Google Reader, and other ways to procrastinate

Google's new Reader is a vast improvement. I think I may give up on Bloglines. I particularly like the ability to flag things I've read to show up in the box on the left (below my profile). I can even set up different sharing lists for each blog (if you're here, you probably don't care about the latest in knitting). What's missing is the ability to search your feeds. And, if you run out of things to read you end up here.

Yesterday I read this post over at Financial Rounds. Of course, I had to check out the Piled Higher and Deeper archives -- great stuff! Here's one of my favorites. And another.

Are you Rich or Tasteful?

While driving between appointments last week, I heard the first half of The Conversation Hour on ABC Radio. I caught most of the interview with Andrew West about his book Inside the Lifestyles of the Rich and Tasteful. The book looks at upper middle class Australia and the division between the materialists and the culturists.

When it comes to defining the upper middle class, they're still only a small sub-group of the Australian population. The broad group that we're talking about represents 10 -15 per cent of the Australian population. This book is not about celebrities; in fact, a lot of Australian listeners and viewers will see themselves in this book. I'd say they're probably earning between 75 and 400 thousand dollars a year. But the tension is a question of taste and consumption. The culturists crave authenticity in everything... the materialists crave the newest and the biggest and the shiniest.

I'd be interested in reading a copy of this book. I'm not sure it's so black and white. I think I see a bit of both in my lifestyle -- I like new tech gadgets, but otherwise I'm fairly frugal and not into conspicuous consumption.

Ethical Investment

Socially responsible investing has been in the news lately -- or maybe I'm just more sensitive to it because a colleague is working in this area.

NPR did a piece on whether you should own stock in a company you despise. Many finance professionals will tell you that socially responsible investing implies a lower return. This is because eliminating "sin" stocks from your portfolio reduces the set of companies you can choose from, thereby limiting the diversification you can achieve and making your portfolio inefficient. Last week the Wall Street Journal reported that Pax, a large socially responsible mutual fund family, is asking shareholders to allow them to eliminate the zero-tolerance policy toward alcohol and gambling stocks.

For Pax, the move comes after it had to sell a lucrative stake in Starbucks Corp. last year when the company set up a deal to launch a coffee liqueur with whiskey maker Jim Beam. The funds' 375,000 shares were valued at $23.4 million at the time, and had to be relinquished even though some SRI researchers estimate liquor-related sales contributed less than 1% to Starbucks's revenue.

Pax is employing what's known as a 'negative screen.' This method eliminates entire industries from the investment choice set, and will make it difficult to construct an efficient portfolio. Another approach to SRI is the best-of-sector approach where you rank firms based on their level of social responsibility and choose the highest ranked firms in each industry or sector. The Dow Jones Sustainability Index is based on this best-of-sector approach.

For an academic take on SRI see Lee, Darren David and Faff, Robert W., "The Corporate Sustainability Discount Puzzle" (July 2006). Available at SSRN: http://ssrn.com/abstract=921501