According to research from New York University’s Stern School of Business, investors gain 2.5 percent a year investing in “sin stocks”—tobacco, alcohol and gambling. Marcin Kacperczyk, professor of finance at NYU Stern, explains the “price of sin” and how it may help investors boost their portfolios.
“We are interested in the question whether social norms affect performance and economic markets in general,” Kacperczyk told CNBC.
“We found that over the long run, 60 to 70 years, those [sin stock] industries outperform by about 2.5 percent every year.”
Kacperczyk added that sin stocks generally pay higher dividends. He advised investors to buy into these stocks now if they want to make money.
“Apart from the crisis time, you could see really good returns for those stocks,” he said.
CNBC Data Pages:
In addition to tobacco, alcohol and gambling stocks, Kacperczyk said the following may also be possibible areas for further research and consideration:
“Defense would be another candidate, although it matters which markets we’re looking at,” he said. “Some people talk about pornography, but we don’t see many stocks related to that, so it’s hard to see the story in the data.”
Most Prominent “Sin Stocks”:
British American Tobacco
More Market Advice:
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- 2010 Could be 'Very Good' for Transports: Analyst
- Where to Invest Amid the Pessimism: Market Pros
No immediate information was available for Kacperczyk.