green spread across a really big base like Wal-Mart's can make a big difference overall. Maybe in the future, companies will fight to earn a place in the "Green 500" Index, and my list of Stuff Green People Like will be a key to the hottest sectors of the market.
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