Divesting Terror

Published: July 30, 2007, 9:14 pm

Michael O'Brien on NRO:An emerging trend in finance and politics across the country is a focus on so-called terror-free investments. Individuals and states alike are increasingly taking time to ensure that the stock they hold is certified as terror-free, meaning that they have no holdings in any government designated by the State Department as a terrorist-sponsoring state, or in businesses with substantial investments in those nations.Divestment is bad investing policy. When politicians decide to divest public funds (like my state employee retirement fund), it's bad public policy. As I've written over at TCS:... do divestment campaigns tend to achieve their proponent's goals? The clear answer from the empirical literature is "no." ... In sum, divestment may make activists feel all warm and fuzzy, but the evidence is that (1) it has no significant effect on the target of the divestment campaign but (2) likely does harm the activists' portfolios. ... Managers of

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