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Sin StocksInvestors classify stocks into different categories: Junior resource stocks, tech stocks, biotech stocks, etc. In the years I have worked as a stockbroker and as a financial writer, I’ve seen the rise of tech stocks (I worked in a broker’s office during the height of the tech boom in 2000!) and I’ve since seen the rise of cleantech stocks. Gold stocks are hot right now. Blue chip. Small cap. Automotive. You get the idea.

These categories are defined around different things, such as the types of products manufactured and sold or the market capitalization of the stock. There is some flex in these definitions — they’re rarely “official” definitions. (Even a market cap definition like “small cap” is up for debate about what constitutes “small”).

Sin stocks are another type of informal classification. They’re a way for investors to describe stock in companies that sell products or services sometimes considered to be unethical or immoral. Investopedia, for example, gives the example of companies that sell products related to alcohol, tobacco, conflict, and sex. But their list is too short, and does it really accurately describe “sin” or social vice?

Alcohol, after all, hasn’t been considered a social vice since prohibition (and even then I don’t think it was considered a social vice by anyone except for Kevin Costner and his Untouchables). Tobacco is sometimes considered a social vice but tobacco has been a popularly accepted part of society for a long time (and is even a part of social customs and religious ceremonies). Weapons (which we call “conflict stocks” are only a social vice in the wrong hands. According to the US Constitution, they are a right, so they’re not really a social vice. Sex is only a social vice in some specific situations and that’s all I’m going to say about that because I don’t want search engines making this site searchable for some of the weirder stuff out there. Investopedia left gambling off of their list of sin stocks but it is often included.

So what are sin stocks really? The types of stocks listed above as sin stocks are highly regulated stocks (you need to be a certain age to purchase the related products or services for most of them). They are sometimes considered acceptable in small doses but not in excess, which can possibly lead to some significant consequences. And some of them are thought to be fun to the point of potential addiction.

But there is still a lot of gray area: A distillery might be lumped into the alcohol sin stocks, but what about a bar, tavern, or pub? A cigarette manufacturer might be considered a tobacco sin stock but what about a lighter manufacturer? A producer of pornography might be considered a sex sin stock but what about a condom manufacturer?

The gray area doesn’t end there, either. Consider these scenarios: A vegan might consider a butcher to be a sin stock; An environmentalist might consider an oil company or a strip mining company to be a sin stock; a Luddite might consider all tech stocks to be sin stocks. (Bonus points if you know what a Luddite is). And when a furniture company prints an ad displaying a homosexual couple, does that turn it into a sin stock? And since governments run lotteries, does that make their Treasury Bills into a type of sin investment?

Sin stocks are typically grouped into the following categories — alcohol sin stocks, tobacco sin stocks, conflict sin stocks, gambling sin stocks, and sex sin stocks. And in the Sin Stocks Report, I’ll frequently focus in on those categories (and a couple of other categories). But that grouping falls far short. Sin stocks are relatively defined — and our opinion of what a sin stock is or isn’t is guided by our own personal beliefs (including religious or moral underpinnings) and by social attitudes (including popular culture and peer pressure).

In the Sin Stocks Report, I’ll explore investments that are popularly called by that term but I’ll also explore the stocks that maybe also deserve the title.

But love them or hate them, one thing is certain: People love their vices and that creates a supply/demand issue that companies service… and investors can maybe profit from. (I said “maybe” to keep the SEC happy).

DISCLAIMER

Nothing on this site is a recommendation because, hey, I can't read your mind and I don't know what you have in your portfolio, and I'm not a licensed financial advisor. So never EVER trade without doing your due diligence. If you want more information about this fascinating topic, please check out the Sin Stocks Disclaimer page which basically says the same thing but more emphatically.