May 16, 2008

Ben Stein and Genocide: Has He Expelled Fidelity Yet?

Ben Stein told us recently that science leads to killing. I'd like to propose a different and far more empirically sound scenario: Greed kills.

Sometimes, greed contributes to genocide.

Need an example? OK, here's an example, and it involves Ben Stein's money. Specifically, Ben Stein's money is invested in companies that are right now, today, right here on good old planet earth, are contributing to genocide. This isn't something sketchy and vague, either.

The story begins with a company called Fidelity Investments. Fidelity manages a number of investment funds. Twelve times now, propositions have been put before Fidelity and its shareholders to stop investing the money from those funds in companies that are directly involved with things like genocide in Sudan and human rights oppression in China and southeast Asia.

Welve times now, Fidelity's management has actively advised its shareholders to vote down the propositions. The last time this happened was just a few days ago, on May 14:

More Fidelity funds reject genocide-linked proposal
Reuters, Wednesday May 14 2008

BOSTON, May 14 (Reuters) - Shareholders of six more Fidelity Investments funds rejected on Wednesday a proposal to halt investments in companies linked to genocide, bringing to 12 the number of funds to block the idea floated by activists...

The non-binding proposal had asked the boards of 32 Fidelity funds in all to "screen out investments in companies that, in the judgment of the board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity..."

Six other Fidelity funds already rejected the proposal in the past two months, making it the first U.S. mutual fund group to hold votes on such as measure.

Fidelity, which manages about $1.5 trillion in assets in 450 funds, had urged shareholders to reject it. The company has long maintained its investments are legal under U.S. laws and it is obligated to achieve the best returns for shareholders...

Experts estimate 200,000 people have been killed and 2.5 million uprooted in the Sudanese region's conflict, which started in 2003 and pits mostly non-Arab rebel groups against the Khartoum government and Arab militias.

The activist campaigns have had some success. Many U.S. universities and states have taken steps to divest Sudan-linked holdings. Last year, a Fidelity fund sold a big chunk of its PetroChina holdings, while Buffett sold his entire holding.

The U.S. Congress passed legislation last year to shield mutual funds and private pension funds from investor lawsuits if they divested shares of companies active in Sudan.
So, that's where Fidelity Investments is at.

Now, here's a model investment portfolio that Ben Stein has recommended on several occasions:
Ben Stein’s Long-Term Portfolio:
- 30% in Fidelity Spartan Total Market Index (FSTMX) or Total Stock Market ETF (VTI)
- 15% to 20% in iShares MSCI EAFE Index (EFA)
- 10% in iShares MSCI Emerging Markets Index (EEM) or Emerging Markets 50 ADR (ADRE)
- 10% in iShares Cohen & Steers Realty Majors (ICF)
- 10% in iShares Russell 2000 Value Index (IWN)
- 15% in Cash


Here's another example of Ben Stein advising someone to invest with Fidelity (and Vanguard, also brought up in the Reuters article above) dated June 13, 2007.
What I generally recommend for the noncash portion of your portfolio - and this has been unbelievably successful - is a mix of various index funds and exchange-traded funds [ETFs], with roughly 25 percent in an S&P 500 index fund from Vanguard or Fidelity...
I'm sure I could find some more if I poked around, but if you care to look, you'll find that Stein frequently mentions Fidelity in his "perfect portfolio" plans. Unless he's not following his own investment advice, I think it's safe to assume that Fidelity has won some of Ben Stein's money.

Has Ben Stein stopped investing money with a firm that turns around and puts it into companies that profit from mass murder? Does he actually care at all about genocide? I'm sure he's already hard at work on a film about how terrible corporate greed and amoral capitalism are and how they undermine the value of human life when their proponents believe that their primary responsibility is to make as much money as possible no matter how.

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