Hear no evil, speak no evil, own no evil?

Why people who see themselves as moral value investors should own evil companies

"There's some good in this world, Mr Frodo, and it's worth fighting for." So said Samwise Gamgee in the movie version of "The Lord of The Rings: The Two Towers." The scriptwriters, who dreamed up the line, thought it might come across as cheesy but decided to leave it in any way. And thank goodness they did—it's become iconic. But what does good mean? To Frodo and Sam, it meant destroying the ring and getting back their idyllic lives in The Shire. To others, it means avoiding being protested by woke university students. And to many value investors, it means not taking a position in any companies they see as immoral.

The sanctimonious among us won't invest in coal mines or cigarette makers because they think soot and smokes are nasty. They reckon that the companies who make those things are evil. They don't want their dollars going to support those causes. However, their logic is misguided. It's precisely because these investors think those companies are evil that they should invest in …