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How to reduce risk in your ethical portfolio

Look for companies that solve problems or meet consumer needs in the new financial environment.

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For ethical investors, watching the stock market plunge has been a stark reminder that even outstanding companies often follow the tide. So going forward, how can investors assess and manage the risks associated with stocks more effectively? Looking for answers, the Monitor's Laurent Belsie turned to two investment pros who deal with ethical investments: John DeSantis, president of Civic Capital Group in Boston, and Joe Clark, managing partner of Financial Enhancement Group in Indiana. (The views expressed here are for informational purposes and do not represent an endorsement by The Christian Science Monitor.)

Is the investment world suddenly riskier?

Mr. Clark: Yes, but not for the reason most people perceive.... If you step back and you look at the forest, and you understand that the generation that was born in the 1920s – we refer to [it] as the Bob Hope generation – for every one person that was born there, there were more than four people born in the baby boom. So for every one car we needed [then], we needed four [for the boomers]. For every teacher, four; for every hospital, four; for every doctor, four. And if you follow that logic then the risk follows later. The echo boom, the generation that followed the baby boom, is actually smaller than the baby boom. For every one person we have in the baby boom, there's about 0.95 people here. And so if you think about it, for every car we needed [for boomers], we now need 0.95. For every house, 0.95. America is not designed to contract.

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