Stocks markets go up and down, but no matter what the economy is doing, people worldwide continue to drink, smoke, gamble, and fight. Why not invest in vice? Vice Fund Manager, Dan Ahrens focuses on "sin stocks"- tobacco, alcohol, adult entertainment, gambling, and aerospace/defense, contending that even during an abysmal economy, people will continue to indulge in these goods and services. In Investing in Vice, Ahrens explores all major aspects of the vice industry and provides traders and investors with: o A brief history of each principal vice industry o Strategies for building a profitable portfolio o Charts of each industry's stock performance o Instructions on how to invest in vice-pros and cons of full service brokers, managed portfolios, and mutual funds o Top Picks-of the best companies, and top stock holdings o Reasons why Socially Responsible Investing may not work With its lighthearted tone and simple approach, Investing in Vice is the ultimate defense in these troubled economic times.
A one-of-a-kind guide to investing in vice industries Although vices such as alcohol, tobacco, and gambling may be deemed socially irresponsible, in the investment world, these stocks continue to dramatically outperform the S&P 500 in this depressed market. Stocking Up on Sin shows readers how to get in on this hot investment trend and make the most out of publicly traded companies that deal with "vice" products such as coffee, weapons, alcohol, and tobacco. Caroline Waxler (New York, NY) is a New York-based financial journalist. She contributes regularly to Worth and Glamour magazines as well as the Financial Times. She was also the ghostwriter for Worth's Greatest Stock Picks of All Time.
In this paper, we empirically test the extent to which a portfolio of socially not responsible firms screened out of a market portfolio will trade at a discount. We create a set of global and domestic sin indexes consisting of a large number of publicly traded socially not responsible stocks around the world belonging to what we label as the Sextet of Sin: adult entertainment, alcohol, gambling, nuclear power, tobacco, and weapons. We compare their stock market performance directly with a set of virtue comparables consisting of the most important in-ternational socially responsible investment indexes. Employing a multi-factor performance measurement framework and recent boot-strap procedures for robust performance testing, we find no compelling evidence in the data that ethical and unethical screens lead to a sig-nificant difference in their financial performance.
This paper assumes the role of advocatus diaboli by testing whether an investment in sin stocks can financially outperform an investment in socially responsible stocks. We create a set of global, regional, and domestic portfolios consisting of a large number of stocks belonging to what could be labeled as a sextet of sin: adult entertainment, alcohol, gambling, nuclear power, tobacco, and weapons. We assess the performance of sin stocks against well-known benchmarks, and rerun the identical assessment for socially responsible stocks. We find no compelling evidence that sin stocks, or socially responsible stocks outperform or under-perform, and establish this result in several ways. Consistent with this finding, a hedge portfolio long in sin stocks and short in socially responsible stocks does not outperform the market, either. However, sin stocks are substantially tilted towards value, bear less market risk with an average beta below one, and are prone to momentum relative to socially responsible stocks.
Several recent studies led by Hong & Kacperzcyk (2009, Journal of Financial Economics) document that companies in industries perceived as sinful - so called sin stocks (i.e. alcohol, tobacco, gambling) - deliver a significant and positive abnormal stock market performance. This potentially attractive characteristics make these sin stocks a relevant investment opportunity for pension funds. In fact, following a rather conservative interpretation of pension funds' fiduciary duty, one might argue that pension funds have to investment overproportionally in sin stocks due to their seemingly superior returns to act in the best financial interest of their beneficiaries. This best financial interest, however, is unlikely the best interest of the beneficiary from a wider wellbeing perspective as, for instance, investments in tobacco companies are unlikely supportive of public health and hence beneficiaries' life expectancy. Before one dives into this legal paradoxon it is worth considering the practicalities of investing in these so called sin stocks, as the academic studies documenting their preferential characteristics used nearly exclusively hypothetical portfolios and not actual investment funds. In fact, only one sin stock based investment fund exists to the best our of knowledge, the Vice Fund. In this chapter, we pursue the first in depth analysis of the financial attractiveness of the Vice Fund, which penalizes instead of rewards responsible corporations. Despite the financial potential of the Vice Fund's underlying sin stocks has recently been indicated, we find the Vice Fund's abnormal return to be statistically indistinguishable from zero. Interestingly, the Vice Fund managers possess significantly value destructing directional trading and crisis management skills. Consequently, we cannot see any practical reason why pension funds would have to invest overproportionally in sin stocks, as their actually realised investment performance is no better than ordinary. Our finding is not necessarily inconsistent with Hong and Kacperczyk (2009), as they regressed equal weighted sin stocks against a value weighted market benchmark and economy wide investment style controls, which means that their significant positive alphas could have resulted from a clever portfolio weighting instead of any sin characteristics (i.e. the overproportionally weighted small sin stocks could have outperformed the underproportionally weighted large sin stocks).
Within this easy-to-use, need-to-know, no-frills guide to building financial well-being is advice for long-term wealth creation and happiness, without all the worries and fuss of stock pickers and day traders.
A ground-breaking book on the transformative power of impact investing This is the first book to chart the catalytic path of this new industry, explaining how it is and can be a positive disruptive force. It shows how impact investing is a transformational vehicle for delivering "blended value" throughout the investment spectrum, giving a single name to a set of activities previously siloed in enclaves, revealing how they are linked within what is becoming a new field of investing. Written by two leaders in the growing field of impact investing, the book defines this emerging industry for participants on all sides of the funding equation (investors, funders and social entrepreneurs). Filled with illustrative examples of impact investing success stories Reveals how the field can expand in order to address the most critical social and environmental issues of our day Explores the wide-ranging applications of impact investing as well as entrepreneurial opportunities The authors do not take a normative approach to argue how investors should behave like an investment guide might but show how entrepreneurial people and institutions are already offering an integrated alternative.
This article examines the return characteristics of a portfolio of US 'vice stocks', firms that manufacture and sell socially irresponsible products such as alcohol, tobacco, gaming services and national defense. First of all, I construct a portfolio using the daily returns of 41 vice stocks over the period October 2007 to October 2013 and find the Jensen's alpha (CAPM), Fama-French Three Factor and Carhart Four-Factor results for the entire portfolio, the entire portfolio during bear and bull markets, and each vice industry individually. Full-period results show a positive, yet insignificant alpha for the entire portfolio and each vice industry. Bear market results show a positive and significant alpha for the entire portfolio as well as for all industry portfolios except the tobacco industry. Bull market results for the portfolio are less conclusive with a significant alpha only in the three and four-factor models.
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