In a previous post, I argued that we can achieve sustainability by changing the way we invest. I summarized some of the suggestions that I’ve made elsewhere on this blog, which include avoiding business debt and seeking value through dividends rather than stock price appreciation.
After sharing this post on LinkedIn, a few people commented. One person correctly pointed out that seeking increased dividends while discouraging debt would cut companies off from retained earnings, forcing them to issue new shares in order to drive growth. I responded by saying that slow growth is desirable – that’s what makes it sustainable. Another person wondered why anyone would want to invest if there is little prospect for price appreciation. After all, shouldn’t we expect a return that at least keeps up with inflation?
After having this exchange on LinkedIn, I decided that I ought to give a more detailed explanation of my views concerning growth.