It’s the New Year… and with it comes New Year’s Resolutions. Droves of people are turning away from their vices — including alcohol, tobacco, and gambling (but certainly not limited to those things).
According to a study by the University of Scranton, and published here, 45% of Americans make resolutions, and those resolutions include quitting smoking smoking (#7 of the top 10 resolutions), and others related to getting healthy and losing weight.
But I’m not worried. It’s not going to kill tobacco sin stocks. Because the same study found that only 8% of people are successful at achieving their resolutions. In fact, a full quarter of people who make resolutions don’t even make it past the first week.
Take Altria (MO) for example. Every year for the past 5 years, their stock has dipped slightly in January and then risen consistently, ending the year about $4.00 above where it started (and last year it rose $11.00 above where it started the year).
Or take Philip Morris International (PM) as another example. Over the past 5 years, their stock dips each January and then it climbs. In some years it actually did much better than Altria (although in the last couple of years it has ended about where it started the year).
Or take Reynolds American (RAI) as another example. Over the past 5 years, their stock dips each January and then climbs in a similar pattern to Altria, rising somewhere between $2.00 and $10.00 each year.
Certainly the rise in stock prices can be attributed to a variety of market factors (a booming economy), as can that dip in January prices (end of year profit-taking). But I believe my point also plays a factor: That initial burst of “I’m-going-to-quit-smoking” optimism, which may have an impact on stock prices, is erased by the second quarter of year in the examples listed above.
So if quit-smoking New Years Resolutions have you worried, don’t be. Most of those smokers will be back shortly, buying up packs of smokes and trying to catch up after their naively optimistic goal.