

At Least on Wall Street, Wages of Sin Beat Those of Virtue - robg
http://www.nytimes.com/2007/09/14/business/14vice.html?ex=1347422400&en=084ed93c655e9530&ei=5090&partner=rssuserland&emc=rss

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jimbokun
But of course:

"The record of the Vice Fund has not been without blemishes. Its founder,
Richard A. Sapio, and two other executives at the fund's advisory firm,
Mutuals.com, were accused in 2003 of securities-related fraud and in 2004 of
conspiracy to commit securities fraud, wire fraud and mail fraud."

Maybe the kind of thing you should think about before investing in something
proudly calling itself "The Vice Fund".

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staunch
No, no. These guys aren't amoral blood suckers -- they're just "keeping the
market efficient!", haven't you heard? (My time in the financial industry was
the most repugnant professional experience I've ever had. I'm a little
bitter.)

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byrneseyeview
They may be amoral -- but whose blood are they sucking?

Also: the only reason this is profitable is that moralists avoid these stocks.
If you want Sin Investing to be less successful, you just need to discourage
socially responsible stock pickers.

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nostrademons
Sometimes, I wonder if the best thing anti-smoking advocates could do would be
to buy up all the Phillip Morris stock and then use their dividend checks to
run lots of gritty anti-smoking ads. Heck, if they bought enough, they could
gain control of the company, publish all the incriminating smoking memos,
forever tarnish the brand image of all cigarette manufacturers, and liquidate
the company.

~~~
byrneseyeview
This is sort of what Warren Buffett suggests is happening with taxes: he
argues (in one of the letters to shareholders in the 80's) that there's a
"Class G" stock entitled to 35% of a company's annual profits, and that
sometimes that money is used to reduce those profits.

It would be great to make that explicit: put together a foundation that buys
cigarette stocks, reinvests most of the dividends, and uses the rest for ads.
It's a built-in hedge, because the stocks only go down if the ads are working,
and if the ads fail (or, per "Thank You For Smoking," make smoking cooler) the
ad budget goes up.

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byrneseyeview
This makes a lot of sense. When you invest in a stock, your returns aren't
just financial: buying shares of a solar power company pays a dividend in
pretension (sort of like buying Amazon in 1999; it wasn't the money -- it was
the .com). Since these stocks have a negative 'dividend' in the sense that
nobody wants to admit to owning them, they offer higher returns to compensate.

Peter Lynch recommended this with garbage haulers and coffin manufacturers.
It's still viable.

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yters
It's generally been said that sin pays of in the short term, while being very
bad in the long term.

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byrneseyeview
In fact: I can't think of any 'sins' that aren't exactly what a cynical person
would do to maximize long-term gain.

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yters
Really? Pride, sloth, envy, wrath, lust, etc. all seem to cause more trouble
for the person who can't control them. How do they maximize long term gain, or
are you thinking of something else?

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brlewis
yters, you're thinking from the customer's point of view, which is great.
Looking from a cynical business point of view, they are weaknesses to exploit.
For example, one could create a discussion site and attract a lot of eyeballs
by posting contentious comments, raising peoples' wrath (also known as
"trolling"). Envy is what high-end consumer products exploit.

~~~
yters
Ah right. However, this has a bad long term effect for the market as a whole.
Just look at what such thinking has done to our culture as it is.

