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Vice grip: Money made selling sex, smoke, drink.
Two recent books examine investing in tobacco, alcohol, gambling, sex and weapons.


Originally published on Monday, April 26, 2004 in The Miami Herald.

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Ideally, we strive to conduct ourselves morally, but there's the rub. As
individuals, we may see right and wrong in absolute terms, but collectively, there are many areas of gray.

In reality, people might agree about some things (murder is wrong; work is
virtuous; lying is bad), but many moral values have changed over time (smoking is unhealthy; public drunkenness is not funny) and others are still evolving (gender equality, sexual behavior, acceptable public language).

Not for nothing is prostitution called ''the world's oldest profession.'' Many human social practices, conducted since early civilization, are considered immoral, evil, not nice or worse, by different segments of society.

Despite the obvious ambiguities, two recent books are in enthusiastic agreement about the lucrative opportunities presented by investing in these industries.

Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs, and Butts. Dan Ahrens. St. Martin's Press

Dan Ahrens is portfolio manager of the Vice Fund. (No kidding; there really is such a thing!) He's also president of a web-based investment firm. As evidenced in his book, Ahrens has a no-nonsense approach to, well, nonsense. He concisely lays out the history of each industry, presents their current situation with respect to the market and their financial position, then presents explanations and rationalizations to justify investing in them.

Anheuser-Busch may be a giant producer and relentless marketer of beer to all, but the company is also the world's largest recycler of used aluminum beverage containers. It composts farm material, uses recycled paper and probably flosses after meals. Ahrens' point is that companies do good and bad, and that one shouldn't invest in any company to make a political statement, but rather to make money.

Fair enough, but some people have legitimate concerns about how certain businesses operate and may choose to avoid supporting them. But the question is should they invest, despite these reservations, if they're convinced of a firm's future performance? It's not just the sin companies -- some people refuse to spend a dime at a Wal-Mart or Disney World for what they deem to be legitimate moral concerns.

Ultimately, it's up to the individual, though Ahrens remains noncommittal: ``Who's to judge what is truly evil?''

Stocking Up on Sin: How to Crush the Market with Vice-Based Investing. Caroline Waxler. John Wiley & Sons. 245 pages.


Waxler's take on the subject isn't very different from Ahrens'; she even quotes him several times. A journalist by trade, she casts a wider net and includes companies and sub-categories that Ahrens ignores. She provides substantially more discussion, comparison and analysis and even gives so-called socially responsible investing a bit more space -- and credibility -- than Ahrens does.

Waxler also looks at these industries from several sides and does a better job in conveying the ambiguities and hypocrisies of the companies and some of their critics. The other difference is that while Ahrens doesn't just come out and say it, he presents a solid case for hooking up with his own fund. Waxler has no such ax to grind -- or cause to shill for.

So should you choose to invest in companies that profit from products and activities of this nature? Let your conscience -- or these books -- be your guide.

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