The Feel-Good Investing Myth That Hurts Your Returns
Why “Buying What You Believe In” Isn’t a Strategy.
A lot of new investors say things like:
“I only buy stock in companies I believe in.”
It sounds noble.
But it’s not how investing actually works.
When you buy a company’s stock, you’re not supporting them, at least not in the way you support a small business or a charity.
Your dollars don’t go toward their operations, paychecks, or research budget.
Here’s the truth:
The only time your money ever touches the company is during its initial public offering (IPO), when it sells shares publicly for the first time.
Every other time you buy a stock, you’re just buying it from another investor who already owned it. The company never sees a dime.
Not the company. Not the CEO. Not the brand you love.
That’s the part most people miss.
Let’s put this into perspective:
Apple’s current market cap is around $4 trillion. If you bought 1,000 shares (roughly a $275,000 investment), you’d own 0.000007% of Apple. Not exactly enough to influence Tim Cook’s next product launch.
So no, you’re not “helping” Apple. You’re simply making a bet on how the market will value Apple in the future.
But what about investing with values?
You don’t have to buy companies that clash with your morals.
For example, if tobacco, gambling, or defense stocks don’t sit right with you, skip them. That’s the essence of socially responsible investing (SRI) or ESG investing; putting your money where your values are.
Just know this: “taboo” stocks often outperform.
In good times, people celebrate by drinking, smoking, and spending.
In bad times, they cope the same way.
That consistency makes those industries wildly profitable.
Even Warren Buffett has noted that tobacco companies historically produced some of the highest margins in the market. Addictive product, low cost, loyal customer base.
And Milton Friedman, the famous free-market economist, would argue that a company’s social responsibility is to maximize profits.
Should you only invest in brands you use?
It’s not the worst idea. You understand their products and business model better than most.
But it’s also biased.
You’ll miss entire sectors you don’t interact with, like dialysis clinics, logistics firms, or semiconductor manufacturers – ones that quietly mint fortunes!
Detach emotion from investing.
A company isn’t “good” or “bad.” It’s either overvalued or undervalued.
That’s not a moral question. It’s a math one.
When you stop treating investing like a show of support, you start treating it like a strategy.
And that’s where real wealth building begins.