Investing in Sin Industries: Are They Worth the Hassle ?
Some professions in the world are not considered to be as acceptable as others. This notion of acceptability is widely influenced by the cultural norms in the society where one is conducting business. However, in the modern world, being associated with sin does not seem to be much of a deterrent to investors. Cities like Las Vegas, Atlantic City and even Macau are literally run by these sin industries. The bustling economies of these cities are testimony that investors indeed support these businesses. However, sin industries are always vulnerable to moral attacks. In the past, they have also been banned by many states and nations only to come back again either as a legalized industry or as part of shadowy grey markets.
In this article, we will consider the pros and cons of investing in sin industries.
What are Sin Industries ?
Religious beliefs designate certain activities as being sinful. Industries that have their business models built around such activities are called sin industries. In the modern world, conducting this business is legal in many countries. However, regardless of the legality, the activities of these industries are largely frowned upon by the entire society.
Common businesses associated with the term sin industry are liquor business, tobacco business, pornography, gambling and businesses related to war and weapons.
The Argument in Favor of Sin Industries
Many magazines and experts have been advising individual investors to consider sin stocks for better returns. There have been many reasons quoted that work in favor of these industries:
Companies like Diageo, Philip Morris and Caesars Entertainment are some listed stocks belonging to this industry.
The Real Costs
The sin industries may be beneficial to a group of investors. However, they are definitely against the interest of the society as a whole. Not only do they lead to a loss of moral fortitude but they also significantly affect the financials. Here are some of the side effects of the so called “sin industries”
Sin industries are indeed profitable and will continue to be so. As an individual investor, it does make financial sense to invest into stable businesses with regular streams of cash flow! However, from a societal point of view, these businesses are loss making. Even if we were to ignore the human misery, the sheer amount of financial duress faced by the society makes these businesses unviable.
Sin industries are therefore a scheme of distribution of wealth. They end up transferring public money into private hands in the most despicable way imaginable.
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