7 Deadly Penny Fund Sins

Author: John Paul Whitefoot

Whatever happened to sin? Brad Pitt didn2019t fare so well in the movie Se7en2026 granted, Gwyneth Paltrow fared even worse. Still, that doesn2019t mean your penny stock portfolio needs to face the same fate.

During a recession (and dare I say in other times as well) sin stocks tend to do better than the market at large. 201CSin stocks201D of course are those companies that operate in activities that some people may consider sinful; including the distribution or production of alcohol, tobacco, weapons, and sex-related products.

After all, when times are tough, people might drink a bit more, smoke a bit more, maybe even gamble a bit more. Now, if you2019re a strong proponent of socially responsible investing, sin stocks probably won2019t be up your alley.

Don2019t get me wrong, there are lots of advantages to investing in "clean" companies. But if your subjective moral compass allows it2026you may just find that if there is one aspect of society that has endured the test of time, its sin. And if there2019s one thing I2019ve learned from watching Wife Swap, it2019s the importance of balance and moderation.

That said, not all sin (or vice) stocks have stood tall during this current recession. The Vice Fund recently reported that it was down 42.83% for the year ended March 31st, 2009 -- measurably worse than the category average of 38.13%.

Still, as penny stock investors we aren2019t looking at high flying sin stocks 2013 our options are a little more2026refined. Further, very few funds cater to penny stock investors. This is unfortunate when you consider how many stocks are now trading in the penny stock range.

I digress, the point is, recessions don2019t stop gamblers from betting, partygoers from drinking, and smokers from puffing. In fact, economic turbulence might give them even more reason to indulge. Or rather, find other ways to relax.

This makes so-called sin stocks, or shares of alcohol, gaming, tobacco, and adult entertainment companies, a safer bet as the U.S. economy slows. Or at least some of them. Not every sin stock is basking in the sunlight of the recession. But I have found a number that are.

About the Author:

John Whitefoot is a seasoned penny stock investor with a keen interest in international business and current affairs. John Whitefoot is Sr. Editor at http://www.pennystockinsider.com and is devoted to uncovering the news, trends, and ideas that affect penny stocks on a daily basis.

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