Home » sin stocks » Sin Stocks Report: Summer Of Sin #91 — Okay, You Love Sin Stocks. But Why Would Someone NOT Want To Invest In Them?

Sin Stocks

At Sin Stocks Report, it seems like we love sin stocks a lot. And we do. So, like all smart investors, you should be aware of biases and ask, “okay, you love sin stocks. But why would someone NOT want to invest in them?

Okay, You Love Sin Stocks. But Why Would Someone NOT Want To Invest In Them?

Sin stocks are not for everyone. At Sin Stocks Report, we’ve always believed that investors should make up their own mind about sin stocks with all the facts. That’s why we started because, at the time, no one else was reporting on sins stocks.

But some might wonder if we LOVE sin stocks so much that it biases our thinking. And yes, it probably does. That’s a huge problem in the investing world and the SEC does what it can to protect investors from biases influencing them.

One of the smartest questions any investor should ask about ANY investment is: why would someone NOT want to invest in it? There will probably be reasons. You’ll never find an investment that is 100% perfect. But by asking this question, you play the devil’s advocate to explore the reasons against investing.

So here are the reasons why you might not want to invest in sin stocks:

  1. Sin stocks are often considered unethical. Maybe you believe their products and services are dangerous, addictive, or even exploitive. And if you don’t, someone you know DOES think that! So even if you are fine with sin stocks, your grandma might not be.
  2. Sin stocks have multiple layers of bureaucracy, laws, and taxes that most products and services do not. Want to start a food truck? Have fun! You’ll encounter challenges with business licenses and getting your truck ready to become a restaurant on wheels. Now compound that many times, and slap a 30% tax on all your food while also limiting who you can sell to… and now you’re getting close to what sin stocks face.
  3. Sin stocks have a social stigma… yes, we mentioned this point earlier but there’s another reason why it’s challenging: politicians love the tax dollars generated from sin stocks but they also have to listen to their constituents who might not want cigarettes to be sold at convenience stores or alcohol to be consumed in bars. Which means they could potentially shut down those avenues. And if you don’t think that could happen, get in your time machine and go back to Prohibition.
  4. Some sin stocks have matured and are at risk of declining if they can’t breathe new life into their industry. The alcohol and tobacco and gambling industries are, arguably, mature industries as we’ve discussed elsewhere. And that means they may struggle to get new customers or to find new ways to sell their products and services. It’s not impossible, and it could be a long, long way to an actual decline, but the natural progression is for mature industries to eventually decline.

None of these may stop you from investing in sin stocks. However, you need to at least be aware of them and consider their impacts — financially and socially — before you make a buying or selling decision.

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.