# Morals and Investing in Emerging Markets



## Juggernaut92

Hello All,

I am trying to nail down an asset allocation for myself. So far I have got it mostly down (North american markets, developed markets, some canadian bonds, some canadian high dividend stocks). Recently I was reading a book called smarter investing. It talked about adding in the emerging market to your asset allocation because there is lots of future growth estimated to be there. Also, developed markets are expected to not average as much returns as they once did. That is just a prediction but something I am hearing from various sources.

Now I am open to getting an ETF that tracks emerging markets but one thing is stopping me. I keep hearing about corruption in the developing nations, human rights issues, lack of freedoms etc. I wanted to know how other investors saw the emerging markets. Now do not get me wrong. I am not boyscout but I was just interested in how others see it. Do you see it as just another opportunity get more returns year over year or do you see yourself somehow facilitating the negative things that are going on around there? Do you think people will invest regardless of the issues there or are people actively boycotting those markets?


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## MrMatt

If the jurisdiction is too corrupt it's a problem.

However if there is no investment, no capital there is no way to address the poverty, and in some areas it's pretty bad.

Building up industry will raise the standard of living for the people there. 

If you can get people from having nothing, or working for pennies a day, to having a job, where they get several pennies a day, or even a dollar, that's WAY better for them.
So I say, because I care about people, give them opportunity.

Also since there are reservations, and risk, in these areas, the returns can be quite good.


Secondly we have to push for proper enforcement of anti corruption laws.
Corruption is bad for pretty much everyone, and there are efforts to stamp it out. There will be poltiical interference (Trudeau and SNC), but at least it's technically illegal.


Finally, if being too abusive costs you your investments to be much richer, the corrupt and exploitive leaders will actually benefit from being "good enough" to not lose their access to your money.

Yes I see problems with giving money to corrupt leaders.
But I think this is outweighed by the benefits to the people there, my pocketbook, and incentivises improvements.

Also iPhone factory protests can help get public attention to the conditions.


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## Just a Guy

Not sure why you have any interest right now. It’s currently a once in a decade opportunity to make huge returns in the regular market, what’s the appeal of going to potentially corrupt ones?

If the regular market wasn’t doing so well, emerging markets may be worth a look, but right now there is no need to get into speculative stuff when stuff we know and use daily is doing gangbusters...


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## AltaRed

Separate from that, presumably you are all aware that MSCI, FTSE and S&P Global are dropping a number of Chinese companies from their indices.
Bloomberg

Emerging Markets has always been on my 'no go' list. Too much wild west, lack of regulation, shenanigans, corruption, currency devaluations, IMF rescues, etc. I probably do own a bit of EM in a few ETFs but would be happy to do without.

Canadian Table of Periodic Returns presents the volatility of EM. Take Gravol .....


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## Juggernaut92

@MrMatt :That is an interesting way of looking at it. I never even thought of it that way in the sense that it helps build up the underdeveloped economies.

@Just a Guy :The dow jones is back to its precovid levels and so is the S&P/TSX meaning that a lot of the discounted stocks have bounced back. Or do you still feel that their are a lot of discounted stocks to pick up?

@AltaRed : That is very interesting and it is the first time I have heard of this. It is nice to hear then that some companies are getting excluded from the markets based on their behavior on the world stage. That is interesting to see that chart. Thanks for sharing.


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## MrMatt

I also agree with JustaGuy, I was just responding to your moral concerns.

I think that fairness, lack of corruption and human rights are competitive advantages There is a feedback loop there, which is why it is so important that we protect them.

That's why I'm so passionate about human rights abuses, and politically focused.


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## Just a Guy

Juggernau, my crystal ball is no better than anyone else’, all I know is I’ve been easily getting double, if not triple digit returns over the past few months, with no signs of things slowing. The market is irrational I don’t predict its going to become sane anytime soon. I hear predictions of another crash soon, so we can do this ride allover again.


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## Covariance

Juggernaut92 said:


> Hello All,
> 
> I am trying to nail down an asset allocation for myself. So far I have got it mostly down (North american markets, developed markets, some canadian bonds, some canadian high dividend stocks).
> 
> Now I am open to getting an ETF that tracks emerging markets but one thing is stopping me. I keep hearing about corruption...


The issues you are concerned about are a far greater concern if you plan to buy shares in individual companies or an ETF for a specific country (as opposed to a broad based ETF).


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## AltaRed

Juggernaut92 said:


> @AltaRed : That is very interesting and it is the first time I have heard of this. It is nice to hear then that some companies are getting excluded from the markets based on their behavior on the world stage. That is interesting to see that chart. Thanks for sharing.


To be clear, most companies being dropped from the indices are those the White House is blacklisting for various reasons, e.g. theft of IP, vehicle for Chinese intelligence, politics, etc. Which speaks to the ethics and morals of those same companies even if they likely have no choice from their political masters.


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## Just a Guy

The other problem with emerging markets is the difficulties in getting true information about the companies. I remember many “highly rated“ companies turning out to be scams, despite being promoted by respectable brokerage firms.


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## latebuyer

I was surprised to find VEQT holds 10% allocation to emerging markets and that even excludes soth korea. I am not very happy about it as i thought emerging markets were riskier.


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## latebuyer

I notice XAW has 13% allocated to emerging markets so you have to watch these all in one funds.


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## MrMatt

Just a Guy said:


> The other problem with emerging markets is the difficulties in getting true information about the companies. I remember many “highly rated“ companies turning out to be scams, despite being promoted by respectable brokerage firms.


That's part of the corruption, that makes it riskier, and also makes it harder for legitimate companies to attract capital.

Corruption and lack of fairness is a scourge, and it's bad for everyone.


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## MrBlackhill

latebuyer said:


> I was surprised to find VEQT holds 10% allocation to emerging markets and that even excludes soth korea. I am not very happy about it as i thought emerging markets were riskier.





latebuyer said:


> I notice XAW has 13% allocated to emerging markets so you have to watch these all in one funds.


Buy XWD if you are concerned by a 10% exposure to EM. There's no EM in XWD.

I'm personally more concerned about the home bias of VEQT which has 30% exposure to Canada. It's also a way to add volatility to the portfolio, because Canada is highly concentrated.


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## Tostig

I don't see emerging markets as all that different from the North American markets. If I had to guess, they would be equivalent to the Russell 2000.

In terms of corruption, companies of North America aren't exactly squeaky clean either. Even the Vatican isn't immune to corruption. Here are some names to remind you:

Tycoelectronics
Nortel
Airbus
SNC-Lavalin
Bombardier
Hollinger
Bre-X

And then there are LTC facilities that operate in Ontario such as
Rivera
Chartwell
Exendicare

I could add that the Bloomberg/Schumer report and the Paulson report of 2007 were in response to corporate lobbyist calling for relaxing investment regulations because the US wasn't keeping up with the aggressiveness of the EU markets. Well, regulations were relaxed and the financial crisis occurred.

You never know what's going to show up until they do. So keep doing what you normally do and have a game plan because after the bad news hits, sometimes they rebound, sometimes they don't.


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## Just a Guy

Tostig, 

true North America has its share of corrupt companies...the difference between NA and emerging markets is you know the companies to avoid as you are able to list them...can you provide a list of corrupt companies in the emerging markets?


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## Tostig

Like I said, you never kn


Just a Guy said:


> Tostig,
> 
> true North America has its share of corrupt companies...the difference between NA and emerging markets is you know the companies to avoid as you are able to list them...can you provide a list of corrupt companies in the emerging markets?


Like I said, you never know what's going to show up until it does. Do you really know who to avoid right now that are in NA market index ETFs? I've been focusing on investing in index ETFs for Nasdaq, TSX and S&P and I have XIN. So what's the difference between these and emerging markets ETFs in terms of being able to identify corrupt companies? Not much.

I was on a flight somewhere and listening to an interview with the guy who wrote the book, Take Your Money and Run. It must have been after the Junk Bond crash of 1987. He said to invest in Junk Bonds for the high yield, Even if 1 out of 10 defaults, you still make enough from the remaining 9 to net a profit. Isn't that the same kind of risk if you're an IPO investor or an investor in small cap or penny stocks?


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## Just a Guy

Well, I remember talking with another guy about Nortel and it’s practices long before they collapsed. We both owned companies and had them approach us for business. Bombardier has been well known for years, sMc-lavlin was easy to avoid. Never got sucked into bre-x.

I also avoided hang-feng, magao and sinoforrest despite many firms heavily promoting them As sure things. All it took was a little common sense and patience.

I don’t advocate buying etfs because they get stuffed full of things others think are good.I stock pick and buy stuff I think is good. So far, I’ve managed to avoid every company on your list and, as I pointed out, suspected many of them to be corrupt based on my own research, long before the “experts” did.

personally, I only buy stocks for companies I know and understand, I don’t jump on bandwagons.


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## Tostig

I didn't investing in any of those companies either. No, sorry, I did buy Nortel on a dip and Bombardier on a dip but they didn't work out. I did make money on Placer Dome. Although, there were never any big issues with them, Canadian mining companies have the worse reputation around the world as being violators of human rights and the environment.

If I dug into every company of those index ETFs for companies to avoid, I would end up not investing in any of them. My own individual stock picking skills had been mediocre. I've won big on some and lost big on some. So I might as well cycle through the good companies I've hung on to since pre-financial crisis and those NA index ETFs.


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## Just a Guy

I also tend to wait for the crash which happens every ten years to start buying. That way the stocked generally go up. Since I only buy “good“ companies, in my opinion, I’ve done very well with my stock picking. This crisis I bought things like husky, Disney, coke, live nation, Boston pizza, TD, etc. Some of the companies, like husky, I didn’t really like, but it was $3, so I couldn’t resist.


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## MarcoE

Are companies from emerging markets more corrupt than companies here? ¯\_(ツ)_/¯ There is corruption everywhere. To avoid investing in immoral companies, you should pick companies based on their behavior, not their country of origin.


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## Juggernaut92

@MrMatt : I see. That is a good point.

@Just a Guy : Yes for sure. Getting accurate info is another thing that was of concern for me. What would you say is your way to get info on individual companies? go to yahoo finance and just read up on them?

@latebuyer : That is interesting. Although I always check the breakdown of the fund before i buy it.

@Tostig : Yeah for sure. There are definitely companies in NA you should avoid. I usually invest in ETFs but try my best to do research on companies I am buying individual stocks from.


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## Just a Guy

Personally I don’t like finance sites too much, they tend to have very biased advice, but I’ll use them for financial papers like annual reports And stock price. Most of the time I’ll just research the company in general. I want to know more about public opinion and their products.


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## Juggernaut92

I see. That makes sense. I find sometimes it is hard to get information on companies because most of the information is on their own website and of course it will be biased towards showing their company in a really good light.


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## Just a Guy

True, but if everyone use Heinz ketchup, uses an iPhone, drinks coke, that kind of bias points to good investments usually, at least a starting point. I never saw hardwood floors from sino-Forrest, and shocking they turned out to be a scam. If nortel is selling and financing its products while reporting both as profits, something strange may be going on.


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## Ponderling

I just go international with VDU or I-XUS and buy a bunch of big companies and financial services in countries around the world. I am not at a stage where I need every best point at a higher risk so I do not chase anything emerging by explicit design. 

I might go lighter on VTI and swing to VBR on a small cap tilt in month or two in the US market - that is as flamboyant as I go chasing more returns.


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## Juggernaut92

@Just a Guy : That is a good point.

@Ponderling :Thanks for the information.


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## james4beach

Here's another reason I stick to North American & European stocks: regulatory concerns on *our* side.

Recent US executive orders have banned the holding of certain Chinese stocks. It includes American ADRs and even a Canadian cross listing.

According to my connections on Bay Street, this will adversely affect even Canadian ETFs which had positions in these stocks. This forces Canadian fund managers to modify their holdings for a variety of reasons, to be compliant with US regulations.

I think that illustrates one problem with "emerging market" or distant foreign holdings. Because they're not on our turf, there are variety of potential regulatory or legal problems -- both on the foreign side and our own side.

Thinking about regulatory / legal smoothness, Canadian and American stocks are definitely the most predictable. Europe would be next, and Japan too I think (since it's a mature first world country with a well-developed regulatory framework and good relationship with the western allies).

But once you venture into other zones I think these kinds of problem scan start popping up. Who knows, in a few years it might not even be legal to hold Chinese stocks. What are you going to do if you committed to a large emerging/China position? You will be forced to liquidate at a low point.


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## MrMatt

james4beach said:


> Here's another reason I stick to North American & European stocks: regulatory concerns on *our* side.
> 
> Recent US executive orders have banned the holding of certain Chinese stocks. It includes American ADRs and even a Canadian cross listing.
> 
> According to my connections on Bay Street, this will adversely affect even Canadian ETFs which had positions in these stocks. This forces Canadian fund managers to modify their holdings for a variety of reasons, to be compliant with US regulations.
> 
> I think that illustrates one problem with "emerging market" or distant foreign holdings. Because they're not on our turf, there are variety of potential regulatory or legal problems -- both on the foreign side and our own side.
> 
> Thinking about regulatory / legal smoothness, Canadian and American stocks are definitely the most predictable. Europe would be next, and Japan too I think (since it's a mature first world country with a well-developed regulatory framework and good relationship with the western allies).
> 
> But once you venture into other zones I think these kinds of problem scan start popping up. Who knows, in a few years it might not even be legal to hold Chinese stocks. What are you going to do if you committed to a large emerging/China position? You will be forced to liquidate at a low point.


Yes, I agree, Political risk is one of the single biggest investment risks.
It's also obvious that we also have a pseudo political risk from big tech.

Just be sure to include this risk premium in your investment decisions.
Unfortunately this again hurts the emerging markets and further restricts their ability to raise capital.

So when you look at those pictures of extreme poverty, you have to consider what are their opportunities, and by restricting their ability to access capital, how are they going to improve their situation.

That being said, India, despite it's internal politics, does benefit from the European influence. Very messy, but a LOT of opportunity.

Myself I'm very leery of political risk, I'd prefer to invest in a major international (Unilever or P&G) and let them sort it out.


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## james4beach

MrMatt said:


> Yes, I agree, Political risk is one of the single biggest investment risks.
> It's also obvious that we also have a pseudo political risk from big tech.
> 
> Just be sure to include this risk premium in your investment decisions.
> Unfortunately this again hurts the emerging markets and further restricts their ability to raise capital.
> 
> So when you look at those pictures of extreme poverty, you have to consider what are their opportunities, and by restricting their ability to access capital, how are they going to improve their situation.
> 
> That being said, India, despite it's internal politics, does benefit from the European influence. Very messy, but a LOT of opportunity.
> 
> Myself I'm very leery of political risk, I'd prefer to invest in a major international (Unilever or P&G) and let them sort it out.


Yeah I generally agree with what you wrote. I am NOT comfortable with regulatory, legal, and political risk of many foreign countries. Add to that concern about the quality of their investor protections and enforcement of financial crimes. To be honest, even Canada is weak on enforcement of white collar/corporate crime.

Many US multinationals, plus many Canadian companies, have significant operations in these countries and "sort it out", as you say. Scotiabank has big operations in Latin America. Brookfield shows only 9% of revenue based in Canada, with the rest from global.

Currently my equities are entirely Canada + the S&P 500, and I think it's fine.


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## dcris07

james4beach said:


> Yeah I generally agree with what you wrote. I am NOT comfortable with regulatory, legal, and political risk of many foreign countries. Add to that concern about the quality of their investor protections and enforcement of financial crimes. To be honest, even Canada is weak on enforcement of white collar/corporate crime.
> 
> Many US multinationals, plus many Canadian companies, have significant operations in these countries and "sort it out", as you say. Scotiabank has big operations in Latin America. Brookfield shows only 9% of revenue based in Canada, with the rest from global.
> 
> Currently my equities are entirely Canada + the S&P 500, and I think it's fine.



James I agree with you there are many issues in the world that make investing in foreign countries uncomfortable at times. Have you ever looked as ESG ETFS ? They tend to only invest in companies that are socially and environmentally responsible and the funds consider a lot of the issues that you have brought up. One of the main things that ESG fund managers consider is governance and how companies actually operate, do they respect their workers, the countries that they operate, what is executive pay like how are the business ethics of the corporation etc..

Here a link to a great piece from BMO on responsible investing and what it actually means:https://thehub.bmosalessupport.com/...e_investing_eng.pdf?file=1&type=node&id=96012

There are many different ETFS now that invest in different parts of the world that have the ESG mandate built in. So in the end you can avoid certain areas of the world and invest in only the areas of the world that you prefer and also take an ESG approach, take a look at this for all the options that BMO has: https://bmogamhub.com/system/files/understanding_bmo_esg_etfs_4_en.pdf?file=1&type=node&id=96366

Hope this helps


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## MrMatt

dcris07 said:


> James I agree with you there are many issues in the world that make investing in foreign countries uncomfortable at times. Have you ever looked as ESG ETFS ? They tend to only invest in companies that are socially and environmentally responsible and the funds consider a lot of the issues that you have brought up. One of the main things that ESG fund managers consider is governance and how companies actually operate, do they respect their workers, the countries that they operate, what is executive pay like how are the business ethics of the corporation etc..
> 
> Here a link to a great piece from BMO on responsible investing and what it actually means:https://thehub.bmosalessupport.com/...e_investing_eng.pdf?file=1&type=node&id=96012
> 
> There are many different ETFS now that invest in different parts of the world that have the ESG mandate built in. So in the end you can avoid certain areas of the world and invest in only the areas of the world that you prefer and also take an ESG approach, take a look at this for all the options that BMO has: https://bmogamhub.com/system/files/understanding_bmo_esg_etfs_4_en.pdf?file=1&type=node&id=96366
> 
> Hope this helps


At the risk of getting political, ESG is a political marketting tool.
Quite honestly I seriously question any group that puts systematic racism and sexism as an investment criteria.

I'll make exceptions if it's a government regulation, evil or not, if the government demands discrimination, you have to play the game.
Or if they have sufficient market power that blatant discrimination is unlikely to have a material impact on their finances. That's how I can justify companies like Scotiabank, which has recently announced racial quotas.


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## james4beach

MrMatt said:


> At the risk of getting political, ESG is a political marketting tool.


I agree. It feels like politics and social justice beliefs... that's not a sector, and I don't see any reason to group or filter companies this way, even if I do support those ambitions for corporate governance.

I'm not saying it's harmful but it's kind of like filtering stocks by whether they pay high dividends. Kind of a red herring, just the wrong criteria to apply to business analysis.


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## MrMatt

james4beach said:


> I agree. It feels like politics and social justice beliefs... that's not a sector, and I don't see any reason to group or filter companies this way, even if I do support those ambitions for corporate governance.
> 
> I'm not saying it's harmful but it's kind of like filtering stocks by whether they pay high dividends. Kind of a red herring, just the wrong criteria to apply to business analysis.


I think high dividends (as a function of cashflow) is actually correlated to business operations and management strategy.

There is a big difference in how a company is run if it
1. Pays out 0% of cashflow in dividends
2. Pays out 50% of cashflow in dividends.

FWIW my decision to own Apple stock has nothing to do with Tim Cooks orientation, because quite honestly it doesn't matter. If it matters to you, you have the problem.


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## james4beach

MrMatt said:


> I think high dividends (as a function of cashflow) is actually correlated to business operations and management strategy.


Yes dividend policies are more correlated with actual business than social responsibility governance policies.

That was a bad example. Some criteria (such as "does this stock pay a dividend at all") is good criteria for screening stocks. It serves as a cashflow/stress test and helps filter out bogus or mismanaged companies.

Other versions such as "highest dividend yielding stocks" is bad criteria and is pretty irrelevant to grouping companies; I wouldn't want to invest based on that.


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## Tostig

If ethics were the only factor in investing, I wouldn't own any stocks in BMO,TD, insurance companies or telecommunication and TV companies. It's companies like these that pissed me off as a customer. I looked at them as an investor because it's their kind of practices that are making money for them.

I'm sure shareholders are very happy with dividends from Extendicare but how many of them are willing to live or send their parents to live in facilities run by Extendicare?


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## tradesviz

Not sure if it's really even possible to draw a line on ethnical/non-ethical with good accuracy for companies that most people invest in. What we see as outside is probably just a drop in the ocean of what is happening in the side - things that never surface. If you are going to get involved in a company - as in boards etc., then yea this is a more valid question. But for generic investing, I'm not sure if it's even worth thinking too much about.

Maybe in the future when we have enough real proponents and demand for "green" everything, those companies that have adhered to strict environmental rules could have an edge in bring a lot of people's primary pick - _some_ day in the future. But at the moment, the truth (IMHO) is that there is very little ethics in the investment decision making process.


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## Juggernaut92

@james4beach :Certain chinese companies getting banned seems similar to what another user said. Yes for now I am glad I did not go into emerging markets. 

@MrMatt : What do you mean when you say india benefits from european influence? I am not too familiar with their market situation. Are you talking about european companies being in india? Also, I am invested in BNS as well. i was unaware they introduced racial quotas. Sounds like they are just pandering. 

@dcris07 :That is interesting. I have not heard of those at all. I agree a bit with others it may be getting a bit political and just made for people in a niche but I will look more into it. 

@Tostig :Can you elaborate on what kind of ethic/moral issues are there with those companies listed? I shudder thinking about LTC homes. I would not get into them at all as it seems like bad idea from a moral standpoint and a investing standpoint because of all the deaths and lawsuits happening right now but am open to seeing things differently. 

@tradesviz :Yes that is for sure as well. I feel like it would be quite difficult for a company to cultivate a global image of themselves while their internal polices and employees are vastly different. When there is a disconnect sometimes it rises to the surface. I am thinking of blizzard employees getting upset with the company when the started censoring/banning hong kong players because of China's influence.


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## MrMatt

Juggernaut92 said:


> @MrMatt : What do you mean when you say india benefits from european influence? I am not too familiar with their market situation. Are you talking about european companies being in india? Also, I am invested in BNS as well. i was unaware they introduced racial quotas. Sounds like they are just pandering.


India has Common Law and a Parlimentary system, heavily informed by the relevant English systems.

I agree they're just pandering, but I think any systematic discrimination is repugnant.








Scotiabank, CIBC to fill 3.5% of top roles with Black employees - BNN Bloomberg


Bank of Nova Scotia and Canadian Imperial Bank of Commerce say they will fill at least 3.5 per cent of senior executive and board positions in Canada with Black leaders by 2025.




www.bnnbloomberg.ca


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## MrBlackhill

MrMatt said:


> I think any systematic discrimination is repugnant.


I think you should see this as "portfolio diversification". The market (world) contains different sectors, industries, market caps, etc. (genders, ethnicities, wealth, cultures, etc.) and you want your portfolio to be diversified to represent the market properly so that you get the best of everything (different opinions).

When I have to much tech in my portfolio, I start looking at what's best in other sectors.


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## MrMatt

MrBlackhill said:


> I think you should see this as "portfolio diversification". The market (world) contains different sectors, industries, market caps, etc. (genders, ethnicities, wealth, cultures, etc.) and you want your portfolio to be diversified to represent the market properly so that you get the best of everything (different opinions).


Great phrasing.

I don't think that if you want different opinions, you should get people with different opinions and not settle for race/gender as proxies for those opinions.
I think not only is using race or gender as a proxy for different opinions technically wrong, particularly at the individual level. To presume so is racist and sexist.

Thinking that a particular group (race or gender) has a certain opinion, or acts in a certain way is discriminatory.
Also since it's well documented that intragroup scatter of most personal characteristics (ie intelligence, political perspective, philosophies etc) is significantly larger than the mean difference between groups, it isn't likely to provide the diversity in those characteristics you want anyway.

In short, I don't think discriminating based on race and gender is in any way a sound business strategy. 
The basis that it will provide diversity of opinion is itself racist and sexist.


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## MrBlackhill

MrMatt said:


> I don't think that if you want different opinions, you should get people with different opinions and not settle for race/gender as proxies for those opinions.


Well, even if some people may have different opinions without the needs of race/gender, they certainly won't have the same understanding than someone who's living that reality.

Even if a man thinks it's dangerous for women to walk the streets at 2 AM, he certainly won't ever have the same understanding than a woman that experienced walking the streets at 2 AM.

Even if a non-First Nations person strongly believes the situation of the First Nations is horrible, he certainly won't have the same understanding than a person born from generations of First Nations family.

There's the opinions, and there's the level of understanding backing up those opinions from experiencing that reality.


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## MrMatt

MrBlackhill said:


> Well, even if some people may have different opinions without the needs of race/gender, they certainly won't have the same understanding than someone who's living that reality.
> 
> Even if a man thinks it's dangerous for women to walk the streets at 2 AM, he certainly won't ever have the same understanding than a woman that experienced walking the streets at 2 AM.
> 
> Even if a non-First Nations person strongly believes the situation of the First Nations is horrible, he certainly won't have the same understanding than a person born from generations of First Nations family.
> 
> There's the opinions, and there's the level of understanding backing up those opinions from experiencing that reality.


I agree and disagree.

I would suggest that a person walking the streets at 2AM would consist of an incredibly wide set of experiences and that while "women" as a group may have a different typical experience as "men" as a group, it is likely that any particular "man" or "woman" would have similar experiences, or that one would have had better or worse experiences.
Also for the unique experiences, I would also hold that there is no experience so biased that nearly all of one group would have it, and nearly all of the other group would not have it.
As such gender is a poor proxy for that experience and you'd be better served by looking for someone with that particular experience.

Secondly, the boards and executive of any organization (including political leaders) have only had, collectively a miniscule number of the experiences of the larger population.
If anything, having had the experience may bias a person regarding the situation. It may bias them to the advantage or detriment of the situation.

I think it is important to have people who can find, understand and effectively communicate the concerns of those who have had experiences they have not had.
In many cases people who do not have the experience or issue may be able to more effectively communicate and advocate than the individuals themselves.

Finally I don't believe that you need to have experienced something firsthand to effectively address the issue. I've had gender based medical issues, and I feel that my opposite gender health professional did an excellent job dealing with it, despite them never having the issue themselves.


So in summary
If you want a particular point of view or experience, select someone with that point of view or experience or attribute. Don't use race/gender as a proxy for experiences.
I think it is more important to consider and communicate the issues relating to the experience or situations by disparate groups, which may or may not directly involve people from those groups.


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## MrBlackhill

MrMatt said:


> I agree and disagree.
> 
> I would suggest that a person walking the streets at 2AM would consist of an incredibly wide set of experiences and that while "women" as a group may have a different typical experience as "men" as a group, it is likely that any particular "man" or "woman" would have similar experiences, or that one would have had better or worse experiences.
> Also for the unique experiences, I would also hold that there is no experience so biased that nearly all of one group would have it, and nearly all of the other group would not have it.
> As such gender is a poor proxy for that experience and you'd be better served by looking for someone with that particular experience.
> 
> Secondly, the boards and executive of any organization (including political leaders) have only had, collectively a miniscule number of the experiences of the larger population.
> If anything, having had the experience may bias a person regarding the situation. It may bias them to the advantage or detriment of the situation.
> 
> I think it is important to have people who can find, understand and effectively communicate the concerns of those who have had experiences they have not had.
> In many cases people who do not have the experience or issue may be able to more effectively communicate and advocate than the individuals themselves.
> 
> Finally I don't believe that you need to have experienced something firsthand to effectively address the issue. I've had gender based medical issues, and I feel that my opposite gender health professional did an excellent job dealing with it, despite them never having the issue themselves.
> 
> 
> So in summary
> If you want a particular point of view or experience, select someone with that point of view or experience or attribute. Don't use race/gender as a proxy for experiences.
> I think it is more important to consider and communicate the issues relating to the experience or situations by disparate groups, which may or may not directly involve people from those groups.


I understand your points. I'll also agree and disagree.

I find it hard to find the "right" way to address this kind of issue. And that's why it may be an eternal debate.


----------



## MrMatt

MrBlackhill said:


> I understand your points. I'll also agree and disagree.
> 
> I find it hard to find the "right" way to address this kind of issue. And that's why it may be an eternal debate.


Well, in my opinion the debate is over and there are incredibly high levels of agreement.

Don't discriminate based on race or gender. 

Sure there are many white supremacists and male supremacists who disagree, but while they've been strengthening in recent years, I hope they will remain in the minority.


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## MrBlackhill

MrMatt said:


> Well, in my opinion the debate is over and there are incredibly high levels of agreement.
> 
> Don't discriminate based on race or gender.
> 
> Sure there are many white supremacists and male supremacists who disagree, but while they've been strengthening in recent years, I hope they will remain in the minority.


I don't think the debate is over considering the current situation.

In the past, we had race/gender discrimination going under the radar.

Now, to avoid discrimination going under the radar, we added control to force equal representation of race/gender.

It's a bad for a bad. From an extreme to another. Hopefully, that oscillation from an extreme to another will damper over time to stabilise in a well balanced state without any discrimination, without any forced control.


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## MrMatt

MrBlackhill said:


> I don't think the debate is over considering the current situation.
> 
> In the past, we had race/gender discrimination going under the radar.
> 
> Now, to avoid discrimination going under the radar, we added control to force equal representation of race/gender.
> 
> It's a bad for a bad. From an extreme to another. Hopefully, that oscillation from an extreme to another will damper over time to stabilise in a well balanced state without any discrimination, without any forced control.


It's still a bunch of racists and sexists arguing for discrimination, nothing has changed.

The problem is that we won't get a balanced state without forced control.
I'll let you in on a not so big secret, individual people like a variety of things, and their distribution of interests is not evenly distributed.

If you grab 100 people and ask their favourite ice cream flavour, you'll get interesting data. 
I don't think it is a good idea to reassign people and telling them that in the interest of equality, that no you can't like chocolate, and you must now like vanilla.
There is nothing wrong with liking vanilla, and nothing wrong with liking chocolate, 

What is the value in having a particular interest evenly shared and divided across the population by demographic group?
Can we just say that it's okay to like whatever flavour ice cream you want, and treat everyone with dignity, even if lots of people tend to prefer one to the other?
Does it really matter if women tend to like chocolate more? 








23andMe Can Guess If You Prefer Chocolate or Vanilla Ice Cream


Apparently, it has a lot to do with your sense of smell.




www.foodandwine.com





Is it a problem, can't we just let women have their ice cream, or should we force some of them to have vanilla instead, for equity?

Do we want a free and fair system, or one that forces artificial "equity".


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## MrBlackhill

MrMatt said:


> Do we want a free and fair system, or one that forces artificial "equity".


I want free and fair system. But unfortunately, at the moment, it seems like we have to force the things to give a message against the racism/sexism that was going under the radar.

I'm not saying it's good. I think it's very bizarre to fight racism/sexism with another form of racism/sexism.

When you were young, have you ever put aside your vegetables because you didn't like them? And then when your parents saw your behaviour, they forced you to eat them? And now you eat your vegetables without anyone forcing you?

That being said, I prefer education. But education is a slow process. And even the education system is broken because it's teaching a way to think and that's biased. There isn't a lot of unbiased education.

Unfortunately, I don't have solutions, so I can't critic a decision unless I have a solution with a strong belief that it's a better solution.


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## MrMatt

MrBlackhill said:


> I want free and fair system. But unfortunately, at the moment, it seems like we have to force the things to give a message against the racism/sexism that was going under the radar.
> 
> I'm not saying it's good. I think it's very bizarre to fight racism/sexism with another form of racism/sexism.
> 
> When you were young, have you ever put aside your vegetables because you didn't like them? And then when your parents saw your behaviour, they forced you to eat them? And now you eat your vegetables without anyone forcing you?
> 
> That being said, I prefer education. But education is a slow process. And even the education system is broken because it's teaching a way to think and that's biased. There isn't a lot of unbiased education.
> 
> Unfortunately, I don't have solutions, so I can't critic a decision unless I have a solution with a strong belief that it's a better solution.


Your vegetable example is flawed.
I assume by vegetables you mean "heathy food", and yes you should be encouraged.

I think a fair society where people can freely choose what they want, without discrimination is good.
I don't think a scorecard of mathematically perfect representation across all fields by all groups is
1. A measure if society is fair.
2. Respectful of the individual.

In short if their goal is equality, they're using a flawed measure.
They're hurting people for no good reason. Remember they're not working towards a fair society.

When I say hurting people.
They are hurting the individuals they are "trying to help" by pushing them to do things they don't want to do, and may not be happy doing.
They're hurting the individuals being displaced from doing things they want to do.
They're hurting society by misallocating resources, putting the wrong people in the wrong place.

They're hurting everyone, nobody benefits and they're moving AWAY from their stated goal of fairness. 
Discrimination is a lose, lose lose game.

I'll stop short of saying that people who support discrimination are all sociopaths, they are most likely simply ignorant.

Also if you think you need to force quotas, it's because you don't think those people are capable of making it themselves, it's the bigotry of low expectations.


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## MrBlackhill

MrMatt said:


> Your vegetable example is flawed.
> I assume by vegetables you mean "heathy food", and yes you should be encouraged.
> 
> I think a fair society where people can freely choose what they want, without discrimination is good.
> I don't think a scorecard of mathematically perfect representation across all fields by all groups is
> 1. A measure if society is fair.
> 2. Respectful of the individual.
> 
> In short if their goal is equality, they're using a flawed measure.
> They're hurting people for no good reason. Remember they're not working towards a fair society.
> 
> When I say hurting people.
> They are hurting the individuals they are "trying to help" by pushing them to do things they don't want to do, and may not be happy doing.
> They're hurting the individuals being displaced from doing things they want to do.
> They're hurting society by misallocating resources, putting the wrong people in the wrong place.
> 
> They're hurting everyone, nobody benefits and they're moving AWAY from their stated goal of fairness.
> Discrimination is a lose, lose lose game.
> 
> I'll stop short of saying that people who support discrimination are all sociopaths, they are most likely simply ignorant.
> 
> Also if you think you need to force quotas, it's because you don't think those people are capable of making it themselves, it's the bigotry of low expectations.


I totally agree with you, but what's the solution?

Discrimination is real. What's the solution against it?


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## dubmac

Just saw this in my inbox

On January 11, 2021, prohibitions arising from Executive Order 13959 (“the Order”) related to investments in certain Chinese companies become effective. Pursuant to these prohibitions U.S. persons, and entities that are deemed U.S. Persons for purposes of the Order, may not transact in the publicly traded securities of certain Chinese companies identified by the Secretary of Defense and the Secretary of the Treasury, or any securities that are derivative of, or are designed to provide investment exposure to such securities. Derivatives include ETF’s that contain any of the prohibited companies as a component. As such, the below securities will be halted from trading and there may be no ability to sell these shares after market close on January 7th.​Ticker EXCH_CODE CNTRY_OF_DOMICILE LONG_COMP_NAME​AVITF OTC US HK AVIC International Holding HK Ltd​AVIJF OTC US CN AviChina Industry & Technology Co Ltd​CGEGF OTC US HK CGN New Energy Holdings Co Ltd​CGNWF OTC US CN CGN Power Co Ltd​CHAEF OTC US HK China Aerospace International Holdings Ltd​CCCGF OTC US CN China Communications Construction Co Ltd​CCCGY OTC US CN China Communications Construction Co Ltd​CJNHF OTC US HK China Jinmao Holdings Group Ltd​FRSHY OTC US HK China Jinmao Holdings Group Ltd​CHL New York HK China Mobile Ltd​CHLKF OTC US HK China Mobile Ltd​CAOVY OTC US HK China Overseas Land & Investment Ltd​CHA New York CN China Telecom Corp Ltd​CHJHF OTC US CN China Telecom Corp Ltd​CHU New York HK China Unicom Hong Kong Ltd​CHUFF OTC US HK China Unicom Hong Kong Ltd​CEO New York CN CNOOC Ltd​CRCCY OTC US CN CRRC Corp Ltd​CRRRF OTC US CN CRRC Corp Ltd​DIPGF OTC US CN Datang International Power Generation Co Ltd​DIPGY OTC US CN Datang International Power Generation Co Ltd​ELKEF OTC US NO Elkem ASA​FEHZY OTC US HK Far East Horizon Ltd​FEZHF OTC US HK Far East Horizon Ltd​INPRF OTC US HK Inspur International Ltd​KHDHF OTC US DE KHD Humboldt Wedag International AG​NJGPF OTC US CN Nanjing Panda Electronics Co Ltd​PLLIF OTC US IT Pirelli & C SpA​PRLLY OTC US IT Pirelli & C SpA​DEIPY OTC US BR Rio Paranapanema Energia SA​DEIWY OTC US BR Rio Paranapanema Energia SA​SIUIF OTC US CN Semiconductor Manufacturing International Corp​SMICY OTC US CN Semiconductor Manufacturing International Corp​SNFRF OTC US HK Sinofert Holdings Ltd​SNFRY OTC US HK Sinofert Holdings Ltd​


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## MrMatt

MrBlackhill said:


> I totally agree with you, but what's the solution?
> 
> Discrimination is real. What's the solution against it?


Identify cases of discrimination and pursue legal sanctions against the offender.

I simply think that in order to address discrimination, we have to actually find an instance of discrimination to address.

The problem is that they're skipping that "finding discrimination" step, because it's hard. Instead they're choosing poorly thought out proxies as they actually can't find much discrimination.

I'm not saying there isn't discrimination, just that it isn't nearly as widespread as some believe.


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## MrBlackhill

MrMatt said:


> The problem is that they're skipping that "finding discrimination" step, because it's hard. Instead they're choosing poorly thought out proxies as they actually can't find much discrimination.
> 
> I'm not saying there isn't discrimination, just that it isn't nearly as widespread as some believe.


I think we always tend to underestimate the complexity, context and issues of situations we are not accountable to solve ourselves.

We also always underestimate the widespread of what we don't see in our own environment.

A few years ago, I was telling my spouse how we were improving against bad behaviors in work environments. At that point, she started telling me every single bad behavior she was living or witnessing at her work, in the federal government. And asking me what should she do. She had stories for me every single day for years. There wasn't many solutions because those bad behaviors came from people in position of power, with lots of contacts, strategies and manipulation. We may believe that other people would not accept such behaviors because we live in a great society, yet those people with bad behaviors still have too many allies or too much people under their control/manipulation.

Also, some solutions are good on paper, in theory, but they take much more time before we see a positive impact. So we must balance out the solutions which are addressing a part of the problem on the short term, even if it's not a good solution on the long term.

Say you are about to get on a plane with your kid and suddenly he tells you he don't want to get on that plane. The plane is about to take off in two hours. What do you do? You talk with your kid, you try to understand what's going on, etc. Now say you are at the gate, the plane is taking off in 5 minutes and at that moment your kid says he doesn't want to get on the plane. What do you do?


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## MrMatt

MrBlackhill said:


> I think we always tend to underestimate the complexity, context and issues of situations we are not accountable to solve ourselves.
> 
> We also always underestimate the widespread of what we don't see in our own environment.
> 
> A few years ago, I was telling my spouse how we were improving against bad behaviors in work environments. At that point, she started telling me every single bad behavior she was living or witnessing at her work, in the federal government. And asking me what should she do. She had stories for me every single day for years. There wasn't many solutions because those bad behaviors came from people in position of power, with lots of contacts, strategies and manipulation. We may believe that other people would not accept such behaviors because we live in a great society, yet those people with bad behaviors still have too many allies or too much people under their control/manipulation.
> 
> Also, some solutions are good on paper, in theory, but they take much more time before we see a positive impact. So we must balance out we solutions which are addressing a part of the problem on the short term.
> 
> Say you are about to get on a plane with your kid and suddenly he tells you he don't want to get on that plane. The plane is about to take off in two hours. What do you do? You talk with your kid, you try to understand what's going on, etc. Now say you are at the gate, the plane is taking off in 5 minutes and at that moment your kid says he doesn't want to get on the plane. What do you do?


A few things.
I think it's obvious that
1. Things aren't perfect
2. Things are dramatically better than they used to be.
Both you and your spouse are correct.

I want to make things better. I think the first step is to not take actions that make them worse.
You don't end bad behaviour by forcing more bad behaviour and hope that will somehow balance it all out. All you end up with is a whole bunch of people behaving badly.

Finally I don't get your example about a child on a plane. 

I actually feel that corruption and discrimination and evil are competitive disadvantages.
In addition most of us agree that we should find and address acts of corruption and discrimination, and other evils.
You're not going to beat discrimination with more discrimination, and you're not going to beat corruption with more corruption. They are both categorically and unequivocally bad.


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## MrBlackhill

MrMatt said:


> I want to make things better. I think the first step is to not take actions that make them worse.
> You don't end bad behaviour by forcing more bad behaviour and hope that will somehow balance it all out. All you end up with is a whole bunch of people behaving badly.


I agree.

I think though that the reasoning behind forcing fair representation of race/gender comes from this example:

Say you work in company A. Your friend works in company B. Both great companies, very well managed, but very different cultures and experiences. Same number of employees. Then both companies merge into a single company. After the "selection" process from the president, it ends up that all the CxO are from company A. Do the employees from company B feel well represented?



MrMatt said:


> Finally I don't get your example about a child on a plane.


Yeah, it was a bad example, I was about to remove it. I was just trying to illustrate that sometimes "you have time to take your time". And in other situations, you must force it and only afterwards you come back on the situation and take your time.

Anyways, I'm having a language barrier on explaining myself properly on this.


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## MrMatt

MrBlackhill said:


> I agree.
> 
> I think though that the reasoning behind forcing fair representation of race/gender comes from this example:


I think you're mixing "fair" and "proportional".



> Say you work in company A. Your friend works in company B. Both great companies, very well managed, but very different cultures and experiences. Same number of employees. Then both companies merge into a single company. After the "selection" process from the president, it ends up that all the CxO are from company A. Do the employees from company B feel well represented?


I understand (and have had this experience)
I don't think it's the same. It is quite possible, and even likely that the company A staff are more in line with the management strategy of the new company.
I'd actually suggest that Company A executives will have the attributes for Company A managements style, and similarly with Company B.
If the goal is to have Company A style, there should be an overrepresentation of Company A style executives to make that happen. 





> Yeah, it was a bad example, I was about to remove it. I was just trying to illustrate that sometimes "you have time to take your time". And in other situations, you must force it and only afterwards you come back on the situation and take your time.


I understand, but maybe even in that case forcing isn't the appropriate solution.
It really matters what the problem is.



> Anyways, I'm having a language barrier on explaining myself properly on this.


That's why free speech is so important.
When you're restricted from saying certain things, it becomes even harder to communicate concerns.


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## james4beach

Imagine that the year is 1935 and the world has learned that Germany has concentration camps, and is exterminating Jews. At the same time, there are very strong business conditions in Germany, especially among businesses which cooperate with the Nazis. The stocks perform well, and many capitalists shrug off the moral issues.

Question: would you hold onto your German stocks? _Should you have held them_? There was no war at the time... they were legal, and very lucrative.

Today, the emerging market ETFs have a huge weight in China. We've known for about 1-2 years now that China also has concentration camps, and the US just determined that the Chinese government is committing a genocide against Uyghurs. This is a very strong statement that is likely to have many consequences in the coming months and years.

I think it's a serious concern. Again this is why I stay close to home turf, with concentration in US & Canada (allies).


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## james4beach

Tostig said:


> I don't see emerging markets as all that different from the North American markets. If I had to guess, they would be equivalent to the Russell 2000.
> 
> In terms of corruption, companies of North America aren't exactly squeaky clean either. Even the Vatican isn't immune to corruption. Here are some names to remind you:


No, there are big differences. In North America and Europe, I can actually *sue* these companies (we investors do this all the time). I can also sue individual directors, executives, accounting firms, etc and I have a reasonable expectation of justice. I can shame them in the media and launch broader actions for justice.

And when I do, I don't have to fear an autocratic regime sending hit men after me. Try this in Russia, China, or Saudi Arabia and see what happens when you challenge the government-linked corporations. You might end up, quite literally, hacked into pieces.


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## MrMatt

james4beach said:


> No, there are big differences. In North America and Europe, I can actually *sue* these companies (we investors do this all the time). I can also sue individual directors, executives, accounting firms, etc and I have a reasonable expectation of justice. I can shame them in the media and launch broader actions for justice.
> 
> And when I do, I don't have to fear an autocratic regime sending hit men after me. Try this in Russia, China, or Saudi Arabia and see what happens when you challenge the government-linked corporations. You might end up, quite literally, hacked into pieces.


I agree there are big differences in each country.
Remember Venezuela nationalized a lot of stuff too. It's a risk in these types of countries.

I think there is a lot of added risk. I think the corruption etc is something that needs to be considered.
Of course you can outsource all this management by owning stock in a large multinational, these guys are better positioned and more aware of the issues with the jurisdictions than you are.

Also there is well known corruption and issues even in western G7 countries. It just tends to be smaller, or restricted to specific parts of the economy.

I think that you should consider and account for the additional risk, and it is potentially too high.
For example I think the risk of investing in Venezuela is too high


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## Just a Guy

This from a country that buys Saudi oil instead of stuff produced in Canada? Don’t start pretending to care now.


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## Tostig

Just a Guy said:


> This from a country that buys Saudi oil instead of stuff produced in Canada? Don’t start pretending to care now.


Maybe it's a necessity because our domestic oil industry and its political backers would rather have Canadians freeze in the dark than if they can't choose their international markets.


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## Just a Guy

Yeah, it’s the west blocking the pipelines east...

wonder what will happen when the transfer payments stop because the east shut down the money flow.


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## MrMatt

Tostig said:


> Maybe it's a necessity because our domestic oil industry and its political backers would rather have Canadians freeze in the dark than if they can't choose their international markets.


Huh? This doesn't make sense.
It's the green lobby who's trying to shut down the oil industry we use to heat our homes.

The domestic oil industry would LOVE to build pipelines so all Canadians can get access to low cost Canadian oil.
As it is, they are still shipping by rail, because they can't get pipelines approved.


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## kcowan

MrMatt said:


> The domestic oil industry would LOVE to build pipelines so all Canadians can get access to low cost Canadian oil.
> As it is, they are still shipping by rail, because they can't get pipelines approved.


Yes once you see an oil train, pipelines seem to be the safer alternative.


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## MrMatt

kcowan said:


> Yes once you see an oil train, pipelines seem to be the safer alternative.


No doubt








Lac-Mégantic rail disaster - Wikipedia







en.wikipedia.org


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## dcris07

Tostig said:


> thics were the only factor in investing, I wouldn't own any stocks in BMO,TD, insurance companies or telecommunication and TV companies. It's companies like these that pissed me off as a customer. I looked at them as an investor because it's their kind of practices that are making money for them.
> 
> I'm sure shareholders are very happy with dividends from Extendicare but how many of them are willing to live or send their parents to live in facilities run by Extendicare





Juggernaut92 said:


> @james4beach :Certain chinese companies getting banned seems similar to what another user said. Yes for now I am glad I did not go into emerging markets.
> 
> @MrMatt : What do you mean when you say india benefits from european influence? I am not too familiar with their market situation. Are you talking about european companies being in india? Also, I am invested in BNS as well. i was unaware they introduced racial quotas. Sounds like they are just pandering.
> 
> @dcris07 :That is interesting. I have not heard of those at all. I agree a bit with others it may be getting a bit political and just made for people in a niche but I will look more into it.
> 
> 
> I hear you on that point definitely understand why many people feel that ESG investing has gotten political and come off as just a marketing tool. I think its important to note that ESG investing especially in ETF's is just getting started and will only get better and more aligned with peoples views in the future. Companies all over the world are beginning to consider how they operate their businesses and how they affect the world around them and they are definitely aware of the fact that many people care about ESG issues. Investors do speak with their wallets and many will only invest in companies that have certain ESG scores. Take a look at MSCI's process for determining ESG scores : ESG Investing: ESG Ratings
> 
> Many products including the BMO ETFS i mentioned last week use MSCI indices that are built with a robust process to determine company inclusion. To sum it up i would say that we are at the beginning of this investment juncture and the standard for ESG investing will only rise in the future and many investors will start incorporating in their asset allocation decisions. Institutions, pension funds, mutual fund companies have already begun and i do not see this trend slowing down anytime soon.
> 
> Hope this provides some better context for everyone.


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## londoncalling

BlackRock says it has more than $800 million for new impact fund (msn.com) 

I also watched a presentation from TDAM this week on environmental investing. It was not the marketing session I was expecting but talked about the environmental impact of environmental investments. One presenter suggested that oil companies are holding back on capital investment to deploy into whichever renewable offers the greatest opportunity.


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