Vice stocks or sin stocks are those stocks of companies whose business activities are traditionally regarded to be sinful or unacceptable in the society. As such gambling stocks, tobacco manufacturers stocks, and alcohol manufacturers stocks fall into this category. Most people like to invest in vice stocks because they consider them to be relatively “recession-proof”; that is, these companies do not experience huge downturns during hard economic times. Here is a description of the vice stocks.
Let’s start with gambling stocks. Currently, the gambling industry has recorded impressive growth, especially due to the evolution of the internet. Several cities around the world now have some form of legalized casino gambling. It is important to note that the gambling industry should not be viewed in the same vice mold as its tobacco and alcohol counterparts. Undeniably, the gambling industry is much more susceptible to economic hardships. In times of recession, most people will keep on feeding the gambling vice, but with strict budget.
The stocks of companies dealing in the manufacture of alcohol constitute another category of vice stocks. Smoking of cigarettes is legalized in many parts of the world. Besides its many negative health effects, the smoking of cigarettes is widely practiced because it is highly addictive in nature. Therefore, they are usually considered to be very resistant to recession.
The other category is the stocks of companies dealing with the production of alcohol. The brewing industry is growing at a fast pace, since many parts of the world lack strict laws to control the rate of consumption of alcohol. In times of economic recession, the consumption of alcohol generally reduces because of hardships that impair consumers’ ability to spend. Just like in cigarettes stocks, alcohol stocks return to their uptrend over the long term. This is because users return quickly to their vices when the hard economic times are over.
The other strongly emerging category of vice stocks is the lust industry. This industry has been thriving because of the spread of pornographic content through the internet. And, entry into this industry has relatively fewer restrictions. Nonetheless, this does not mean it is an easier market to penetrate.
In conclusion, it is of essence to point that vice as an industry is heterogeneous when it comes to the economic cycle. The gambling, alcohol, and tobacco industries do not experience massive fluctuations in times of economic hardships when compared to other industries.