Home » alcohol sin stocks » The Playbook For Investing In Millennial-Friendly Sin Stocks

Millennials.

You’re either in the group, or you’re annoyed by them, or you’re a marketer who is desperately trying to decode them.

Millennials are a massive group of consumers who are happy to spend money on travel, mustaches, and gourmet coffee… when they have money. And they may not feel like a wealthy demographic cohort but they are — compared to their parents and grandparents.

So it’s no surprise that marketers are trying to figure out what they like to buy, what they want to avoid, and how it impacts businesses.

As a sin stocks investor, it would serve you well to figure these questions out, too.

Because, like it or not, Millennials are the future consumers and their buying power will only grow, which means that investors who are forward thinking can identify what products and services Millennials are buying, and what they’re panning, and you can invest accordingly.

For example: coffee. Baby Boomers were fine with companies like Dunkin’ Donuts. Generation X moved slightly higher-end and they buy Starbucks coffee. But even Starbucks is mainstream now and Millennials are going for more gourmet local coffee experiences rather than the big chains owned and operated by the “1%”.

The same concepts apply everywhere — from travel to clothes to food to entertainment.

As an investor, you might be playing the Baby Boomer and Gen-X angle right now but eventually you’ll need to rethink your investing strategies to consider what Millennials are buying.

Here’s what we’re paying attention to over at SinStocksReport.com with regard to the Millenial demographic and sin stocks investing…

Millennial-Friendly Sin Stock Investing

As with all demographics, there are some generalizations that one must make about Millennials as whole. These may not reflect individual tastes and preferences, and I’m likely going to get a bunch of emails from angry Millennials about how wrong I am. But investing is not about individual preferences; rather, it’s about identifying potential trends based on assumptions derived from a large large sample size… and that’s what we’ve done below. Plus, we are slicing and dicing groups like Millennials, Gen-X, Boomers, Hipsters, etc. in a somewhat haphazard way, which is necessary because there is no true, authoritative definition; the definition of each cohort, and the boundaries between them, are gray at best.

Millennials are a generally welcoming and permissive bunch (yes, we’re generalizing here a bit), which means that alcohol sin stocks and marijuana sin stocks are probably going to become more mainstream and acceptable, and may no longer be considered sin stocks in the future. Beer stocks like Anheuser-Busch (BUD) and Molson Coors (TAP) are responding by acquiring craft beer companies — the small-batch craft-brewed brands favored by this demographic.

Millennials are health-conscious, which may mean that tobacco sin stocks could struggle in the future if they can’t keep up with the changing tastes and preferences of Millennials. You should watch for tobacco companies to stop focusing on the big, mainstream brands that make up the main stable of brands and do one (or all) of the following…

  • Focus on options that are perceived to be healthier, including e-cigarettes or maybe some kind of “cigarette-lite”
  • Get involved in pot
  • Create smaller more “craft”-style brands, much like the craft beer movement

Millennials are socially conscious and very global, which could mean that they will avoid conflict sin stocks like weapon manufacturers and crime sin stocks (like prisons). And we may see new sin stocks added, including financial sin stocks (which we’ve already called here at Sin Stocks Report), and a less-vertical-specific group of any company that sells sweatshop-made products or unhealthy food.

For Millennials, sex sin stocks is the big unknown, in our opinion. Millennials are more open and permissive as a group, but sex sin stocks are typically pornography, which means this type of perceived sexual exploitation might run counter to the values of Millennials.

Millennials also feel short on cash but love experience-based travel. And that could play big-time into the hands of gambling sin stocks like casinos, who have already cornered those two components of offering a cheap way to travel while also gaining the potential of making money.

The Thing About Sin Stocks And Millennials That You Should Know…

One more thing worth mentioning: Sin stocks have always been an investment into the popular yet potentially subversive categories… that is: things that people love but pretend NOT to love. So you have to go a level deeper than most people realize in order to invest well:

For example, just because Millennials might not like tobacco doesn’t mean you should sell your tobacco holdings, and just because they don’t support exploitation doesn’t mean they don’t secretly view adult materials; the play is counter-cultural, just like sin stocks have always been.

Or another example: Millennials might be socially conscious and politically democratic, which means they might not like for-profit prisons or weapons manufacturers, but they are also (collectively) an anxious group that looks to the government to provide a measure of protection through prisons and defense. Therefore, they may consider for-profit prisons and weapons manufacturers to be a necessary evil for the world we live in.

Furthermore, Millennials value a certain line of ethics and stand up for these ethics but they may not always make sense for follow-through: the best example is the use of sweatshop labor to make mobile devices. Millennials might love ethical investing and hold a hard line against sweatshop labor but they are also financially motivated to purchase comparatively cheap mobile devices (“cheap” compared to what mobile devices could cost if they were manufactured in firms that paid fair market wages). Which means they SAY they don’t support sweatshops but their dollars speak differently.

And Keep Thinking Down The Line…

Millennials are graduating from high school and college, enjoying adulthood, and starting families. Right now they have the freedom and finances to take up social causes and buy gourmet coffee. But what happens down the line? Will they become more financially conservative as they raise their families and think about retirement?

And think further down the line: what about the children of Millennials? Many of them are in grade school or even early high school now… how will they influence the world? Remember that children often reject the values of their parents, which means they may end up becoming far more conservative.

Historically, we see something similar in the 60’s, 70’s, and 80’s. The very conservative Baby Boomer culture of World War 2 and the 1950’s and early 1960’s gave way to the Hippie movement — a socially conscious and experiential group, akin to today’s hipster Millennials. But then the children of Hippies rejected their parent’s free-form living and returned to a conservative approach. (Go re-watch old episodes of Family Ties if you want a picture of this.)

Summary

No matter what demographic group you are in, your investing will be impacted by Millennials — now or in the future. Investors who love sin stocks need to think carefully about how Millennials will impact the stock market and make adjustments accordingly, as this group of consumers becomes a greater and greater force in the market.

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.