Home » conflict sin stocks » “Reverse” Sin Stocks Are In A Difficult Position

We live in complicated times: the sins (and sin stocks) of yesteryear are not necessarily the ones of today. (In fact, today’s companies are facing the “opposite” problem!)

Does anyone really think it’s a sin to drink alcohol or own alcohol sin stocks? Alcohol may be lumped in with all the other sin stocks yet few people turn down a glass of wine for moral or religious reasons. Alcohol, along with tobacco sin stocks, gambling sin stocks, sex sin stocks, (and others) have been stigmatized as unhealthy vices, and therefore “sin”.

And yet, there we are in an interesting time because there are other companies that are now facing the same level of stigma even though they are not traditionally sin stocks… and what creates this stigma is that these companies are forced to make a decision about who they choose as customers.

On February 14, a gunman entered Marjory Stoneman Douglas High School in Parkland, Florida and horrifyingly killed 17 people and injured more than a dozen others.

This shooting touched off a wave of responses that have reached a higher volume than we’ve seen in previous shootings.

Some people want government intervention in the form of legislation. (That’s a VERY CHALLENGING change to make, in view of the Second Amendment.)

Students staged walk-out protests around the country. (That had mixed reviews and, frankly debatable value, in our opinion.)

Some people even proposed boycotting gun sin stocks like gun manufacturers (which we reported on a couple weeks ago and evaluated that it would not be an effective strategy).

So, what can be done? One approach that’s been interesting to see is the public corporate condemnation of the NRA. Basically, companies that once sponsored or gave discounts to NRA members are now coming out to publicly condemn the NRA and cancel all discounts. For example: companies like TrueCar, Hertz, Enterprise, North American Van Lines, Delta Airlines, and more… just to name a few. (Read more about it here or read about the larger approach to “corporate activism” here.)

Now, here’s what’s interesting about this approach: This approach won’t necessarily work to end school shootings but it actually has the reverse effect of other so-called “traditional” sin stocks.

In other words, companies that do offer discount programs to the NRA are now almost required to end their relationship with the NRA or risk becoming sin stocks themselves! It’s fascinating.

Taking it a step further, Dick’s Sporting Goods and Walmart have both publicly announced that they won’t sell guns anymore.

While it seems to some people like this is activism and that “finally corporate America is waking up” and taking part, we believe that these are calculated corporate gambles to increase customers.

Here’s why we think that: the money these companies no longer earn from discounted NRA member purchases is offset by an increase in left-wing consumers who will likely flock to companies that vocally condemn gun ownership.

(To be clear, there are some companies that are coming out strong in favor of gun ownership, although these companies are fewer in number).

… It’s easier, after all, to come out against something (even if it has little to do with you) versus coming out for something, even if it has very little to do with you.

The other reason we think this is a calculated corporate gamble? Consider this: what does a public condemnation of the NRA actually solve? Nothing. There won’t be fewer school shootings because NRA members no longer get discounts at Enterprise, Hertz, or Delta.

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.