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Vice Stocks: Investing in Sin

Posted February 5, 2008

“Tough economic times won’t stop gamblers from gambling, drinkers from drinking, or smokers from smoking. It’s not going to happen.” — Ian L. Cooper

By Ian L. Cooper, Small Cap Trading Pit

Baltimore – (TFN): The following was taken from this week’s 60-Second Buzz on TFN. Watch this video.

Truth be told, further sell offs are imminent. The Fed will attempt to prop up the economy with further rate cut aggression met with a Bush Administration stimulus plan, but there’s no guarantee that either will snap the economic melee. But does that mean you convert to the 100% cash under the mattress strategy? No.

There’s always a bull market somewhere, despite the tumultuous fear. Think about this…

Tough economic times won’t stop gamblers from gambling, drinkers from drinking, or smokers from smoking. It’s not going to happen. In fact, tough economics may give them more reason to indulge in smokes, drinks, and gambling – the catalysts for “sin” stocks. During the fall of 2000-2002, for example, as the S&P 500 lost 47% of its value, “sin” related stocks, like Altria (MO) just about doubled, as others, such as Anheuser-Busch (BUD) tacked on an 87% upside.

Rather watch the financial video? Click here.

Immediately following the 9/11 attacks, the tobacco sector was an out-performer. A similar trend was seen during the 1991 Persian Gulf War, too, proving that people will buy cigarettes and alcohol regardless of economic and political tensions.

And it won’t be a surprise, given current economic conditions, if we see upside in other “sin” related investments, such as The Vice Fund (VICEX). With VICEX, you can argue that as economic disaster persists, the more money in makes. In fact, over the last year, the Fund tacked on 24% in value, as compared to 5.3% upside for the S&P 500.

To paraphrase Gordon Gekko, “Sin is good!”

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Posted by Ian Cooper · Filed Under US Stocks and Markets 

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