The World’s Most Ethical Companies designation from Ethisphere.com recognizes companies that truly go beyond making statements about doing business “ethically” and translate those words into action. WME honorees demonstrate real and sustained ethical leadership within their industries, putting into real business practice the Institute’s credo of “Good. Smart. Business. Profit.”

There is no set number of companies that make the list each year. Rather, the World’s Most Ethical Company designation is awarded to those companies that have leading ethics and compliance programs, particularly as compared to their industry peers. This year, there are 110 World’s Most Ethical Companies. Of these companies, 36 are new to the list in 2011 and 26 companies dropped off from the 2010 list. These “drop offs” generally occurred because of litigation and ethics violations, as well as increased competition from within their industry.

IT CAN PAY TO BE ETHICAL

Investing in ethics is beneficial for any company, even in a recession. The below graph compares the “WME Index,” or all publicly traded 2011 World’s Most Ethical Company honorees, against the S&P 500 since the initial World’s Most Ethical Companies recognition from 2007.

Top ethical companies in S&P 500 from 2007-2011, total return was around 45%

Companies in S&P500 not making Ethical list:  2007-2011 total return was around 10%

So the most ethical companies produced returns 4 and a half times greater!

2011 WORLD’S MOST ETHICAL COMPANY SELECTION PROCESS:

1. The Methodology

A methodology committee of leading attorneys, professors, government officials and organization leaders, assisted Ethisphere in creating the scoring methodology for the World’s Most Ethical Companies awards.

2. Candidate Selection

Over the course of the year, companies across the world submitted their applications to become 2011 World’s Most Ethical Companies. Based on these applications, as well as information Ethisphere gathered throughout the year, a list of semi-finalists was created.

3. In-Depth Analysis

At this stage, semi-finalist companies were notified and given an in-depth survey questionnaire to fill out regarding their ethics and compliance program, governance and corporate responsibility.

4. Further Refinement

Ethisphere then conducted data analysis on hundreds of companies based on their responses to the survey, as well as documents and information researched and requested by Ethisphere to confirm survey responses. Every company was then given an EQ score based on the results of the survey and measured against seven distinct categories. These categories were Corporate Citizenship and Responsibility; Corporate Governance; Innovation that Contributes to the Public Well Being; Industry leadership; Executive Leadership and Tone from the Top; Legal, Regulatory and Reputation Track Record; and Internal Systems and Ethics/Compliance Program.

5. The Winners…

The highest EQ scores for each industry became this year’s 2011 World’s Most Ethical Companies.

You can find more in-depth information on the methodology for 2011’s World’s Most Ethical Companies here.

I wanted to highlight ten of the companies in “Our Proud to Own” pool that made the List:

Aerospace:

1. Rockwell Collins, Inc. (COL) – Rockwell Collins develops communications and aviation electronics for commercial and military customers worldwide. Core competencies include communications, navigation, automated flight control, displays, simulation and training, integrated electronics, and information management systems. The firm sells to governments, airlines, original-equipment manufacturers, and other commercial customers while providing follow-on services and support for many of its products.

Automotive:

2. Johnson Controls (JCI) –  Johnson Controls operates three businesses. The building efficiency segment is a $14.9 billion group that provides controls and services for HVAC systems. The automotive experience segment is a $20.1 billion business that primarily sells seats in addition to interior products, such as cockpit systems and other electronics. The power solutions unit is a $5.9 billion business that makes batteries for passenger vehicles, trucks, and other applications.

Chemicals:

3. Echolab (ECL) – As the global leader in the cleaning and sanitation industry, Ecolab provides products that help its hospitality, food-service, health-care, and industrial customers do laundry, wash dishes, kill pests, and fix appliances when they break. With unmatched scale, a solid razor-and-blade business model, and a dedicated salesforce, Ecolab’s competitive advantages are firmly in place.

Consumer Products:

4. Colgate-Palmolive (CL) – Colgate-Palmolive is one of the world’s largest consumer product companies. In addition to its namesake toothpaste and detergents, the firm manufactures shampoos, shower gels, deodorants, and shaving products. It also owns specialty pet food maker Hill’s, which sells its products through veterinarians and specialty pet retailers. Colgate products are sold around the world; about three fourths of sales come from outside the United States.

Energy:

5. Encana (ECA) –  Encana Corp, based in Calgary, Alberta, engages in the exploration and production of natural gas in the United States and Canada. At the end of 2010, the company reported proved reserves of 13.9 trillion cubic feet of natural gas equivalent, based on forecast prices and costs. Daily production averaged approximately 3.5 billion cubic feet of natural gas equivalent in the third quarter of 2011 at a ratio of 96% gas to 4% liquids.

Insurance:

6. Aflac (AFL) – Aflac offers supplemental health insurance and life insurance in the two largest insurance markets in the world, the U.S. and Japan. In addition to its cancer policies, the company has broadened its product offerings to include accident, disability, and long-term care insurance. It markets its products through independent distributors, selling most of its policies directly to consumers at their places of work.

Industrials:

7. Deere & Co. (DE) – Deere designs and manufactures agricultural, landscaping, construction, and forestry equipment. The firm typically finances a large portion of its equipment sales through its Deere Credit subsidiary. Founded in 1837 by John Deere, the company now employs more than 50,000 people around the world.

8. Caterpillar (CAT) – Caterpillar is the world’s largest manufacturer of heavy construction machinery such as bulldozers, excavators, and loaders and equipment for surface and underground mines. The firm also produces engines for its own off-highway vehicles and others’ machines. Cat supports its machinery and engine revenue with a financial services arm, a logistics business, and remanufacturing service work.

Telecom:

9. Singapore Telecom (SGAPY) – Singapore Telecommunications Limited is engaged in operation and provision of telecommunication systems and services, and investment holding. The main services and products provided by both Singapore and Australia are mobile communications, and data.

Business Services:

10. Accenture PLC CAN (ACN): Based out of Dublin, Ireland, Accenture is a leading provider of consulting, technology services, and outsourcing solutions to a global client base. It serves 96 of the Fortune Global 100 and more than three quarters of the Fortune Global 500. Accenture’s business is organized within five operating groups: communications and high tech, financial services, products, resources, and health and public services. It employs more than 220,000 people spread over 50-plus countries.

There you have it!  Want some help building a “proud to own” portfolio?  Check out http://www.faithbasedinvestor.com.

Jay’s View:  Our game plan is set to work no matter which way themarkets go in 2012.  It could be a real bumpy ride, but we are confident we will come out on top this year!  Get our game plan…

This monthly VIP newsletter covers how to invest without compromising your faith and values.  We have 5 sample portfolios that we update monthly and as market conditions warrant.  You see exactly what we are buying and when we do so.   Want to learn more about our VIP program?  Go here:

http://www.faithbasedinvestor.com/index.php/services/vip-membership/membership-benefits

Download a sample of our monthly newsletter:

FBI Jan 2012 as of 1-3-12

Having success is often related to avoid deadly wealth destroying mistakes.  In this ebook, I share ten of the most common mistakes I have seen people make over the past 16 years of my financial advising career.  Come lean and make sure you avoid these mistakes like the plague!

Big Mistake #1: Paying too much $$$ in fees

Big Mistake #2: Getting advice from the wrong places

Big Mistake #3: Choosing the wrong places to store wealth

Big Mistake #4: Failing to plan ahead

Big Mistake #5: Failing to properly account for inflation, taxes, and long-­term health care

Big Mistake #6: Spending more than you make

Big Mistake #7: Failing to properly understand risk

Big Mistake #8: Failing to save regularly

Big Mistake #9: Using debt to consume rather than to conserve

Big Mistake #10: Gambling with your assets instead of investing

Download the ebook here:

10 Mistakes Ebook

As 2011 winds up, many investors are more concerned with return of capital than return on capital. That is understandable; Wall Street faced some powerful headwinds this year. With little policy momentum to foster or aid any available economic momentum, U.S. and global indices were poised to finish the year with flat to poor annual returns.

The debt crisis in Greece boiled over to Italy and touched Spain and France, scaring the world economy. Key heads of state from the European Union reaffirmed their countries’ commitments to the euro and sought to reassure investors; many observers saw as much rhetoric as action in their efforts and were skeptical that the EU could effectively address its debt crises in the coming years.

At home, our economy expanded, but not as much as would be hoped for in the typical recession recovery. Unimpressive job creation and high unemployment thwarted any housing rebound, despite record-low mortgage interest rates. Many consumers perceived the economy as bad and Congress as even worse, but consumer spending and retail purchases showed improvement in an economy where inflation hovered around 3.5% and growth hovered around 2%. A super committee of 12 Capitol Hill legislators could not agree on where to make cuts to the federal deficit, only months after a drawn-out fight to raise the debt ceiling prompted Moody’s to issue a historic downgrade of the U.S. credit rating to AA+.

Stocks. As the holiday season started, the Dow was more or less flat for 2011: down 0.7% YTD at the close on November 22. Year over year, it was +2.8%. The S&P 500 was down 5.5% YTD on November 22 and its 1-year change was -0.8%; the NASDAQ had lost 0.4% over the previous 365 days and YTD it was at -5.0%. Looking at the small caps, the Russell 2000 was down 11.2% YTD and 4.3% YOY.

How about the S&P 500 sectors? Approaching Thanksgiving, the YTD numbers looked like this (again, this snapshot was taken at the close on November 22): utilities, +7.0%; consumer staples, +3.8%; health care, +2.2%; consumer discretionary, -0.5%; info tech, -1.4%; energy, -2.8%; telecom services, -6.3%; industrials, -9.1%; materials, -15.0%; financials, -24.5%. That’s three out of ten in the black. The S&P 500’s total return was -3.78% at that point.

Other global benchmarks suffered from the anxiety generated by years of fiscal mismanagement on the part of sovereign governments. Morningstar data (measured in U.S. dollar terms) showed the following YTD losses among important world indices on November 22: Sensex, -20.2%; CAC 40, -24.6%; DAX, -23.5%; FTSE 100, -11.8%; Hang Seng, -21.0%; Nikkei 225, -18.7%; Australian All Ordinaries, -13.3%; TSX Composite, -12.3%; Shanghai Composite, -14.1%; MSCI Emerging Market Index, -21.0%; MSCI Word Index (ex-USA), -15.5%.

Commodities. Gold and silver had definite allure. Looking at the handy charts from IndexMundi.com gold was up 22.8% YTD and silver 12.3% YTD on November 22; copper, on the other hand, was at -22.4%. In energy, crude oil had advanced 7.8% on the year; natural gas had fallen 20.7%; RBOB Gasoline futures were up 20.5% YTD. In crop futures, wheat was at -11.5%, cocoa -15.3%, oranges +40.6%, barley +7.0%, coffee -5.5%, sugar -11.6%, cotton -38.2%, rubber -26.4% and soybeans -12.7. The U.S. Dollar Index approached Thanksgiving down 0.8% on the year.

Real estate. The annualized numbers mean most in this sector, and these were the latest available by late November. The pace of existing home sales as measured by the National Association of Realtors was 13.5% better in October 2011 than in October 2010, although the month-to-month data had shown basically a plateau since February. NAR’s pending home sales index (September edition) showed 6.4% annual improvement; the National Association of Home Builders/Wells Fargo Opportunity index showed housing affordability at its highest in more than 20 years. The 20-city S&P/Case-Shiller Home Price Index showed an overall 3.8% year-over-year decline in prices in the September edition.

Total housing permits hit their highest level in seasonally adjusted terms in October since spring 2010 (when the home buyer tax credit expired). New home sales, however, were down 0.9% from a year before in October.

All in all, it was a year for patience. 2011 required it, and 2012 may require much more. Years of deficit spending have come to haunt key economies. What would have been stunning volatility during most of the 1990s or 2000s seems par for the course today as we have to hang on, stay diversified and ride out the turbulence – hoping that our stock market can manage at least a bit of “decoupling” from the debt troubles plaguing continental Europe.

To avoid investment scams, give Jay Peroni a call at 866-594-9919 for a 30 minute portfolio review.

Help! Where do we go from here?

There is definitely a lot of bad news coming down the pike.  From the United States’ massive fiscal problemsto potential defaults in Europe to the massive inflation and economic slowdown in red hot China.  If you also consider the Japanese global supply restraints and the Middle East oil crisis, there really is a perfect financial storm brewing.  Will it be a tropical storm or a category 5 hurricane?  That is the question.

Bad times don’t have to beat you down.  We serve a mighty God who can steer us through the storms. This doesn’t mean we will be bulletproof, but it does mean we can place our trust in Him rather than monetary instruments.  This shouldn’t be an excuse for complacency and “sticking the mighty head in the sand”.  Instead, it is a time to put our faith into action.  We should seek to do all we can to proactively protect the wealth entrusted to us and leave it to God for the results.

Plan ahead

He wants us to plan ahead for good times and bad.  In our desire to multiply all the Lord has provided, this means we should be taking the extra steps to be wiser stewards in how we:

* Earn income

* Give generously

* Spend money

* Invest a surplus

By bringing our faith to the front and center, seeking wise counsel, and taking action, we have a better shot at producing positive results even while the world is falling apart.  Have you noticed that there are two economies?  The world’s and God’s?  Where do you place your trust?

Most of us will be quick to respond “of course we choose God!” Yet, is this the way we live? If it is, why do so many Christ followers worry and fight so much about money?  Why do most Believers not handle their money any differently than non-believers?

It all starts with your attitude

Many Christians are still stuck in the rut that money is the root of all evil.  They look negatively at wealth and cite passages like:

Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God. – Matthew 19:24

READ MORE

At Faith-Based Investor, we combine both moral and financial analysis to uncover companies our subscribers and clients can be “proud to own”.

This starts with a moral inventory.  What Christian values are important to you as an investor.  How much of your money in your 401Ks, IRAs, mutual funds, and stocks do you want to be profiting from things like:

1. abortion

2. explicit entertainment

3. homosexual activism

4. Embryonic stem cell research

5. Vices like tobacco, alcohol, and gambling

There may be other values important to you as well.  You may want to find companies making a difference in this world.  Those that are positively impacting our culture or those feeding the poor and helping the sick, or those creating cures for life threatening diseases.  Whatever the case, your values are important.  Shouldn’t your portfolio reflect those values?

It shouldn’t end with a moral analysis

It is great to have companies in line with your values but we are also called to multiply what has been entrusted to us.  As good stewards we have a responsibility to provide for our families and help those less fortunate.  We cannot do so if we are not financially stable and need help ourselves.  By getting stronger, we can help more people around us.   That is where good financial analysis comes into play… Faith-Based investing should combine good moral and financial analysis!

After screening “out” companies that don’t meet our moral criteria, we still have over 6,000 companies to choose!  If we can’t find good investment opportunities from among thousands of choices – shame on us!  There is no good excuse.

Finding great investment opportunities begins by knowing what you are looking for.  Are you an income investor, growth oriented, aggressive, or some combination of these.  At Faith-Based Investor, we break down our portfolios into 5 basic strategies:

* Dueling Duo (Growth/momentum based)

* All-Weather (balanced, middle of the road approach)

* Global Income (maximize income)

* Contrarian (deep value, price is important approach)

* Tomorrow’s Treasure (aggressive – small and mid sized companies)

As we talk to many investors, many fall into one particular category, but others combine strategies.  They may want some lower risk investments in one account and higher risk investments in another account.  Whatever the case, a financial analysis is just as important as the moral analysis.  Finding out what type of investor is extremely important.  Considerations like time frame, risk level, liquidity needs, and investment goals are the starting point for any solid investment portfolio.  Let us know if we can help in any way.  Call us at 866-594-9919 for a FREE 30 minute portfolio review!  Get started today so you can find companies you can be “proud to own”!

Just a gimmick?

This past week, I received a great question, “My advisor seems to think your approach to investing is a gimmick and  he won’t implement any of the recommendations you have given us, what should I do?”

Don’t wait a second longer.  We will take a look at your investments from two perspectives:

Here is my interview on Follow the Money:

On this week’s program, gold and silver soar to new highs while the U.S. dollar falls to a 2 ½ year low. We’ll bring you an update. And this week, rising food and gas prices just will not give U.S. consumers a break…  It’s all a part of our Weekly Market Report where we will recap the highlights of this week’s market action in stocks, bonds, commodities, energy, and precious metals. And precious metals advisor, Tom Cloud, will be here with his Precious Metals Market Update.

Then, in Segment Two, Jerry is joined in a special interview by Certified Financial Planner and Author, Jay Peroni. Jay is a friend of the show and a part of our Christian Financial Advisor Network. He will be here to discuss what he sees ahead for the U.S. stock market. Jerry and Jay will also discuss the topics of faith and money along with Jay’s book, The Faith-Based Millionaire.

LISTEN HERE

Many people may made a commitment to show better stewardship in 2011. This may include your personal lifestyle in an effort to live and eat better or it may also include your finances.   Many are trying to “go green”.  Conserving what God created is always a good idea.  How can you make a bigger impact with your investments to compliment your moral and social preferences?

You’ve probably heard the phrase, “do well by doing right.”   In the financial arena, it is often written or spoken in reference to impact investing – also known as socially responsible investing. At Faith-Based Investor, we believe in social and moral responsible investing.  See the difference.

A chance to be an activist

Maybe you don’t think of yourself as an activist – you don’t take to the streets, you don’t have the time or energy to get involved on the ground in social or political causes. Well, many investors around the world are choosing to be economic activists through socially responsible investing.

The fact is, sometimes a corporation or a big business can generate large-scale environmental or social returns for a community or a region – an impact that many non-profit organizations would be hard-pressed to match. Socially responsible investing means allocating some of your investment assets across private sector change agents working for sustainability.

The demand is there and financial firms are noticing it

Many investors want to affirm sustainability through their portfolio choices. The fund companies must meet an interesting challenge as they seek to serve this expanding investor niche.

On one hand, it would seem appealing to allocate X percent of one’s assets to an emerging market fund dedicated to impact investing. You could help the emerging economy of a nation or a region with a growing middle class, and essentially cast your vote in a certain economic direction. On the other hand, many emerging market economies have lax environmental and labor regulations and poor track records when it comes to human rights – and mutual fund companies are hardly lobbyists.

Still, as of January 2011 there were 166 impact investing funds available – more than twice the selection found in 2001.

Social returns aside … what about investment returns?

A few years ago, impact investing was getting a bad rap. The word on the street (Wall Street) was that your fund choices were limited and performance was nothing to write home about. Well, is that true today?

It doesn’t appear to be. SRI funds appear to be holding their own in the market The KLD 400 Social Index – pretty much regarded as the benchmark index for socially responsible investing – posted a 1.1% price return across the past five years compared to 1.0% for the S&P 500. Some individual fund returns have been very impressive. For example, the 75-stock Huntington EcoLogical Portfolio gained 33.5% during 2009.

Who sets the screens?

Who determines whether or not companies meet a socially responsible fund’s criteria? Sometimes that is left up to private third-party research firms consulting the fund. This may mean that some companies you might think twice about make the cut, as their criteria could differ from yours. So you want to keep checking what you own.

You also want to see that the funds are really walking the walk. The Social Investment Forum (a Washington, D.C.-based membership organization for financial services industry firms and professionals committed to impact investing) says that just 27% of socially responsible mutual funds file shareholder resolutions or actively call for change at the companies they own. SmartMoney looked at 20 big socially responsible mutual funds and discovered that 10 had invested in oil companies.

Going green?  Consider green investing!

Look into some of these green investment options and you will likely find one (or two, or more) that may meet your personal environmental, moral, and social and standards. Over time, they may create financial, social, moral, and environmental returns.