Christopher Holton, vice pesident of the Center for Security Policy and director of its Divest Terror Initiative, responds to Travis’s sentiments on divestment:

I believe Mr. Kavulla’s skeptical comments were made out of ignorance of terror-free investing and not out of any real philosophical difference of opinion with regard to Iran.
I will try to clear up some misconceptions that many have about terror-free investing, especially due to misinformation propagated by critics of terror-free investing.
First of all: Terror-free investing works! There is NO empirical evidence that terror-free investing adversely impacts portfolio investment performance. Terror-free investing has already been successful in the State of Missouri’s Missouri Investment Trust and in the Roosevelt Investment Group’s Anti-Terror Multi-Cap Fund, a fund rated 5-star by Morningstar.
In the process of making the decision to go terror-free, the Missouri Investment Trust tested a back-dated, terror-free model portfolio, and found that the terror-free portfolio would have outperformed the standard portfolio over the preceding 5 years.
In addition to the moral issue involved, there is an economic consideration: Global Security Risk. The Securities and Exchange Commission has acknowledged that doing business in a nation that sponsors terrorism or is a proliferator of weapons of mass destruction entails material and substantial risk for investors that must be disclosed. The SEC then coined the term “Global Security Risk” to label this issue and created an Office of Global Security Risk to oversee it. This is not a subject for debate. This IS a risk factor and the SEC says it must be disclosed. This includes the potential reputational risk associated with a company that has been found to partner with a nation that is killing US troops in Iraq.
Contrary to what Mr. Kavulla may perceive, the overwhelming majority of portfolio managers have ignored this risk factor and have not provided proper disclosure. Moreover, most portfolio managers that I have spoken with over the past 4 years have been almost totally clueless about geopolitical risk factors. So my experience has been very different from that of Mr. Kavulla.
The Enron and subprime debacles illustrate just why individual investors and taxpayers need to be active in the management of their own investments and especially the management of public funds. There is no doctrine of portfolio manager infallibility, as I am sure Mr. Kavulla will agree. Investing public money in such a way that even indirectly aids the warfighting capabilities of our enemies is bad public policy and citizens and their elected representatives should do all that they can to stop it.
And make no mistake about it: Western companies provide corporate life support for the Ayatollahs in Tehran, enabling them to generate revenues and acquire technologies that have already been shown to help Iran’s command, control and communications facilities in Iran and even that of Hezbollah in Lebanon.
Far from being an ineffective measure, divestment can negatively impact stock price and thus the personal wealth of the shareholders that corporate managers have a fiduciary duty to serve. This is the exact type of activism that helped bring about the end of apartheid in South Africa. It was the divestment movement in which 24 states and 71 cities participated, in addition to colleges and universities, that focused real attention on South Africa and resulted in US sanctions.
DivestTerror.org aims to do the same today with Iran. We want to bring the Iranian threat into sharp focus for American taxpayers and investors at the grassroots level and then show them how they can be empowered to do something about it themselves: invest terror-free and cut off corporate life support for the Ayatollahs who are killing American heroes in Iraq and Afghanistan today.
Companies MUST be given a stark choice:
They can choose to do business with the Ayatollahs, or they can choose to have unfettered access to US capital markets. They should not be able to have it both ways.