Earn extra income by investing in your vices

Colin Lalley 1600


Colin Lalley

Colin Lalley

Insurance Expert

Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness.

Published April 26, 2017|6 min read

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Investing can be hard, mostly because...well, it’s just really not that fun.You have better things to do than look at stock prices all day. You have seasons of House of Cards to binge and beers to drink and…Okay, maybe not better things to do, but other things to do. You’d rather watch Netflix than look at your financial status. But what if you could make money off of what you love?

Sin stocks aren’t anything new. They’re shares in "a company either directly involved in or associated with activities widely considered to be unethical or immoral" like alcohol or gambling. They might have a stigma, but they’re also normally recession-proof – meaning you’ll get decent returns even when the rest of the economy is floundering (people like to drink in tough times—who knew?). Sin stocks are also likely to be undervalued because "their negative image leads to them being shunned by analysts and institutional investors."That adds up to relatively safe investments. Now’s the perfect time prop up your hobbies of drinking, binging, and smoking, and add some new sin stocks to your portfolio.

Investing in beer

Beer. It’s everywhere. It’s the most social of our vices: you binge watch Netflix from the solitary comfort of our couch/sweatpants, smoking isn’t legal in most bars or restaurants, but it’s not hard to get together with some friends for a drink.You might think that means you have a lot of options when it comes to investment opportunities, but that’s not really the case. What most people don’t realize is that a lot of beers fall under one of a few main distributors. Remember that Budweiser Super Bowl ad from a few years ago that mocked "pumpkin peach ale" and other craft brew-type beers? Anheuser-Busch InBev, the super beer conglomerate behind Budweiser, also owns the tiny Elysian Brewing, which brews...Punkuccino Coffee Pumpkin Ale and Superfuzz Blood Orange.The point is that if you’re going to invest in beer, you’re likely going to choose one of these five breweries: Constellation Brands, Inc; Anheuser-Busch InBev; SAB-Miller; Molson Coors; Boston Beer Company; or Craft Brewers Alliance. That covers most of the beers you’ve ever heard of, and most smaller breweries aren’t publicly traded.And that’s not necessarily a bad thing. Consider that Constellation Brands owns Modell, the fastest-growing beer brand in the country, and its stocks were up 14% year-over-year in February. Or that Anheuser-Busch InBev owns half the beer market in the United States and 30% of the global market.If you don’t want to invest in a big conglomerate, you still have options. Smaller private craft brewers are turning to crowd equity platforms to let customers invest directly. Or you can invest in an alternative like a sports bar franchise, allowing you to still see gains from increases in beer consumption.

Investing in Netflix

Netflix is a relatively new stock – heck, it’s a relatively new industry – but it’s been a skyward trajectory and looks like it’ll only keep going up. There’s a reason why The Motley Fool gave "7 Great Reasons to Buy Netflix, Inc. and Never Sell".It seems every day like Netflix can do no wrong. Even though it missed its Q1 2017 subscriber goal, it hit its earnings goal of $2.64 billion. Over the last decade, it’s provided a 4,300% return. It’s even gotten people to watch over 500,000,000 hours of Adam Sandler movies. The only time they’ve had a sizeable setback is when they spun off their DVD arm; they lost 70% of their stock value, but they’ve clearly bounced back.What makes Netflix a good bet is that it will only continue to grow. The company has already announced plans to use $1.08 billion in part to grow its original programming, which means more time for you to sit around and binge on upcoming seasons of House of Cards, Orange is the New Black, and Stranger Things. And it’ll use some of that money to expand into international markets, which is helping its stock prices skyrocket.Netflix stock is pricey, but over the long run it’s provided consistent growth for investors patient enough to let it run its course.Plus, if Netflix can boost their stock price, maybe they’ll put more effort into the fight scenes in next season of Iron Fist.

Investing in marijuana

Weed! It’s a big-but-legally-dubious business. More and more states are making decisions about the future of marijuana, and there are two areas of potential growth: recreational use, and pharmaceuticals.Fortune took a deep dive into marijuana stocks and, besides some comical intel from Robinhood about how much investment in marijuana companies spikes on and around April 20th, they found some interesting results.Comparing the returns on ten marijuana companies from 2014 to present, Fortune found that investors would have gained a 32% return on their investment. Those companies gained over a billion dollars in value over those three years. Unfortunately, the results are a little skewed; six out of the ten stocks actually lost money, but Cannabics Pharmaceuticals had a return of over 4,200%. When there were wins, they were big wins.

The expansion of recreational marijuana makes it rife for profit, but medicinal use might have more potential. The pharmaceutical industry is already fast-growing, and the growth of medicinal marijuana can help spur its growth even more. Marijuana is a riskier investment because of its legally grey status: it’s legal in some places and under some circumstances use cases, but remains illegal elsewhere. This can cause marijuana stocks to "trade in lockstep with each other": if policy (or even speculation) changes, it can affect a lot of stocks, causing them to rise or fall together.Want to get in on the marijuana boom but don’t necessarily want to take the risk of investing in a marijuana-centered stock just yet? Look for pot-adjacent companies. Scotts Miracle-Gro, for example, "has acquired several leaders in hydroponics and has positioned itself as the premier supplier for indoor marijuana growers." Looking at companies that have other lines of revenue to fall back on can help lower the risk of investing in a still mostly-illegal industry.Another unique way to use marijuana stocks? Use it to shore up your other stocks – namely, beer. Young people have decreased their alcohol consumption slightly over the years to make room for marijuana use. If the trend spikes suddenly, you can mitigate losses in your beer stocks with gains in your marijuana stocks!Financial advisors are always touting the benefits of a balanced portfolio, right?There’s obviously more that goes into an investment than whether or not, in your down time, you enjoy what the company offers. If that was the only criteria, no one would own stock in Waste Management (up almost 20% over the past year) and would just own stock in...well, beer, Netflix, and weed.But if you can make some money in this fields, why not? Talk to a financial advisor and see if they fit into your financial plans. The worst case scenario is you go home to stream another Adam Sandler movie.