The argument about missing out on tobacco stocks is analogous to the arguments given about missing out on "the biggest up days in the market" (which almost always occur in bad bear markets). Absolutely you should invest based upon your personal ethics, and your results will be better for it. Investing = owing a stake in a business. It means partnering with the people running the company. Would you own a private company that sells X product/service? Would you go into partnership with the key people? If your answer is no, then eliminating the company/industry from consideration will save you a lot of time to allocate into other companies/industries. You will end up with a more objective mind in both investing and dis-investing in those companies as well.
We will all miss multiple boatloads of stocks that will perform well, for a variety of reasons. If a subset of those are due to personal ethical concerns, that is no worse than missing out on a subset where we didn't understand the technology, or the marketplace for the product/services, or anything else. There are way too many public companies for any of us to know about, much less analyze, to decry "missing out" on any subset of big winners.
The primary reason to pass on RICK has never been that it's a sin stock, it's that the CEO has a long track record of being untrustworthy and exercising poor judgement. There is a really well researched anonymous (I think?) short report from 2018 that goes into great detail on this.
let's see, you enjoy multiplying endless uncertainties in special situations, but attempting to assert some fuzzy ethical line is too much effort? or you may be annoyed when needing justify modification? or you are just not running enough money?
what's your stand on separating the ethics of the c-suite vs ethics of the business?
Interesting piece! Think this is definitely a situation where many of us evolve our thinking over time.
I liked the take of a PM who said: we don't invest in tobacco as we don't think it's great when a business's products kill its customers!
Personally I struggle with it as family members have died of lung cancer through smoking - you can argue that this is emotional & irrational for investing.
Then separately for me there is a different class of Sin Stocks, where I just feel that the people involved have a higher likelihood of being shady, and this would generally include strip clubs and casinos. Again, this is borne from experience after being burned investing in a founder-led casino chain, which looked great on paper. Consequently I never looked at RICK.
I'm also a bit sceptical of people who talk about the Outsiders - it's become almost a cliché - it's easy to say you're going to model Buffett etc. but I'm only interested if you've actually done it already, otherwise it's just marketing-speak.
The argument about missing out on tobacco stocks is analogous to the arguments given about missing out on "the biggest up days in the market" (which almost always occur in bad bear markets). Absolutely you should invest based upon your personal ethics, and your results will be better for it. Investing = owing a stake in a business. It means partnering with the people running the company. Would you own a private company that sells X product/service? Would you go into partnership with the key people? If your answer is no, then eliminating the company/industry from consideration will save you a lot of time to allocate into other companies/industries. You will end up with a more objective mind in both investing and dis-investing in those companies as well.
We will all miss multiple boatloads of stocks that will perform well, for a variety of reasons. If a subset of those are due to personal ethical concerns, that is no worse than missing out on a subset where we didn't understand the technology, or the marketplace for the product/services, or anything else. There are way too many public companies for any of us to know about, much less analyze, to decry "missing out" on any subset of big winners.
The primary reason to pass on RICK has never been that it's a sin stock, it's that the CEO has a long track record of being untrustworthy and exercising poor judgement. There is a really well researched anonymous (I think?) short report from 2018 that goes into great detail on this.
Ha I am long Rick. The pain is real!!
let's see, you enjoy multiplying endless uncertainties in special situations, but attempting to assert some fuzzy ethical line is too much effort? or you may be annoyed when needing justify modification? or you are just not running enough money?
what's your stand on separating the ethics of the c-suite vs ethics of the business?
Interesting piece! Think this is definitely a situation where many of us evolve our thinking over time.
I liked the take of a PM who said: we don't invest in tobacco as we don't think it's great when a business's products kill its customers!
Personally I struggle with it as family members have died of lung cancer through smoking - you can argue that this is emotional & irrational for investing.
Then separately for me there is a different class of Sin Stocks, where I just feel that the people involved have a higher likelihood of being shady, and this would generally include strip clubs and casinos. Again, this is borne from experience after being burned investing in a founder-led casino chain, which looked great on paper. Consequently I never looked at RICK.
I'm also a bit sceptical of people who talk about the Outsiders - it's become almost a cliché - it's easy to say you're going to model Buffett etc. but I'm only interested if you've actually done it already, otherwise it's just marketing-speak.
Thanks for prompting the debate.
What happens in a situation like this when the CEO guarantees all the debt? I am sure covenants have been tripped.
Well, you could own the same sort of thing owning escape rooms. XP Factory (XPF.L) - no investment advice.