The Dark Side of Investing

Rodney’s talk of $12 cigarette packs and judgmental taxes gets me thinking about “vice” stocks.

Think cigarettes… booze… video games…

These are just a few of the vices that people turn to in hard times – whether you define “hard times” as an economic recession or just another annoying bad day.

Vice stocks are known for performing well in recessions. If frustrated people are motivated to drink and smoke when times are good… they certainly aren’t going to stop when times are bad… whatever the cost.

Here’s a look at Philip Morris International’s stock price over the past few years:

Philip Morris Stock

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The cigarette maker’s stock dropped from 2008 (blue circle) to 2009 as the whole market crashed. But since early 2009 it’s been on a tear.

Most stocks are either below, or slightly above, their 2008 peaks. Philip Morris blew past its 2008 peak in late 2010 and never looked back.

I’ve drawn three upward-sloping trend lines – each one is increasingly steeper.

In total, the stock is up 190%. At a high of $94.13, that’s nearly triple its low of $32.

I guess tapping into consumers’ “dark sides” is one bright spot in this troubled economy.

To quote the Most Interesting Man in the World (the vice-pushing Dos Equis beer spokesman):

“Some say having a dark side will lead to no good…I certainly hope so.”

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Categories: Economy

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.