Wise Investing

Matthew Rarey recommends Good Returns: Making Money by Morally Responsible Investing by George P. Schwartz.


Making Money by Morally Responsible Investing

by George P. Schwartz, with William J. Koshelnyk

Geodi Publishing, 2010

191 pages, $25

To order: amazon.com and barnesandnoble.com

As crisp as a new hundred-dollar bill, this engaging book promises much more for investors who want to make money without soiling their consciences. How? The author’s uniquely Catholic arguments for ethical investing are both philosophically compelling and materially rewarding, as evidenced by a 40-year track record of multiplying other peoples’ money. Virtue and profitability should be no less compatible than faith and reason; and investing, like Christianity, is a matter of faith and works, demanding a host of virtues to be done wisely and well.

Finding in Pope Benedict XVI’s encyclical Caritas in Veritate the validation that one can “do well by doing good,” George P. Schwartz champions the wealth-creating philosophy called Morally Responsible Investing (MRI). It’s profit-driven — Schwartz is in business, after all — but avoids promoting the culture of death.

To this end, Schwartz’s Michigan-based investment firm manages the Ave Maria Mutual Funds. Founded in 2001 through the inspiration of Schwartz’s friend, businessman and philanthropist Tom Monaghan, the funds exemplify MRI. A rigorous screening process prevents investing in morally objectionable companies, which Schwartz contends make up 10%-15% of the average mutual fund’s holdings.

But he is adamant that MRI is not just morally sound, but financially prudent — at least as practiced by him and his associates, who have married MRI to the investment philosophy of Schwartz’s mentor, Warren Buffett. Buffett’s “Values Investing” approach is unabashedly “plain vanilla,” eschewing get-rich-quick schemes for long-term rewards reaped by discovering, then investing in, fundamentally strong but under-valued companies. Though Buffett’s personal beliefs and philanthropic activities run counter to the Church’s stance on a range of subjects, notably abortion, his basic investment strategies pose no moral quandary.

“My attraction to Buffett’s investment techniques has elicited quizzical looks on more than one occasion,” admits Schwartz, who is a stockholder in Buffett’s Berkshire-Hathaway, Inc. “Life is complicated, and conflicting realities can exist side-by-side. Regardless of my feelings about someone’s social views, I could never deny his accomplishments in the area of his professional expertise.”

Good Returns is also a warmly personal book as well. Schwartz describes his early life in a family that was “the cradle of both my Catholicism and my entrepreneurial outlook.” Born in 1944, Schwartz learned early on “the moral rightness of a fair exchange.” And he used those early lessons in honesty, frugality and moxy to make a vocation of investment services. That has promoted not only his own fulfillment and the good of his family — five children, seven grandchildren, and a wife of 42 years — but the financial well-being of clients and mentees. Readers of this book may just become one and/or the other: a pretty good return on a $25 investment.

Matthew A. Rarey writes from Chicago.