Home » sin stocks » 3 Reasons Investors Hate Sin Stocks (And What You Can Say To Shut Them Up)

… “I wouldn’t dare invest in sin stocks“…

… “You need to leave your morals at the door if you want to invest in vice stocks“…

… “I’m an ethical investor. Sin stocks have no place in my portfolio“…

People love to hate sin stocks and there are three reasons for their hate:

Values

Partly, it’s a choice that is informed by values… and there is nothing wrong with that. Our values should inform all the decisions we make. Actually, we can’t really get away from that. Everyone will always invest according to their true values (which may or may not be their stated values).

Misinformation

But partly it’s a choice that is misinformed by values: By defining sin stocks as “bad stocks” (when, in fact, they are two very different things), it’s easy to dismiss opportunities. The word “sin stocks” has a whole baggage car’s worth of baggage attached to it so anti-sin-stock investors may unwittingly choose sin stocks or may ignore stocks that aren’t actually sin stocks, purely because of misinformation. In other words, they avoid specific stocks because those are sin stocks but they don’t really pay close enough attention to the stocks they do own.

Moral superiority

And let’s not forget the sense of moral superiority that comes from reviling something that seems (on the surface) to be wrong. It feels good and sounds good to be an ethical investor, although claiming to be an ethical investor does not automatically make you one. A great example, mentioned to me during an interview once, was that you get people who feel morally superior about being eco-friendly because they use reusable bags at the grocery store… but then they buy goods with a lot of packaging and drive their groceries home in a massive emissions-spewing SUV.

What you can say to shut up the haters

If you are tired of hearing sin stock haters deride your choices, here are a few things you can ask them:

  • What do you define as a sin stock? Few people are aware of the full range of sin stocks and easily lump only a few well-known sin stocks into the category. Additionally, different values may consider some sin stocks to be acceptable and others not to be. An excellent example would be conflict sin stocks, which could include gun manufacturers (perhaps considered acceptable) and Private Military Companies (perhaps considered unacceptable), or wineries (perhaps considered acceptable) and beer breweries and spirits distilleries (perhaps considered unacceptable).
  • Do you know what stocks are in your portfolio? And, do you know what companies those stocks own at this exact moment? Altria is the famous example: The company formerly owned “family friendly” brands like Kraft Foods, Maxwell House Coffee, and more, while also being a cigarette manufacturer. That’s not the only company that does this. Other companies may seem innocent enough but are actually sin stocks (check out the post 3 Hidden Sin Stocks That You’ve Probably Forgotten Are Publicly Traded for some examples… but these certainly aren’t the only ones. Companies buy other companies and those companies make strategic decisions without daily input from investors. Your ethical investment could buy another company that later becomes a sin stock.
  • Have all of the products and services you buy been ethically sourced from eco-friendly and labor-market-friendly manufacturers? I love hearing people slam sin stocks from their morally superior high horse while wearing clothes stitched by child labor and while driving an SUV that they don’t need. It’s easy to point to a few things that are “outside” of our lives and say those things are wrong. But it’s much harder to make choices as a consumer. Many “ethical investors” do not want to support the sin stocks but sin stocks are traded in the secondary market and the money you spend on those stocks doesn’t go back to the company (whereas the money spent on child-labor-manufactured clothing does go back to the company).

Sin stocks are just another type of stock. You don’t have to invest in them if you don’t want to. But consider your reasons before throwing the good opportunities out with the sinfully dirty bathwater.

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.