.... but does having a smaller pool of prospective buyers actually negatively impact share price in the long run, after those who are divesting have sold out? How? That is the issue. It is like voting. One vote does not matter so should we stop voting? The bottom line is that charity begins at home. I don't think it does. Recently some funds decided to divest from some gun firms. Stock price did fall. Company wealth can get impacted by social perceptions. I think share price is determined in the long run by the company's financial performance, regardless of the size of the pool of prospective share-buyers. That is one part of the story. A larger force is risk perception. Explain to me why COST sells at such high P/E to WMT consistently when WMT metrics on almost every count are superior to COST? I can give you many such examples. Best run and most admired organizations with products of timeless utility sell at high P/E simply because the risk is relative lower. Incidents like recent school shooting impact public perception and IF it gets anti-guns for 75% of the people - not saying it will happen - but if it does that regulation follows and there is permanent destruction of market cap. That is a risk that does not hang on a relatively socially acceptable business.Just look at Alyce's portfolio. It has been beating the market consistently. Look at others in the rising star portfolio section. She is beating most of them. All the other Fools competing are similarly smart. By choosing ethical and socially acceptable businesses she has automatically ended up choosing firms with best practices. Stock Advisor has achieved phenomenal results for a decade rather consistently due to choice of firms with highest quality management. Such firms has much less risk relative to others. The share price component that may be attributed to risk is very real and unfortunately discussed the least. Much of the investing community is focused on discounted cash flow. Why does Appl trades so low today despite super financials and no slowdown in growth? It is the risk perception that Apple may not be able to innovate fast enough going ahead despite any evidence to support it. Over long term the share price will reflect firm's performance AND shareholder friendly management (this is critical, eg. look at CHK or FCX) but only if major risks do not come to pass - regulation, obsolescence, disasters (natural or market) etc. Anurag
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