Home » sin stocks » Varied Vice: Why Sin Is Relative And “Sin Stocks” Are A Misnomer

Okay, this blog post is going to get me into a lot of trouble because I assert that…

sin is relative.

(Pause as audience gasps).

The word “sin” (and, to a lesser degree, “vice”) is typically used to describe a religious position on the morality of actions.

And I’m not picking on a specific religion here — many religions outline acceptable and unacceptable behavior. Each religion’s outline of acceptable and unacceptable behavior becomes the standard for defining sin within the framework of that belief system.

But the market itself (from the companies that produce products to the stock market that sells those companies’ stocks) is agnostic. It evolved out of no specific religion and it adheres to no specific religious code.

So when financial analysts use the term “sin stock” or “vice stock” what are they really saying?

They’re using those terms as short-hand for stocks that can be described as possessing a mix of the following characteristics:

  • The company operates in a highly regulated environment
  • The company’s products are potentially dangerous (especially if consumed in large quantity)
  • The company itself, or its products or services, are controversial (now or in the past) — and this controversy could be inspired by a variety reasons, including health, social, or the prevailing religion of the day

Not every sin stock can be described by every one of these characteristics but all sin stocks possess a mix of some of these characteristics.

As you can see, there is no inherent, overarching religious analysis here. It is purely social (with some historical-religious influence, certainly). We’re using social definitions but labeling them “sin” and “vice”.

Therefore, if we are using the term “sin” in a social sense (as I have shown), rather than in a predefined religious sense (as I discussed earlier) then we must recognize that the social definition of the term “sin” is changing:

  • During Prohibition, alcohol was a social vice. Today, alcohol sin stocks are a category of vice investments but are they really “sin”? Some religions might define the consumption of alcohol (at certain times or in certain quantities) to be a sin… but from a social standpoint, not at all! Bars and liquor stores are readily available.
  • Or ask anyone in the NRA or a member of the Armed Forces if they would consider conflict stocks (such as firearm manufacturers or defense contractors) to be sin stocks. They’ll tell you you’re crazy — these weapons are tools of freedom. Again, some religious groups would fee that the companies that sell these products are trading in sin but socially we accept weapons as part of the world we live in.
  • If I visit Las Vegas and throw away $20 on a slot machine, is that a sin? Some religions would say yes (or some might quantify the amount I can gamble or some might question my motives for gambling) but by our social definition, casinos are gambling sin stocks but they are very acceptable and legal today.

From a religious standpoint, some of these may have a sin element to them (especially if the company’s products are consumed in excess). But most financial advisors and analysts aren’t speaking within a framework of a specific religion; rather they use sin as a short form that is defined socially, not religiously.

Just some food for thought on the dichotomy between our religious and social definitions.

(I wrote a whole bunch more and then redacted it because I sounded like even more of a raving lunatic than I already do).

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.