The Ethics of Investing

So far I’m keeping to schedule and have just finished reading study session one, the first four readings which are all about ethics in investing and a bit on Global Investment Performance Standards, which is also a CFA Institute creation. So its basically a lot of common sense which doesn’t make the most interesting of readings.

What I did find interesting were all the situations where employees/managers had to make ethical decisions which could have far-reaching consequences (i.e. closing down the firm). With no real experience in the industry, it kind of brings to perspective how difficult it is to make the right decision because doing the “right thing” could put you out of a job or result in your firm’s bankruptcy. Of course the above situation would only come about through one’s own incompetence and in that case, it becomes much harder to be sympathetic.

Its sort of a running theme I’ve been picking up lately whether it be Warren Buffet emphasizing the importance of honesty or my Business School’s Dean talking about how a change of focus from making money to taking care of his clients made him even more successful than before but the readings reinforced how ethical behaviour will help you in the long run by enhancing your reputation and credibility.

The general message I’ve been getting is that honest behaviour actually pays off in dollars and cents rather than just through an intangible moral currency. While I’ll like to think that I’ll always chose the ethical choice just because it is the ‘right’ thing to do, the financial incentives that seem to come along with ethical behaviour shoudl probably keep me on the right track.

So now I’ve finally finished the first study session, I’m debating whether or not to continue with quantitative analysis or start with something more interesting like portfolio management before going back. When I looked through the chapter on technical analysis, I ended up reading almost the entire chapter because it was so interesting so going through more compelling material will definitely help improve the speed at which I can go through the material, especially with my finance and marketing midterms competing for time…