Avoiding sin stock: does it make a difference?
Yes, it does matter. You are right that lower demand for a stock will drive its price down. Lower stock prices can hurt the company. Take a look at Fixee's answer to this question: a declining share price will make it hard to secure credit, attract further investors, build partnerships, etc. Also, employees are often holding options or in a stock purchase plan, so a declining share price can severely dampen morale. In an extreme case, if share prices plummet too far, the company can be pressured to reverse-split the shares, and (eventually) take the company private. This recently happened to Playboy. If you do not want to support a company, for whatever reason, then it is wise to avoid their stock. "This question drives at what value a shareholder actually provides to a corporation, and by extent, to the economy. If you subscribe for new shares (like in an Initial Public Offering), it is very straightforward to say ""I have provided capital to the corporation, which it is using to advance its business."" If you buy shares that already exist (like in a typical share purchase on a public exchange), your money doesn't go to the company. Instead, it goes to someone who paid someone who paid someone who paid someone (etc.) who originally contributed money to the corporation.  In theory, the value of a share price does not directly impact the operation of the company itself, apart from what @DanielCarson aptly noted (employee stock options are affected by share price, impacting morale, etc.). This is because in theory, the true value of a company (and thus, the value of a share) is the present value of all future cashflows (dividends + final liquidation). This means that in a technical sense, a company's share price should result from the company's value. The company's true value does not result from the share price. But what you are doing as a shareholder is impacting the liquidity available to other potential investors (also as mentioned by @DanielCarson, in reference to the desirability for future financing). The more people who invest their money in the stock market, the more liquid those stocks become. This is the true value you add to the economy by investing in stocks - you add liquidity to the market, decreasing the risk of capital investment generally. The fewer people there are who are willing to invest in a particular company, the harder it is for an investor to buy or sell shares at will. If it is difficult to sell shares in a company, the risk of holding shares in that company is higher, because you can't ""cash out"" as easily. This increased risk then does change the value of the shares - because even though the corporation's internal value is the same, the projected cashflows of the shares themselves now has a question mark around the ability to sell when desired. Whether this actually has an impact on anything depends on how many people join you in your declaration of ethical investing. Like many other forms of social activism, success relies on joint effort. This goes beyond the direct and indirect impacts mentioned above; if 'ethical investing' becomes more pronounced, it may begin to stigmatize the  target companies (fewer people wanting to work for 'blacklist' corporations, fewer people buying their products, etc.)."
"There are moral distinctions that can be drawn between gambling and investing in stocks. First and I think most important, in gambling you are trying to get money for nothing. You put $100 down on the roulette wheel and you hope to get $200 back. In investing you are not trying to get something for nothing. You are buying a piece of a hopefully profit-making company. You are giving this company the use of your money, and in exchange you get a share of the profits. That is, you are quite definitely giving something: the use of your money for a period of time. You invest $100 of your money, and you hope to see that grow by maybe $5 or $10 a year typically. You may get a sudden windfall, of course. You may buy a stock for $100 today and tomorrow it jumps to $200. But that's not the normal expectation. Second, gambling is a zero sum game. If I gamble and win $100, then someone else had to lose $100. Investing is not a zero sum game. If I buy $100 worth of stock in a company and that grows to $200, I have in a sense ""won"" $100. But no one has lost $100 to give me that money. The money is the result of the profit that the company made by selling a valuable product or service to customers. When I go to the grocery store and buy a dozen eggs for $2, some percentage of that goes to the stockholders in the grocery store, say 5 cents. So did I lose 5 cents by buying those eggs? No. To me, a dozen eggs are worth at least $2, or I wouldn't have bought them. I got exactly what I paid for. I didn't lose anything. Carrying that thought further, investing in the stock market puts money into businesses. It enables businesses to get started and to grow and expand. Assuming these are legitimate businesses, they then provide useful products and services to customers. Gambling does not provide useful products and services to anyone -- except to the extent that people enjoy the process of gambling, in which case you could say that it is equivalent to playing a video game or watching a movie. Third -- and these are all really related -- the whole goal of gambling is to take something from another person while giving him nothing in return. Again, if I buy a dozen eggs, I give the store my $2 (or whatever amount) and I get a dozen eggs in exchange. I got something of value and the store got something of value. We both walk away happy. But in gambling, my goal is that I will take your money and give you nothing in return. It is certainly true that buying stocks involves risk, and we sometimes use the word ""gamble"" to describe any risk. But if it is a sin to take a risk, then almost everything you do in life is a sin. When you cross the street, there is a risk that you will be hit by a car you didn't see. When you drink a glass of water, there is the risk that it is contaminated and will poison you. When you get married, there is a risk that your spouse will divorce you and break your heart. Etc. We are all sinners, we all sin every day, but we don't sin quite THAT much. :-) (BTW I don't think that gambling is a sin. Nothing in the Bible says that gambling is a sin. But I can comprehend the argument for it. I think gambling is foolish and I don't do it. My daughter works for a casino and she has often said how seeing people lose money in the casino regularly reminds her why it is stupid to gamble. Like she once commented on people who stand between two slot machines, feed them both coins and then pull the levers down at the same time, ""so that"", she said, ""they can lose their money twice as fast"".)" "There are some useful answers here, but I don't think any of them are quite sufficient.  Yes, there are some risks involved in CFD trading, but I will try and give you information so you can make your own decision. Firstly, Cyprus is part of the EU, which gives it a level of credibility.  I'm not saying it's the safest or most well regulated market in the world, but that in itself would not particularly scare me away.  The far more important issue here is the risk of using CFDs and of eToro themselves. A Contract for Difference is really just a specialization of an Equity Swap.  It is in no way like owning a real stock.  When you purchase shares of a company you own a real Asset and are usually entitled to dividends and voting rights.  With a CFD, what you own is one side of a Swap contract.  You have a legal agreement between yourself and eToro to ""swap"" the return earned on the underlying stock for whatever fees eToro decide to charge.  As already mentioned, CFDs are not available to US citizens. Equity swaps have many benefits in financial markets.  They can allow access to restricted markets by entering into swaps with banks that have the necessary licenses to trade in places like China.  Many ""synthetic"" ETFs use them in Europe as a way to minimize tracking error as the return is guaranteed by the swap counterparty (for a charge). They also come with one signficant risk: counterparty credit risk.  When trading with eToro, for as long as your position is open, you are at risk of eToro going bankrupt.  If eToro failed, you do not actually own any stocks, you only own swap contracts which are going to be worthless if eToro ceased to exist. CFDs also have an ongoing cost to maintain the open position.  This makes them less suitable for buy and hold strategies as those ongoing costs will eat into your returns.  It's also not clear whether you would receive any dividends paid by the stock, which make up a significant proportion of returns for buy and hold investors.  eToro's website is fairly non-committal: eToro intends to offer a financial compensation representing the dividends which will be allocated on stocks, to the extent such dividends shall be available to eToro. All of these points expose what CFDs are really for - speculating on the stock market, or as I like to call it: gambling.  If you want to invest in stocks for the long term, CFDs are a bad idea - they have high ongoing costs and the counterparty risk becomes significant.  Wait until you have enough money and then buy the real thing.  Alternatively, consider mutual funds which will allow you to purchase partial shares and will ensure your investment is better diversified across a large number of stocks.  If however, you want to gamble and only keep your position open for a short time, these issues may not be of concern to you. There's nothing wrong with gambling, it can be fun, many people gamble in casinos or on football matches - but bear in mind that's what CFDs are for.  CFDs were in fact originally created for the UK market as a way to avoid paying capital gains tax when making short term speculative trades.  However, if you are going to gamble, make sure you're not putting any more than 1% of your net worth at risk (0.1% may be a better target). There are a few other ways to take a position on stocks using less money than the share price: Fortunately, eToro do not allow leveraged purchase of stocks so you're reasonably safe on this point.  They claim this is because of their 'responsible trading policy', although I find that somewhat questionable coming from a broker that offers 400:1 leverage on FX pairs. One final word on eToro's ""social trading"" feature.  A few years ago I was in a casino playing Blackjack.  I know nothing about Blackjack, but through sheer luck of the draw I managed to treble my money in a very small amount of time.  Seeing this, a person behind me started ""following"" me by putting his chips down on my seat.  Needless to say, I lost everything, but amazingly the person behind me got quite annoyed and started criticizing my strategy.  The idea of following other people's trades just because they've been lucky in the past sounds entirely foolish to me.  Remember the warning on every mutual fund: Past performance does not guarantee future returns" You could argue that Nokia was overvalued at the time, but I think you're right. As incompetent as Elop was/is, you have to have many tiers of management making strategic mistakes to explain what happened to Nokia.  Their first sin was failing to anticipate how a pocket-computer/smartphone would disrupt the mobile market.   Their second sin was failing to respond to the clear evidence that this was happening in 07/08 with the first iPhones -  think of how rubbish their Symbian OS continued to be until they adopted Windows Phone.  Their third was their failure to accept a future as a mere OEM. Had they started producing flagship android phones, in say 2012, then I believe we wouldn't see Samsung as dominant in the western market as it is now. "There are different schools of thought. You can ask the IRS - and it would not surprise me if you got different answers on different phone calls. One interpretation is that a put is not ""substantially identical"" to the disposed stock, therefore no wash is triggered by that sale. However if that put is exercised, then you automatically purchase the security, and that is identical. As to whether the IRS (or your brokerage firm) recognizes the identical security when it falls out of an option, I can't say; but technically they could enforce it because the rule is based on 30 days and a ""substantially identical"" stock or security. In this interpretation (your investor) would probably at least want to stay out of the money in choosing a strike price, to avoid exercise; however, options are normally either held or sold, rather than be exercised, until at or very close to the expiration date (because time value is left on the table otherwise). So the key driver in this interpretation would be expiration date, which should be at least 31 days out from the stock sale; and it would be prudent to sell an out of the money put as well, in order to avoid the wash sale trigger. However there is also a more unfavorable opinion - see fairmark.com/capgain/wash/wsoption.htm where they hold that a ""deep in the money"" option is an immediate trigger (regardless of exercise). This article is sage, in that they say that the Treasury (IRS) may interpret an option transaction as a wash if it's ballpark to being exercisable. And, if the IRS throws paper, it always beats each of paper, rock and scissors :( A Schwab article (""A Primer on Wash Sales"") says, if the CUSIPs match, bang, wash. This is the one that they may interpret unfavorably on in any case, supporting Schwab's ""play it safe"" position: ""3. Acquire a contract or option to buy substantially identical stock or securities..."" . This certainly nails buying a call. As to selling a put, well, it is at least conceivable that an IRS official would call that a contract to buy! SO it's simply not a slam dunk; there are varying opinions that you might describe as ranging from ""hell no"" to ""only if blatant."" If you can get an ""official"" predetermination, or you like to go aggressive in your tax strategy, there's that; they may act adversely, so Caveat Taxfiler!" check out this rebuttal to the TechCrunch article from Leigh Drogen: http://www.leighdrogen.com/wealthfront-betterment-sigfig-and-a-bankrupt-investing-philosophy/  It's not so much the software piece he takes aim at but what he calls a broken philosophy. Saving money off fees and automating the investing process to prevent behavioral biases is all good but it's not a solution. I think if you are only trading stocks with average volume greater than 1M you should not have any trouble entering a 10,000 size trade. If you are you can try a couple of things: Change your order from a market order to a limit order, however this may potentially reduce the number of shares that are actually traded on that day, and you may miss out on some or all of your order. Limit your trading to more liquid stocks, say average daily volumes above 10M or 100M. Apart from that you might have to just put up with some extra slippage and incorporate it into your trading plan. That is you can reduce your R multiple to allow some slippage. "Does your job give you access to ""confidential information"", such that you can only buy or sell shares in the company during certain windows?  Employees with access to company financial data, resource planning databases, or customer databases are often only allowed to trade in company securities (or derivatives thereof) during certain ""windows"" a few days after the company releases its quarterly earnings reports.  Even those windows can be cancelled if a major event is about to be announced.  These windows are designed to prevent the appearance of insider trading, which is a serious crime in the United States. Is there a minimum time that you would need to hold the stock, before you are allowed to sell it?  Do you have confidence that the stock would retain most of its value, long enough that your profits are long-term capital gains instead of short-term capital gains? What happens to your stock if you lose your job, retire, or go to another company? Does your company's stock price seem to be inflated by any of these factors: If any of these nine warning flags are the case, I would think carefully before investing. If I had a basic emergency fund set aside and none of the nine warning flags are present, or if I had a solid emergency fund and the company seemed likely to continue to justify its stock price for several years, I would seriously consider taking full advantage of the stock purchase plan.  I would not invest more money than I could afford to lose. At first, I would cash out my profits quickly (either as quickly as allowed, or as quickly as lets me minimize my capital gains taxes).  I would reinvest in more shares, until I could afford to buy as many shares as the company would allow me to buy at the discount. In the long-run, I would avoid having more than one-third of my net worth in any single investment.  (E.g., company stock, home equity, bonds in general, et cetera.)" Late to the party, but it's just improving your cost basis in a defined risk trade even further. If you want to put up less risk capital but want to test the waters, this can be one way to do it. Another could be buying cheap OTM butterflies or financing a further otm option with the basis reduction from the debit spread if you want to gamble a bit further and venture into 15-20 delta positions. Usually, I am doing debit spreads with a buying atm and selling a couple strikes further otm or at least at the most liquid strikes, but if it's a high flier, it can be disappointing, but a good trade. If you're more of a contrarian in where you buy your calls/puts, it's absolutely a good way to lessen your risk on a calculated bet.