Buying a stock means one becomes a business partner. Therefore, some investors who may have high moral standard won’t invest in stocks with negative impression by society, eg smoking, drinking (alcoholic), gambling, etc.
These “lower” moral standard businesses usually are main contributors to country growth through payment of high tax. Quite many of them are also protected by economic moat with special and limited license (monopoly) from local government to operate. As a result, their long term growth is stable with little competition.
From investors point of view, some of these lower moral standard stocks could be excellent choice for investing. Tobacco stocks (eg. British American Tobacco, BAT of Malaysia Bursa) may not be a good choice due to declining number of global smokers after decades of health education. This is similar for soft drink consumption (bad for teeth), consumers prefer healthier drinks, so stocks such as Coca-Cola are affected in longer term.
There are many global giant stocks related to alcoholic drinks. Malaysia only issues 2 licenses so far to 2 local brewery, Carlsberg (Bursa: 2836) and Heineken Malaysia (Bursa: 3255). Both beer stocks are duopoly giants with strong business fundamental.
However, over the past 1 week, both beer stocks experiences “crisis” with falling of share prices by about 30%, not due to spreading of Coronavirus, but due to turbulence in Malaysia politics (sudden change in government). As a result, many blue chip giant stocks in Malaysia are falling down in share prices overnight while there is little change in business fundamental.
In fact, the consumption of beer could be increasing if some people may feel depressed over 3 crises at the same time (politics, health and bearish stock market). This is fear driven speculative action (some investors may afraid new government could be more conservative, may ban beer or alcoholic drink production in Malaysia).
Even gambling giant stock (Genting Group, Bursa: 3182), another “lower” moral standard stock is also falling down but this is not just fear driven, also weaker fundamental induced over the past few years, resulting in share price cut by half.
Both Altria (NYSE: MO) and Thai Beverage (SGX: Y92) are giant stocks at low optimism but induced differently. Altria (e-cigarette) has weaker business over the past 3 years while Thai Beverage is relative more stable and defensive.
Perhaps for every “SIN” stock invested, one may balance with another stock to save the world, eg healthcare or green technology, etc. There is a choice, both life styles and investment partners.
Crisis is opportunity when share prices fall down to low optimism due to market fear. However, Buy Low at wrong time may get lower in share prices. It is crucial to integrate at least 5 styles of 55 Ein55 investing styles: LOFTP (Level 1-4, Optimism 0-100%, Fundamental, Technical and Petsonal Analysis) to make individual unique decision (Buy, Hold, Sell, Wait, Shorting).
Learn from Dr Tee free 4hr investment course to position in global giant stocks (both Low and High moral standards, eg healthcare stocks which save lives) with potential Level 3 (country) and Level 4 (global financial crisis). Register Here: www.ein55.com
