I don't smoke, and when I see someone else smoking, I cross the street. Or walk faster...anything to get away. No one, not even Philip Morris, can deny the harmful effects of smoking--lung cancer, emphysema, heart disease, and so on. Second-hand smoke dries my throat and makes my voice raspy. And makes me cough.
As a society, we are far-removed from the days of celebrity role models like Mike Wallace, Ronald Reagan, and countless others, all with a cigarette dangling between their fingers, attempting to look cool and sophisticated as they pitched this nasty habit on television and in magazines. This was the golden age of television. Of course, these commercials are banned today as our modern-day celebrity role models have revised our vision of what it means to be cool and sophisticated.
All of which brings me to Philip Morris. After all the lawsuits and all the government intervention, I wondered how this industry leader would approach its investors as well as the general public, in its attempt to market its signature product. In an attempt to discover the answer to this question, I decided to go straight to the company website. And here's what I found:
On the Philip Morris USA website, under Responsibilities, the following is what was said:
"There are some who believe that a company that makes a dangerous and addictive product cannot be responsible. We believe that responsibility is defined not only by the products a company makes, but also by the actions it takes."
I needed a few readings of the above quote to fully understand its meaning. Beyond the shame and the embarrassment, Philip Morris acknowledges that its products are dangerous and addictive. The company also acknowledges, albeit indirectly, that it is shirking its responsibility by manufacturing such products.
What is Philip Morris's goal? Again, from its home page:
"PM USA's role is to responsibly manufacture and market PM USA brands to adult tobacco consumers in a financially disciplined way."
PM is also trying to minimize the number of underage tobacco consumers, or so they say on their website. I've always thought that most cigarette advertising was geared toward young and underage smokers.
PM has a page on its website devoted to "Helping Reduce Underage Tobacco Use" and claims that "underage tobacco use has declined since the mid-1990s."
But what is the bottom line? In 2010, according to Philip Morris,
"US consumers spent an estimated $80 billion on cigarettes. We estimate that cigarette industry before-tax profits were approximately $9.9 billion."
My question to the WSO community is this: Would you invest in a company like Philip Morris if you felt you could make a financial profit by doing so?
I don't have a problem with it. Consumer discretion. With all of the info and the smoking taboo that is ingrained in modern society, people who smoke know what they are doing, so who the hell cares?
Would you not pay taxes bc you don't agree with gov revenue allocation for defense spending and military policy? At least with investing in PM you'll be making money.
Yes. I would absolutely invest. In fact i think that although it is a heavily regulated industry, those companies who are already there have a huge lasting advantage. Their product is addictive, people still willingly smoke themselves into oblivion (I am a huge believer in choice) and there are huge barriers to entry for their industry. Honestly, at this point, cigarette companies are going out of their way to tell you that their product is bad for you. Taxes are being jacked up on cigarettes everywhere and yet people just keep on buying. Granted, I do have a friend who would never work for any cigarette company because he is opposed to what they sell. I do not have such reservations. No one is forced to pick up a cigarette and start smoking. You have a choice and people who smoke make that choice, eventually the nicotine is making the choice for them but either way you choose what you do.
I already hold RAI and MO, and would like to own some PM. The only issue I have with it is it is up so much in the last year. Could it be overvalued right now?
PM was a big winner for my clients in 2011, in an otherwise sour year for stocks.
A great total return play.
Oil, nuclear, and mining are about as controversial as my portfolio gets. I remember being called a sellout in college when I bought stock in Chevron. I think my response was, "Dude, we sold out when we turned 16 and bought cars. And if you hate coal mining, turn that light off; you're using coal."
But I don't own alcohol, tobacco, or defense. I may change my view on defense if the US and our military customers decide to stay good neighbors for a few more years.
I think that the issue there is that oil, mining etc (I don't think nuclear is so bad), is that they don't only effect the user, but most possibly a population of an entire region or country. Yes, smoking harms people with 2nd hand smoke w.e. But pollution from oil refineries is massive in comparison.
Illini, who do you own for exposure to nuclear? NRG or EXC?
Firm policy prevents me from making anything that might be construed as recommending a specific investment online, including "I currently own this."
Don't forget the U-235 miners, and hit me up at the next WSO meetup.
No weapon makers (i.e. "defence" and any related war contracting) or tobacco investments for me... even though I enjoy the occasional cigar (once a quarter max).
Other industries I tend to avoid: I try not to make any gaming (that's gambling not PS3) related investments, but sometimes I get involved as our firm acquires hotel companies/assets that sometimes have a Casino element. I don't feel as strongly about gambling as tobacco or war mongering.
I also avoid real estate deals that involve throwing old grannies and poor people out of rent controlled / subsidised accommodation. We can argue the merits and drawbacks of this type of regulation, but I'm not going to screw people out of their homes.
I try to avoid paying US taxes on our investments due to the various American wars around the world. I don't want American and non-American blood on my hands (I know I will get monkey shit for this).
There are so many ways to make money and/or invest, why cheat, steal, lie, kill and harm one another? It really is that simple.
Contrary to what your B-School professor might say, morality matters as does being true to oneself. I feel one should take responsibility for one's decisions / actions as an investor and as an individual.
What about McDonalds? More folks are gonna die from obesity-related illnesses than lung cancer in the near future (if that is not already the case).
No, but that hardly addresses my point.
Yes you can, plenty of folks are social smokers, aka only a couple cigs or cigars a month. Where are you from?
The topics of this conversation remind me of the film, "Thank you for smoking". Check it out.
I have and will continue to do so. I'm not the manufacturer, just a trader of their stock. Smokers have a choice not to purchase or to buy products that help to kick their addiction. There are many controversial industries that people complain about the ethics of investing in (most of sin stocks). There is even a fund that tracks sin stocks and it has performed well.
Media likes to tout the progress of wind, solar energy but these have high costs and don't produce profits. No one likes oil companies but you can bet they know how to make a profit. If you are a trader/investor you have to follow the money, don't let your emotions get involved. If the profits you earn are weighing on your conscience, as "evil" as it may sound, you're in the wrong business.
Bottom line: If you want to be a health advocate, go work for a health company. If you want to make $$$, buy PM.
Yes, I would. However, in reality I'd be more bullish on PM than MO. Tobacco growth is going to be in emerging markets, not the US.
I agree. I put money into MO though instead of the international PM. My rationale behind this was to shield against all the nastiness that was happening last summer, keeping in mind that Altria makes money off of more than just cigs. I planned on buying PM also but never got around to it. Do you guys think it's too late to get in on PM after the run up, or will it continue to go higher? I had no idea PM would run up so much and I kind of missed the boat on it.
Ronal reagan?
I just figured out a way obama can win some votes... Need campaign managers number, pm plz.
I think the point would be that a cigarette is an inherently dangerous product. Regardless of whether you have one or three packs a day it is never good for you. Mcdonalds, in moderation, isn't inherently as bad bad for you. A cheeseburger isn't going to have the effect on your body that a cigarette does IMO. Obviously, if you do something like Super Size Me yes, the effects are just as bad if not worse because it gets to you faster than a cigarette.
Smoking is not inherently dangerous, just like mcdonalds. You can smoke cigars or cigs socially (aka several times a month) or go to burger king several times a month, and in either case the risk is negligible. However, people get in the habit of consuming both in unsafe amounts.
I think societies need to seriously consider the benefits of natural selection and survival of the fittest.
All this 'its better than smoking in certain cases' talk doesn't get around the fact that the consumption of fast food in this country is at very unsafe levels and causing an epidemic of obesity-related illnesses: cancer, diabetes, heart disease, etc.
Granted, everything uses oil. But these other companies are able to use other energy sources and make some sort of dynamic transition to another/other form(s) of production/delivery/transportation. Oil companies can only make money by mining and refining oil. Everything is based off of them for now, but won't always be. Unless oil companies somehow recharter their companies and switch to producing other sources of energy, they will always have the same impact on the global ecosystem.
I don't think I was ever trying to minimize the impact of the obesity epidemic and over consumption of cheap and generally shitty food. I think that anytime you consume massive amounts either fast food or cigarettes its not good for you. I'm simply saying that a cheeseburger gives you protein, carbs, fat which your body can actually use for energy or something similar. If that is just lunch then its not a big issue. A cigarette gives you what? Tar, nicotine (though ironically I did see an article that nicotine by itself actually has some health benefits, don't hold me to that though) and a million other carcinogens which have absolutely no good impact on the body. That's all I'm saying. At the end of the day, if you only eat Mcdonalds your just as bad off as a smoker. Honestly I"m not against either. Eat or smoke whatever you want, just don't come crying to me when you are obese or you get lung cancer.
Gotcha, I'm all about personal responsibility as well.
Do a youtube search of "Socially Irresponsible Investment Bank"
I won't touch PM because I see them declining over time. Everything else is fair game. I personally don't put money in stocks at this point, but not investing in any of the above for moral reasons is even more futile than the OWS protests.
Just my $0.02
Have you guys seen Food Inc? Pretty interesting film. Also reminded me of "The Informant!" which I thought was pretty cool, worth watching. Interesting fact: Warren Buffett's son was assistant to the Chairman of ADM, the company depicted in "The Informant!"
Amphipathic,
Your McDonalds Vs. Big Tobacco comparison is flawed as a key difference with cigarettes is that they are addictive. Having said that, I wouldn't invest in McDonalds either.
I'd add Monsanto and other similar types of organisations to the list of businesses that I wouldn't invest in.
I know I don't follow the "Othrodox" portfolio theory rule... I guess I'm not very religious when it comes to finance ideology.
McDonalds is addictive...... http://www.usatoday.com/money/industries/food/2003-06-17-warning_x.htm
See I like smoking, but I just don't do it because I know it is bad for my health. Just like I love the smell of gasoline. Fitting, given my screen name. But I do not sit around sniffing oil.
VGR for the permanent dividend recap scammola.
MODs (merchants of death):
I would invest in all of them as their demand is inherently inelastic.
I'm sure funding prostitution, crime, bribery and such can be lucrative as well, but I wouldn't do that either.
Prostitution ---> haha bad quality but you can make it out.
Hi Relinquis,
It does not affect me how the end user uses the product. That is not my concern because i believe in "freedom of choice"
Have you seen Mad Men or Breaking Bad on TV, or the movies Drive or Hurt Locker? Cigarette smoking is still very much a part of today's media (sorry for the older show/movie references, don't watch a whole lot of TV/movies).
And where do all of you guys live? As someone who has been to Chicago, LA, and NYC a lot recently it seems like you guys are walking around with your eyes and noses shut. I would say that at least 30% of the residents (not tourist) I walk by in Chicago's Loop, Midtown/FD and downtown LA are smokers. Sure during the daytime/lunch hours there won't be a whole lot because they don't want to annoy their coworkers with the smell when they return to the office but after hours when work begins to let out or people are hitting up happy hours the sidewalks fill up with smokers.
People aren't as frightened by the ill-effects of cigarettes as you all may be. Call them stupid, or naive but for a lot of people its a great stress reliever. I'm not arguing that it is the healthiest stress reliever but neither is excessive drinking, cigar smoking, or buying a motorcycle.
Just for clarification, I am not a regular smoker by any means. If I'm out on the weekend and looking for a little extra buzz or a chick I'm talking to wants to go have a smoke than I'll have a few and don't consider it to be the kiss of death. Or if the partner on an engagement is an occasional smoker and at 10-11pm wants to go out on a smoke break before pounding out the last draft edit I'll join him and shoot the shit. It's just a stigma for some people to get past I guess.
I believe in personal responsibility until people start becoming addicted or bombs start falling on unarmed civilians' houses.
Also fast food is a completely different industry than typical MODs in my opinion. Fast food is able to reform. Recently went to Jamaica and the Burger King there was way better and obviously healthier (e.g green lettuce and red tomatoes and grease that doesn't stain your hands for three days). Fast food in America is an American problem. Maybe its still not healthy, but it could be. Smoking, defense, and oil cannot reform their businesses to become "friendly to humanity".
http://en.wikipedia.org/wiki/Vice_Fund
nobody is forced to smoke, if u get addicted thats your own fault, smoking weeds out dumb people and that is a great service to society, I would happily invest.
there may have been an argument against it when there was still heavy adv. and adv. targetted at 14y. olds, but now that just doesnt hold
I don't think concluding that people that smoke makes them dumb bc they know it kills them. Just bc alot of people who DO smoke are dumb, on the contrary, many great artists/musicians/actors have smoked. Maybe they are dumb, so you may be right, but that is not really a fair way to deduce a result.
There are actors/musicians out there who are dumb as hell. Not saying they all fit the mold, but I don't view acting as an industry with loads of smart people.
have u ever had a smoke after a nice beer, or good coffee, or awesome meal, or great fuck?
let me tell u something, it's fuckin great.
i quit tho, so im glorifying.
i will get u with a nice meme as well, as soon as i find one u son of a bitch
edit:
Yes, I have positions in Philip Morris and Altria Group in my retirement portfolio. Hedging them out with big pharma and biotech just hoping that one of them will come up with a cure to lung cancer. haha.
That said, if Lockheed Martin directly sells 10 F-35s to Bahrain or Quatar, knowing that these regimes have put down peaceful protests in the past, and then these regimes use those F-35s to put down a protest or attack another country in a way that they couldn't previously, Lockheed Martin might not be legally responsible, but they sure as heck are morally and ethically responsible.
I think most bullets made by Smith and Wesson are used for hunting or target practice. They have no clue who they're selling those bullets to, and I don't think they have much more ethical responsibility than GM for drunk driving when someone gets unlawfully injured.
I think you have a duty to not sell to someone if you are pretty sure they're going to use your weapons to oppress people. I'm not sure the defense contractors follow that philosophy. We kept selling to Israel during the war with Lebanon. We didn't cut off Quatar, Bahrain, and Yemen during the 2011 protests. And our own war in Iraq comes a little closer than I'd like to oppression, and the defense companies do have a vested interest in unnecessary war.
If Lockheed, Northrop Grumman, Raytheon, or the other firms took the lead in cutting off oppressive countries before Congress acted, I'd be in a much quicker rush to buy them. Defense does create economic value to the extent that it ensures war against democratic capitalist countries is too expensive, but then it comes out, sells 50 Apache helicopters directly to the Government of Azerbaijan for a quick buck, and those helicopters are probably going to be propping up the dictatorship rather than protecting democracy.
IP totally see where you're coming from. I was just making generalized analogies.
I think people confuse a shareholder's limited legal liability for a corporation's debts with a shareholder's moral responsibility / accountability for funding / owning a company that conducts its affairs in an immoral or inhumane manner. In the case of cigarettes and most weapons makers we're talking about company's who's sole purpose is to cause human deaths and addiction as a means to expanding markets, margins and generating profits.
Oppression & deaths (in the case of weapons / "defence", addiction (in the case of big Tobacco) and such are the purpose of using the products these corporations make and a sought after Key Performance Indicator for the firms and their products, not an externality.
These corporations actively pursue the aforementioned in order to expand the markets for their goods / services. This even contrasts unfavourably with the industrial pollution issue where that is an externality as pollution isn't actively sought by industrial production (it doesn't expand their markets or profit margins), rather it is a by-product that they do not account for as the costs are socialised (a failure of the free market system). Increased oppression, killing potency (ever heard of stopping power?) and addiction does expand markets and margins for "defence" and big tobacco companies and are actively sought by their managers, by any means possible, in order to serve their shareholders who demand this (i.e. the investor... do you own stock / bonds?)... I can't see how the investor is not morally responsible.
I wonder about American culture today and how much it is shaped by corporations and market fundamentalism.
This has been an interesting discussion... Ciao guys.
Very eloquently put.
That being said, it raises the fundamental question of the morality of investing in general. Which would probably not be well received in this forum.
philip morris cigarettes has helped generations of young people look cool. let's not lose sight of the big picture here.
I smoke like a chimney..
We have +8Billion people on this planet. Guns, Cigs, Alcohol, anything that mitigates this endlessly destructive and by definition parasitic creature is a positive.
I think US defense stocks are a great buy. The military is only going to become more robotic and once we have robots on the ground subduing citizens of other countries there will be zero political fall out for war.
What kind of blow back have we been getting with a decade of war. Either way it would be collateral damage.
Hence why I support investing in defense stocks lol.
See my comment about 8Billion people and the need for population control and reduction.
What morality system are we using as the base for this argument? Defense stocks do not kill people, countries make that decision. Just like I would invest in gun company stocks.
Would you have an aversion to investing in a knife company because people can use knives to harm others?
And yes, I wouldn't invest in a knife company that supplied armies as a main market, not that that is of relevance to the ideology of your investing in defence stocks.
You can invest in rapists for all I care. It's up for you to live with yourself. I'm just trying to understand your rationale. i.e. do you actually believe that you are just a bystander and not that the purpose of the death is to line your pockets, or do you simply not care that people are killed to make money for you (for whatever reason, there is a lot of them, overpopulation, they're not your kind of people, etc...)?
Weapons do nothing unless the person uses them to do good or evil. That moral choice is for the end user.
Regarding defense stocks, at least in the US, they largely sell to the US military and our allies or friendly nations. Since I am American, pay taxes and support things that benefit myself and my country, I am find with US Military actions.
To each their own, I just don't care.
thanks for the honest response...
Yes, of course. I don't smoke, but i think there are certain groups who receive a net benefit from smoking. Nicotine is one of the nature's best neuroregulators and anti-psychotics; I think a damage from smoking doesn't even begin to compare to the damage from living with a mental illness, and the side effects of the pharma's answer to that problem are just as bad, if not worse than the side effects of tobacco use. And don't underestimate the damage from unchecked stress. Prolonged stress causes the increased release of pro-inflammatory cytokines, which then go to wreak havoc over every corner of the body. So while smoking is worse than yoga for managing stress, it is still better than binge drinking or not managing stress :)
My father died 10 years ago from lung cancer, almost certainly from smoking. When he was a soldier in Korea during the Korean War the military put packs of cigarettes into each man's rations. Virtually everyone was smoking when they came back from Korea. From then on my father was a chain smoker for the next 25 years. When he married my mother she made him quit (cold turkey). When he quit he had horrible headaches for the next 5 years until he finally somewhat normalized--however, the urge to smoke never went away. 18 years after he quit he was diagnosed with terminal lung cancer and died 9 months later.
Choice is choice--I'm all for choice. However, would we be for choice if Pepsi were laced with highly addictive heroin? Is that really a "fair" choice? People choose to smoke because they are physically addicted. The choice to quit smoking is far more difficult than the choice to stop going to McDonald's. While it's true junk food is in some ways physically addictive, nicotine has been found to be one of the most addictive substances ever known to man.
The idea that a person would take a job at Phillip Morris or invest in the company is morally repugnant and it's rationalized because of "choice." Nicotine--one of the most physically addictive substances known to mankind. This is not a "real choice"--this is like gambling in Vegas; the house has the advantage. The only way to beat the house is to never play the game (or to be one of the lucky few who can smoke without physical addiction).
i like how ANT flip flops between his moralizing grandstanding about how the US is the force for good and justice and his macchiavellian chest-pounding about how it's all about the law of the jungle and the US just happens to be the biggest gorilla.
unpredictability is the essence of successful trolling. h/t to you sir.
Actually I continually say that the USA does what benefits the USA and as an American I support what benefits me.
I also didn't realize this thread was about the USA being the force for good. I simply do not make moral decisions when I invest. Defense weapons can be used to prevent war, can be used to incite war and can be used to defend the innocent.
But yeah, bringing in unrelated things and attributing them falsely to me is not trolling in its finest. I hope you can sense the oozing sarcasm.
by that account the welfare leeches that you take such relish in bashing on are just practicing the ANT philosophy: what is good for me, is good. and when two opposing and irreconcilable "goods" clash, might makes right, in your thrasymachian worldview.
and sarcasm is truly, as you demonstrate so well, the lowest form of wit.
I'm with melvvar on this one. My ethical views may also ultimately come down to self-interest, but the conservative approach is ethical consistency that leaves you winning 55% of the time, conceding the other 45%, and having everyone understand why your ethics make you win that 55%. :evilgrin:
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