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Straight from Satan

D. Murali

OVER the past few days, markets have earned many epithets, ranging from rubble to bubble, from handiwork of manipulators to numbers of irrelevance. For some, Sensex is the Satan's apple one should keep away from. Now, this book is not just about investing in shares but more specifically in vice. Be warned: If you are a saint, this is not for you.

For the rest of us, Caroline Waxler, a staff writer of Forbes, has tips on `how to crush the market with vice-based investing' in Stocking up on Sin, published by Wiley (www.wiley.com). Her book is about sin in all its manifestations — such as `gambling, tobacco, and weapons' and among `sin-dustries' are also alcohol, sex, and drugs. "Historically, investments related to human weaknesses have been a safe bet — no matter how the market is performing," explains Waxler. "Over the last five years, vice-based investments have outperformed the S&P 500, earning a 42 per cent return, compared with a negative return for the S&P." Return is no sin, so her's is a call to all the `virgins' to join the party and let their `sindex' grow.

Waxler would never let you go without revealing `the titillating 20' in the end, listing "the ones that are the most undervalued relative to other vice stocks", such as Pfizer for you-know-what, Lockheed Martin because it is `world's largest military weapons manufacturer', International Game Technology ("worldwide leader of gaming machines and software"), and Sara Lee for junk food and in-things.

A broader portfolio has almost 70 of them, including companies that run riverboat casinos, online lotteries, bombs, cockpit controls, bras, missiles, helicopters, chocolate, condoms, adult magazine and petroleum jelly. If you are good enough to start from the beginning, the author would explain `why vice is nice' and how `sin never goes out of style'. A research she cites is of Galvin: "That there was a steadier demand for vice during times of weak economic conditions." There is, in fact, Vice Fund (Vicex), launched in August 2002 by Mutuals.com: "It defines a vice stock as any company that makes at least 25 per cent of its revenues from politically incorrect products in one of four sectors: tobacco, gambling, defence/ weapons, and liquor."

Largely recession-proof and easy for the public to understand as to what the company does and the fund adheres to its "straightforward sinful mantra." There are the kin of sin too, like leisure and fast-food. "The only other somewhat naughty fund in the industry's 8,000-plus mutual funds," according to the author is Morgan FunShares.

After that taste of sin and fun, you hear an inner voice that asks: "If I invest in Playboy, am I going to hell?" With a bundle of guilt, you read the appropriately titled chapter 2, "the ethical dilemma and asset allocation". Take it easy as Waxler rationalises for you and assuages "that overactive conscience of yours". She suggests an escape route: "If you still feel guilty, take your profits and donate to charity." Does that explain what you read in the news about the Rs 3-crore bundle in the temple hundial? Don't stretch things too much, because she's not saying "that you should knock off your spouse for the money left to you in the will, donate half of that to your favourite charity, and all will be forgiven."

But no, you're too respectable to be seen with sin-shares. "Won't they laugh at me?" you ask, but Waxler has an answer: "But you're more likely to be laughed at if you lose all your money in a `proper' company that goes down the tubes."

Read it in private, as when sinning, if you're ready for some sin-ergy.

BookValue@TheHindu.co.in

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