I give an example here. I am invested in HSBC - the world's local bank - for a pretty long time. That was way back in 2007 when I just started this blog. Back then, the financial crisis had not happened yet and in the span of almost 8 years, a lot had changed. The whole landscape of the global financial markets had been changed and now you heard not only of companies bankrupting but also countries!
Back in June, I saw news of HSBC laying off 50,000 people globally to cut their annual cost. If you're seeing this through the eyes of an investor, you should be happy. And indeed, the stock price went up briefly following the release of this news. We're talking about cutting annual cost by up to $5 billion annually, so of course this brings the company a better set of numbers and a healthier overall ratios.
But if you're the employees working there? Seen through the eyes of the employees, there's only one word to describe this feeling - 'sian'. This isn't the first bank doing such head count cuts. I believe a few global banks, including Standard chartered, also did the same to adjust to the global changes that is sweeping across the financial landscape.
So the question is, is it fair for the top honchos to decide on the direction of the company, reaping the possible rewards of their actions and yet the risk is taken by the grunts of the company? Even if the decision turns out to be a bad one and the top honchos have to resign, they do so with a huge bonus, a golden handshake and possible another good career for them in the next MNC. How would you feel about this? It's not just this laying off that pisses me off but it's also the numerous charges laid upon them on money laundering and also other shady business that investment banks do.
Does ethics matter to you when you're doing investing?
I thought about this question long ago when I first started dabbling into the market. Back then, my stance was that we don't always know what the company is doing but what we can do is to reap the profits or dividends and do what we think is right with that money. But slowly, I'm wondering if that's the right decision. These days, I don't mind paying more for a local startup cafe just to support their business and what that represents, instead of some heartless MNC with dubious morals.
Does investing in a vice business troubles you? Does it make you sleepless at night? I've since reduced my allocation in HSBC by half but still hold a portion of it in my portofolio.