Ethics is lacking in much of corporate America. Just think about the last time you purchased a box of cereal and opened it, just to see that half of it was filled with air. In the past, the same size cereal box was filled with cereal. Well, the air you purchased increased the profit margins of the company that produced the cereal, and the compensation of the corporation’s executives.
How does corporate greed translate into profits from trading and investing? On one hand, in theory, stock prices rise when earnings are expected to rise and vice versa. But if earnings are artificially inflated, then what? Or if an unethical corporation is earning money and has strong earnings growth prospects, then what? In my opinion, one should sleep with their eyes open and take profits when available based on pre-determined profit levels, as an unethical business is one that will ultimately fail. Holding a stock of an unethical company too long may ultimately lead to a loss – massive profits on a single trade or investment are less likely scenarios.