x Abu Dhabi, UAEMonday 22 January 2018

Daniel de Faro Adamson and Joe Andrew: The Blue Way

The central argument behind The Blue Way is pretty simple - you should invest in companies that have progressive values.

The central argument behind The Blue Way is pretty simple - you should invest in companies that have progressive values, because you'll make more money that way. Seizing on the red-blue divide that has characterised American politics since the 2000 elections, the authors argue that Democrats (the blue team) do it better than Republicans (the reds) when it comes to both politics and business. The authors try to prove the theory by looking at the 10-year performance of their own "Blue Index," a list of 76 companies culled from the S&P 500 stock index based on political donations and a list of "progressive" practices. Between June 1997 and June 2007 this index returned roughly 35 per cent a year, beating the 500 companies in the S&P by a margin of around 18 per cent per year. That may sound like a convincing reason to invest in progressive companies. And there is wisdom behind the notion of putting your investment dollars in companies with the qualities the authors promote: innovation, staying on top of new trends and avoiding mortgaging the future in favour of short-term profits. Thing is, these aren't merely progressive principles. They're good principles for businesses, no matter the political leanings of the management.

And that's where the authors make a mistake. By redefining smart companies by their political contributions - a direction the book takes from the outset - they ignore the real reason so-called "blue" companies do well: because they have adapted to the new global economy. It would be absurd to assert that companies like Apple, Google, Nike and Starbucks have been successful merely because they've given more money to Democrats or ascribe to the pet causes of progressives.

Meanwhile, given the market turmoil since the book was published last year, it's impossible to be sure whether the Blue Index has sustained its remarkable performance. The authors never give us a full list of the companies that are on it. But they do tell us that the failed investment bank Lehman Brothers is one of them. Publisher: Simon & Schuster, 2007 Ratings Explained ★★★★★Excellent ★★★★Very good ★★★Good ★★Poor ★Dire afitch@thenational.ae