The do-it-yourself ethical investor

Clients don't need to compromise their unique social standards, however, to invest profitably, says Ms. Kossian at T. Rowe Price in Baltimore. Never has she had to tell her clients that their screening standards were too onerous. Even the retired psychologist who refused to invest in notoriously stingy health-maintenance organizations, and the mother who avoided vaccinemakers because she felt they had caused autism in her son, were able to craft moneymaking portfolios that upheld their personal values.

Once a personal policy is set, the challenge becomes finding companies poised not only to prosper but also to put the stamp of your values on the world.

At this stage, Robert Berridge, a vice president at Green Century Capital Management Inc. in Boston, would apply his own thorough formula. But for those with less time, he offers a tip: Limit your range of options to companies with ethical products.

"There are no real rules of thumb for ferreting out what a company is doing from what it says it's doing," says Mr. Berridge. "They may say they donate to this or that cause, but maybe the core of what they're doing is not so good."

So, rather than spend days combing through corporate histories, Berridge suggests finding the best companies involved in the most ethical enterprises. Look among organic grocers, for instance, and consider a solid company like Whole Foods Market, he says. Or consider makers of alternative-energy products, such as Vestis, a manufacturer of wind turbines.

This technique saves time, Berridge says, and virtually guarantees that every holding in the portfolio is an ethically minded company.

But there can be drawbacks. He cites the case of AstroPower, a solar-power company with the greenest of products but a revenue stream that could have used a lot more green - that is, cash. Like Enron, another favorite among ethical investors at one time, AstroPower seemed to have artificially inflated its revenues before a sobering quarterly statement sent its stock price tumbling 50 percent in one day.

The lesson: Even green sectors have bad apples.

What's more, according to Kossian, investors who want to see environment-friendly products roll off each of their assembly lines might be missing out on many good companies who bless the world in subtler ways.

"When you start the other way around, you may be holding a number of mediocre companies and be depriving yourself of the full universe of stocks to choose from," Kossian says. "It's possible to end up with tremendous underperformance over a long period of time."

Kossian recommends instead considering ownership in any company with consistent earnings growth, competent management, and a unique advantage in its industry. Digging for those companies and weeding out the troublemakers could take lots of time, but as in yard work, a few powerful tools can save a lot of time and heartache.

Fortunately for today's time-strapped investors, analysts have sorted through reams of corporate data and posted rankings in myriad categories on the Internet. Find trustworthy rankings in areas relevant to your goals and values and you're close to knowing which stocks to pick.

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