Should You Invest in “Sin” Stocks?

Do you love smoking cigars and cigarettes? Do you gulp down beer, whiskey, rhum, gin, lambanog, ethyl, isopropyl, etc.?

Do you adore gambling and playing the games of poker, slots, baccarat, bingo, blackjack, roulettes? Then I suppose you would definitely invest in companies that sell these products and services. Or, would you?

We always remind new investors to take a deeper look into a company’s fundamentals before deciding to buy their shares. But I seldom hear these days to consider asking themselves first if the company they are interested in are actually producing either clean or “sin” products.

You wonder why our government won’t totally ban cigarettes and liquor despite the more harm than good that they offer? It’s simple. The government earns from taxes paid by these companies.

What Are The Listed Philippine Sin Stock Companies?

I tried to browse a few and found a very short list of “sin” stocks. You can add some more if I missed any of them.

PRC               PHILIPPINE RACING CLUB
BEL               BELLE CORP
LR                  LEISURE & RESORTS WORLD CO
BLOOM        BLOOMBERRY RESORTS CORP
MJC              MANILA JOCKEY CLUB INC
SMB              SAN MIGUEL BREWERY INC
GSMI            GINEBRA SAN MIGUEL, INC.

Should I include mining stocks? Hhmmm…

Turbine aalborg

Why A Lot of Sin Stock Traders Love Sin Stock Companies

1) Because these sin stock companies produce and sell products that are sinfully desired by many people: cigarettes, beer, gambling. Next could be adult magazines and guns. Products that excite people. “Great” reasons to value these stocks.

2) Because these sin stock companies produce and sell products that people WANT to buy each and every single day. Cigarettes are not smoked once. Gamblers don’t just gamble for one night in Casino Filipino. Alcoholics don’t drink just one bottle of beer and become transformed into a clean Christian person in just one weeknight. They all have to be bought over and over again.

If a company’s products are consumed endlessly, investors won’t go away from them.

3) Because these sin stocks have loyal followers. Investors and traders are confident that buyers of these products will remain until they die.

4) Young people become adults. Millions of them become exposed to booze and cigarettes. They will never run out of consumers each year.

5) Even when the country’s economy is down, people with addiction to these vices will continue to buy these sin products. Regardless if the country’s economy falls apart or not, smokers will never stop smoking. Alcoholics will never stop drinking. Sin stock traders therefore will continue to buy and sell their shares and earn a lot from them.

6) As long as there are sinners, sin stocks will stay.

Are You An Upright Investor or An Investor with The Right to Choose?

When investors meet, most of the time they talk about how much their investments have earned in the past year. Or who has the bigger net gain. But sometimes some investors won’t admit that they own companies that sell products that say “smoking is dangerous to your health”. Or firms that ask you to “drink moderately”.  Our parents may be quite thankful FHM and Maxim magazines have not decided to be listed yet.

Should you really ignore sin stocks? Are you a socially responsible investor? Do you support companies that produce products and services that destroy health and families? Really, it’s your conscience that will matter at the end of the (trading) day. Your call. To each his own.

But personally, I will only buy stocks of companies that benefit the general public and not only the few ones.

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2 Responses to Should You Invest in “Sin” Stocks?

  1. nick says:

    We should separate investing and guilt. We dont force people to drink its their choice.I dont drink I will invest with san miguel I just want tomake sone money.

  2. Carlos says:

    I haven’t invested in guilt stocks yet. But it’s an intriguing concept.

    As reference, even US presidential nominee backed out of buying a gun company (even though it was a bargain, and there was as good a chance to make money off it). He just felt it wasn’t something he could do personally, and business-wise it would not reflect well on the business’ brand.

    Investing isn’t just about making money for yourself though. When you invest in a stock, you invest in their business. And the more people invest in a business, the more that business has room to grow.

    And since they aren’t the only businesses/stocks to make money off, it’s a question of whether you are willing to support gambling (or some other vice) as long as they make money for you.

    This leads me to think that vices are a good investment choice, but I’d rather not invest in them for two reasons: it doesn’t reflect well on me (assuming my choices are somehow made known) and during tough times, vices take the toughest hits.

    During the global financial crisis, Americans started staying away from casinos. I don’t think I’d like to invest long-term in a business that is not recession-proof.

    Beer is a different matter though. But I think it’s only a “sin” when consumed in excess – and when used as an excuse to do something stupid.