A disappointing check on the Vice Index

Even long-time NaturalBlog devotees probably don't remember all the way back to February 2007 when I conceived of the "Vice Index," a mutual fund of stocks tailored to people's bad habits. There's the beer-maker Molson-Coors, the winemaker Constellation, Starbucks for your caffeine, MGM for the gambling, Camel cigarette-maker Reynolds, and finally the maker of Trojan condoms (and First Response pregnancy tests), Church & Dwight.

Well, I'm sorry to report the intervening 28 months have not been kind for vice. The value of Vice Index shares is down around 41 percent (compared to a 31 percent loss in the S&P 500 Index in the same period). All of my vice stocks tanked in the recession brought on by recent liberal governing, except for the company that makes condoms.

I guess that tells you all you need to know about how people are weathering the downturn.

Vice advice

You may remember way back in February, when I suggested a mutual fund with a portfolio made up only of companies that serve people's vices. I'm about ready to call my experiment in the markets a failure, since I'm down 4.34% since the fund's debut.

Compare that to the S & P 500's 6% increase in the same period, and you have to wonder whether there's money in vice.

MGM Mirage was my best bet, up nearly 40%, but Molson Coors and Starbucks are killing me, off 37% and 20% respectively.

I guess the lesson is clear: Invest with your head, not your heart. Or at least pick a better beer.

NaturalBlog Vice Index

I saw in the news last week that profit for Molson Coors was up a staggering 343 percent in the fourth quarter. That got me to thinking about the need for a mutual fund that trades in vices. I'm sure these exist, but I'm a do-it-yourselfer.

I'll keep it simple, tracking the value of one share of common stock in six firms that play to people's vices and seeing how I do percentage-wise versus the Standard & Poor's 500 Index.

On to the companies:

• Beer: Molson Coors (NYSE:TAP). Hop on board the Silver Bullet train. They probably can't duplicate last quarter's profits, but I'm backing my college favorite, Coors Light. Price: 86.61.


• Wine: Constellation Brands (NYSE:STZ). The world's second largest wine conglomerate, they distribute Mondavi wines, one of my favorite moderately priced California wine labels. Price: 24.01.


• Caffeine: Starbucks (NASDAQ:SBUX). This one's a no brainer. The industry leader in the sale of legal stimulants. Price: 33.01.


• Gambling: MGM Mirage (NYSE:MGM). The Las Vegas entertainment giant also allows me to get my fingers into Hollywood. Price: 68.97.


• Tobacco: Reynolds American International (NYSE:RAI). This is the corporate parent of cigarette brands including Camel, Kool, Winston, Doral and Pall Mall. No vice fund is complete without tobacco. Price: 63.94.


• Sex: Church & Dwight Co. (NYST:CHD). This firm makes a host of consumer products. I'm picking it because it owns the Trojan condom brand. It also owns First Response pregnancy tests, which I think is a funny pairing. Price: 47.34.

So there we are. Add up those prices and you get 323.88. So that's where the NaturalBlog Vice Index starts. For comparison's sake, the S-and-P is at 1,455.54 today.

Go VICE!