Do you think you should pay for your sins?

Since I have completely trashed the 'Sin Industries' in my last post, let me tell you the other side of the story as well, from a strictly financial point of view. So if you are entirely into a 'Profit-seeking' approach and not a soul seeking one, you would want to read this part.

Sinful investing sounds like you are doing something wrong. But before you judge me for this, let's face the fact, all of us know that alcohol, weaponry etc are all here to stay for a long time. I am not writing this to put anyone in an ethical dilemma but since ethics and morality are two subjective things, I think it is only fair to talk about the companies which have been labelled 'sinful' and not so “clean”.

Sin Stocks

Some sectors of the economy are generally considered sinful, such as the gambling, alcohol, tobacco, sex, and defence industries. Sin Stocks are stocks of those companies which are considered to carry out unethical and immoral activities. There is a lot of grey area when it comes to ethics and morality, so let's look at it from a profitability point of view.

Sin stocks are considered as defensive stocks, as they are far more immune than other businesses during an economic downturn. Because people suddenly do not stop drinking and smoking in bad times. They have monopolistic returns, as there is comparatively less competition in the space. Sin Stocks are generally severely underpriced since it is not exactly considered as 'virtuous', so investors can pick them up at super cheap prices. The major advantage is that Sin Stocks generally perform well in both bull and bear markets.

Though they are relatively stable, they come with some special risks, such as higher regulatory and taxation risks than the other sectors. So it is not advisable to have a portfolio full of Sinful stocks, but can make it a part of a balanced portfolio due to the stable demand in these sectors.

Some Indian Sin Stocks are:

• United Spirits

• UBL

• ITC

• Godfrey Phillip