At Least on Wall Street, Wages of Sin Beat Those of Virtue | Hacker News Reader

At Least on Wall Street, Wages of Sin Beat Those of Virtue

nytimes.com

5 pointsrobg15 comments

But of course:

"The record of the Vice Fund has not been without blemishes. Its founder, Richard A. Sapio, and two other executives at the fund's advisory firm, Mutuals.com, were accused in 2003 of securities-related fraud and in 2004 of conspiracy to commit securities fraud, wire fraud and mail fraud."

Maybe the kind of thing you should think about before investing in something proudly calling itself "The Vice Fund".

No, no. These guys aren't amoral blood suckers -- they're just "keeping the market efficient!", haven't you heard? (My time in the financial industry was the most repugnant professional experience I've ever had. I'm a little bitter.)

yes they are keeping the market efficient. and if people investing in "vice" type companies are amoral blood suckers, what about people that work for casinos, beer companies, tobacco companies? the delivery guys? the brew masters? what about the regulators that allow those companies to do what they do? what about consumers of those products, keeping the companies in business? when is the last time you drank a beer? played online poker?

They may be amoral -- but whose blood are they sucking?

Also: the only reason this is profitable is that moralists avoid these stocks. If you want Sin Investing to be less successful, you just need to discourage socially responsible stock pickers.

Sometimes, I wonder if the best thing anti-smoking advocates could do would be to buy up all the Phillip Morris stock and then use their dividend checks to run lots of gritty anti-smoking ads. Heck, if they bought enough, they could gain control of the company, publish all the incriminating smoking memos, forever tarnish the brand image of all cigarette manufacturers, and liquidate the company.

This is sort of what Warren Buffett suggests is happening with taxes: he argues (in one of the letters to shareholders in the 80's) that there's a "Class G" stock entitled to 35% of a company's annual profits, and that sometimes that money is used to reduce those profits.

It would be great to make that explicit: put together a foundation that buys cigarette stocks, reinvests most of the dividends, and uses the rest for ads. It's a built-in hedge, because the stocks only go down if the ads are working, and if the ads fail (or, per "Thank You For Smoking," make smoking cooler) the ad budget goes up.

Willingness to do good with ones own money isn't a common trait.

Heck - there are a number of "good vs evil" issues where the "good" folks would actually make serious money if they walked their talk, and were actually correct about the "evil". Interestingly enough, "good" folks make "they'd make more money if" arguments on many of these issues. I don't know why they're unwilling to act on their own advice since it would also put the "bad" folks out of biz, making it doubly good.

This makes a lot of sense. When you invest in a stock, your returns aren't just financial: buying shares of a solar power company pays a dividend in pretension (sort of like buying Amazon in 1999; it wasn't the money -- it was the .com). Since these stocks have a negative 'dividend' in the sense that nobody wants to admit to owning them, they offer higher returns to compensate.

Peter Lynch recommended this with garbage haulers and coffin manufacturers. It's still viable.

It's generally been said that sin pays of in the short term, while being very bad in the long term.

In the long term, we're all dead.

Yeah, nothing matters besides me and this life. Which is why people sin.

In fact: I can't think of any 'sins' that aren't exactly what a cynical person would do to maximize long-term gain.

Really? Pride, sloth, envy, wrath, lust, etc. all seem to cause more trouble for the person who can't control them. How do they maximize long term gain, or are you thinking of something else?

yters, you're thinking from the customer's point of view, which is great. Looking from a cynical business point of view, they are weaknesses to exploit. For example, one could create a discussion site and attract a lot of eyeballs by posting contentious comments, raising peoples' wrath (also known as "trolling"). Envy is what high-end consumer products exploit.

Ah right. However, this has a bad long term effect for the market as a whole. Just look at what such thinking has done to our culture as it is.

Reply on news.ycombinator.com