Investors are further assured that the stocks held in the index have nothing to do with borrowing or lending, women’s fashions, cosmetics, modern cinema, popular music, or pork.

Personally, I wouldn’t touch this fund with a barge pole. It is virtually guaranteed to earn sub-par returns.

Here’s why…

Investing in Sin Stocks vs. Socially Responsible Stocks

If you were given the choice six years ago between investing in the environmentally and socially responsible Sierra Club Stock Fund (Nasdaq: SCFSX) or investing in sin stocks with the Vice Fund (Nasdaq: VICEX), which invests primarily in tobacco, alcohol, defense and gambling, which would you have chosen?

I’ll give you a hint. Your profits would have been much bigger if your conscience weren’t your guide.

• The Sierra Fund has delivered negative returns over the past six years.
• The Vice Fund has delivered positive performance – and beaten the S&P 500 handily, too.

This is no aberration.

Merrill Lynch recently examined the performance of alcohol, tobacco and casino stocks in all recessions since 1970 and found that while the S&P 500 fell 1.5% on average, sin stocks rose an average 11%.

This downturn isn’t shaping up to be any different.

Sure, consumers are cutting their spending far more than in past recessions. But history shows that people do not drop their bad habits in hard times.

Rather many people feel an intense need to escape through alcohol, tobacco, or a trip to their local casino.

This is not too surprising.

If a citizen of ancient Greece or Rome were magically transported into the modern era, he would be astounded by the current state of agriculture, transportation, housing, medicine, architecture, technology and general living standards.

Humanity itself, however, would offer few surprises. We remain the flawed human beings we have always been, struggling with the same deadly sins our ancestors wrestled with millennia ago: greed, gluttony, sloth, pride, anger, envy and lust.

Investing in Sin Stocks Through The 7 Deadly Sins

Given this reality, when it comes to investing in sin stocks, four months ago The Oxford Clubunveiled its new Seven Deadly Sins Portfolio.

It is already up 41%, more than 10 times as much as the S&P 500.

We locked in a 92% profit in the casino stock Wynn Resorts (Nasdaq: WYNN) in 64 days. Our shares of Smith & Wesson (Nasdaq: SWHC) have doubled in less than four months. All but one of our positions are up over 20%.

Why are these vice stocks outstripping the broad market by such a wide margin? One answer is careful security selection.

But two other studies out of Yale and Princeton offer a further rationale.

• One study attributes vice stock outperformance to the lack of attention pension and other institutional investors pay to these stocks in order “to maintain an aura of respectability.” (That creates opportunity.)
• The other believes it’s because companies in sin industries benefit from high barriers to entry, thanks to strict regulations and taxation.

These factors are not likely to change.

I’m not endorsing the sin industries, incidentally.

I don’t smoke and I hope my kids never do. I don’t gamble unless the stakes are negligible. And I don’t own a handgun, although I am a supporter of Second Amendment rights.

Why Would Anyone Invest in Sin Stocks?

So why would I consider investing in sin stocks and these types of companies?

• Because my investment portfolio is a vehicle for achieving and maintaining financial independence, not for making grand moral statements.
• Consumers and investors have every right to patronize or own any legal, publicly traded business that creates jobs, pays taxes and allows citizens to enjoy their many freedoms.
• Moreover, you only need look at Afghanistan under the Taliban to see what a society unleavened by political, religion and economic freedoms looks like.

Last month French President Sarkozy made news when he said the burqua – a symbol of the repression and subjugation of women – “is not welcome in France.”

Shariah law isn’t welcome in my portfolio either. And the returns have been superb because of it.

Source:  Investing in Sin Stocks: How to Oppose Radical Islam in Your Portfolio

The recession has hit consumers hard. And many have cut their spending, doling out their dollars for the necessities: food, shelter, clothing and gasoline – but little else.

To say business has been bad doesn’t really capture the scope of the damage.

• It’s easy to see the effects on casinos – the top dogs in most markets – and we don’t always notice the impact to the rest of the food chain.
• Restaurants have plenty of empty tables these days. Those little beepers you get while waiting in line are just sitting around collecting dust.
• Malls resemble ghost towns; most of the visitors are store employees themselves. Many of the weekend customers are teenagers, with little more to spend than time.

That’s why it’s so surprising to find a company that’s doing well, much less a casino.

Amidst all of this economic devastation there are companies who have been holding their own and putting up impressive earnings figures. We’ve found one casino stock in particular that has a unique business model of drive-to locations that’s been succeeding where Vegas hasn’t.

Casino Stocks Drop As The Travel Industry Suffers

The travel industry is suffering right now. And while it’s put a bite on tourism, it’s hurt most casinos much worse.

And no place got hit harder than Las Vegas. “Sin city” experienced a 10% drop in visitors in January and February. Unfortunately, that’s the good news. Gaming revenues were a paltry $937 million, down almost 20%.

More visitors equal more spending in the gambling capital of the world.

And when you consider that over 37 million visitors go to Vegas every year, a 10% drop equates to 3.7 million people not adding tens of millions to the economy – or a casino’s bottom line.

As the infamous strip has grown, mega-casinos have popped up as well with each casino supporting thousands of workers and capable of adding billions to their parent company’s bottom line. A 20% drop in revenue for many casinos means that they aren’t able to pay their fixed expenses.

That sobering statistic has translated into a huge problem for many of the gaming companies, who now find themselves scrambling to stay solvent. They’ve laid off thousands of employees and slashed expenses in an effort to stem the red ink.

But it hasn’t been enough: Las Vegas-based MGM Mirage (NYSE:MGM), Riviera Holdings (AMEX:RIV) and Station Casinos are all in discussions with their lenders and bondholders. The topic? Missed debt payments.

Station Casinos missed a payment last week, and Riviera missed a $4 million interest payment on its $25 million line of credit on March 30.

Casino Stocks – It’s All About Location, Location, Location…

At first glance, you might think all gaming companies and casino stocks are in similar straits. But they’re not. An important difference sets at least one of them apart: casino location.

Not too surprisingly, with fewer people willing to shell out money for airline tickets, a greater percentage of Vegas visitors are coming from drive markets like Southern California.

It’s not that people don’t want to gamble – they just don’t want to shell out hundreds or thousands of dollars for plane tickets to get there.

So it stands to reason that if we wanted to “invest in sin,” we should take a look at gaming operators who own casinos primarily served by drive markets, whether it be Las Vegas or elsewhere.

Ameristar Casinos, Inc. (Nasdaq: ASCA) isn’t the biggest casino operator, but it’s certainly one of the most profitable. None of its eight casinos are in Las Vegas, and all of them cater to local, drive-to clientele.

• Cactus Pete’s and Horseshu are both located in the town of Jackpot, Nevada – a popular recreational vehicle destination in the northeastern part of the state. With a full hookup RV park right next to the casino, Cactus Pete’s – the largest gaming and entertainment destination in northeast Nevada – allows RV gamblers easy access to casino facilities.
• The Ameristar Casino Hotel in East Chicago, Indiana – one of the largest casinos in the Midwest – is a short drive for its Windy City clientele.
• The company recently completed a 130,000 sq. ft. addition to its casino in St. Charles, Missouri. With its seven restaurants, Resort Spa St. Charles is a short 20-minute drive from downtown St. Louis.
• The company’s Kansas City, Missouri 3.5-acre casino floor features more than 3,000 slots, 105 gaming tables, 12 restaurants, an 18-screen movie theater complex and a Kid’s Quest childcare facility. And it’s a mere five minutes from downtown.
• The Council Bluffs, Iowa crowd need only head down to the Platte River, where three full decks of gaming await on the largest riverboat casino in Iowa. Ameristar also owns a large land-based AAA 4-Diamond hotel adjacent to the riverboat.
• The company’s Casino Black Hawk is located about 70 miles from Golden, Colorado. A major regional gaming and entertainment destination, the Black Hawk complex, sports a 1,550-space parking garage, one of the largest in the area.
• The Casino Hotel Vicksburg, another riverboat casino located on the mighty Mississippi, is the largest dockside casino in the southwest part of Mississippi. Number one in its market for the past several years, this facility sports a colorful blues bar and a state-of-the-art gaming center.

Casino Stocks: Ameristar’s Business Model Is Working…

So how well is Ameristar’s “drive-to” business model working? Quite well, thank you. Last quarter, it achieved record earnings – chalking up $0.52 per share – compared to a net loss of $1.07 for the same quarter in 2008.

“Ameristar achieved record EPS in the first quarter,” said Gordon Kanofsky, Ameristar’s Chief Executive Officer and Vice Chairman. “This was largely because of our sustained emphasis on achieving operational and marketing efficiencies, particularly during the current recession.”

Even more impressive, the company achieved these results on revenues of $315 million, $10 million lower than the previous year.

To experience a decline of only 2.7% when the rest of the industry’s looking at 20% declines speaks to the validity and diversity of the company’s business model.

Since most of the casinos are located in travel destinations, hotel occupancies remain high, offsetting small declines in gaming revenues.

The company remains well capitalized, having recently amended its credit facility with its lender through 2012.

CEO Kanofsky commented on the company’s future outlook: “Despite expected continued difficult economic conditions in 2009, we believe Ameristar is well positioned to continue to drive year-over-year margin growth.

“We also believe that regulatory reform in three of our key markets – coupled with significant investments in two of those markets – should drive future revenue growth, enabling Ameristar to emerge from the recession stronger and more profitable.”

We wholeheartedly agree. If you’re looking at investing in sin through casino stocks, Ameristar Casinos sports some of the best odds outside of Las Vegas.

Good investing,

David Fessler

Source: Casino Stocks: The One Sin Stock You Should Be Betting On

To stay in Vegas, you’d have to get to Vegas. And that costs money no-one is willing to spend right now. Accordingly, the supposedly recession-resistant vice stocks are taking it on the chin. Just yesterday [Thursday], we claimed our own 25% short profits share from the collapse of Las Vegas Sands (LVS) share price.

Today, I’d like to direct your attention to Wynn Resorts, Limited (NASDAQ:WYNN).

When it came to the subject of Macau, casino mogul Steve Wynn said on Wednesday: “The central government and the Macau government putting a crimp in or a slowdown in visitation was an attempt to give the community a chance to absorb the stuff that had been built.”

But that really makes no sense at all. Revenue growth has slowed as global recession and new travel restrictions on mainland Chinese tourists have hit all Macau casinos. Allowing “the community to absorb” new casinos doesn’t bring renminbi, yuan or dollars into the till. And the outlook that this may change is getting dimmer by the day:

Citi just downgraded Ctrip.com International, Ltd. (NASDAQ:CTRP), China’s premier travel service provider for hotel accommodations, airline tickets and packaged-tours in China. Analysts reduced it from a Buy to a Sell, slashing its price target from $53 to $18. We dipped below that price this morning.

If the outlook for the company who’d make a mint off shuttling Chinese gamblers to Macau is lagging… when China is lathering a good third of its currencies reserves into work-creation programs (infrastructure investment is nothing else!)… and when the companies responsible for China’s prosperity are closing at a record pace… it is time to bail.

WYNN is currently trading at around $30.15, down a hundred bucks from its 52-week high of $137.93, and uncomfortably close to its 52-week low of $28.06. Other than $3 LVS, WYNN still has a decent height to fall from.

I say short it at current levels, for gains of 15-20% by New Year’s. Cover at $33 should there be an upward bounce.

Source: After LVS, Wynn set to lose

This from Today’s Financial News:

Despite the substantial drop in the U.S. equity markets, Las Vegas Sands Corp. (NYSE:LVS) gained over 9% today. The company is currently in talks with a syndicate of banks to raise between $1.5 billion and $2 billion to finance new casino projects in Macau. The company had suspended construction on its expansion into Chinese gaming, laying off most of the 11,000 construction staff.

The stock price has dropped from over $122 last December to just above $6 today.

We think Sands is the new GM: Obtaining credit to finance the Macau project at this point is a self-defeating target. By the time the money comes in, the Chinese gaming market will be just as hard-hit as Vegas. There may be room for another 10% gain in the next weeks. More likely, the company will blow past its 52-week low of $4.32 before November is over.

Since I first wrote about this stock on August 19, 2008 (“The House always wins: Investors lose big with MGM Mirage (MGM), Las Vegas Sands Corp. (LVS), Wynn Resorts (WYNN)”), the price has dropped from $50.93 to below $5.

Short it again, for 20-30% gains by mid-December!

Source: The long dying of vice stocks: Short Las Vegas Sands (LVS) for 20-30% gains!

This from Smart Profits Report:

From late 2005 until about a year ago, gaming and casino stocks racked up huge gains – especially those with a strong presence in Macau. These include Las Vegas Sands (NYSE: LVS), Wynn Resorts (Nasdaq: WYNN), and the MGM Mirage (NYSE:MGM).

Since late 2007, however, these stocks have endured a huge drop, losing 70% to 90% of their value. Casino-related stocks such as International Game Technologies (NYSE:IGT) and Shuffle Master (Nasdaq:SHFL) have also lost a good chunk of their value.

For China, allowing some U.S. casinos to enter the Macau market is a big deal. This paves the way for further penetration into the Asian markets, which is why the casinos mentioned above did so well from 2005 to 2007.

I don’t think it’s a coincidence that these three casino stocks made their highs in October 2007 – the same month that the Chinese stock market (SSE Composite) topped out. Since then, the SSE Composite has lost close to 70% of its value.

Chinese Visa Restrictions Stifle The Action Around The Craps Table

So why has this sector endured such a brutal selloff?

There are a number of other reasons, including recessionary pressures, a lack of funding for some of the U.S.-based Macau casinos, plus China’s efforts to limit the number of visas that residents of the southern Chinese province of Guangdong need to enter Macau.

As of October 1, residents now are allowed one trip every three months instead of two months – bad news since Guangdong customers are one of Macau’s biggest revenue sources. This has investors wondering if China has any additional changes in mind, with the uncertainty weighing on these casino stocks.

Until last week, that is…

The Upside And Downside Scenarios For These Three Sector Stalwarts

Last Tuesday, LVS, WYNN, and MGM all made their recent lows. But that was the trigger point for a huge rally, with the stocks then posting gains of 100% to 200% over a four-day period.

Let’s take a quick look at upside and downside…

Upside: Based on the intraday charts, these three stocks probably have higher to go, at least over the near-term.

Downside: The intermediate-term picture is a little hazier. None of the three have triggered daily buy signals yet. Moreover, if the stock indexes are in a bearish consolidation pattern and go on to make new lows, they could give back some, or all, of their recent gains.

However, if the S&P 500 makes new lows, and moves down to the 765 area, and these three stocks do not make new lows with the index, it should represent a good, intermediate-term buying opportunity.

How To Play The Casino Like James Bond

If the gaming and casino stocks have set their lows, LVS, WYNN, and MGM should benefit more than the others.

However, if you want to diversify and spread your risk in this sector, there are a couple of other ways to do it.

Take a look at the Ladenburg Thalmann Gaming and Casino Fund (MUTF:GACFX). Unlike the Market Vectors Gaming ETF (AMEX:BJK), which is less than a year old, I prefer this fund because there is more data to analyze.

Here’s a weekly chart of GACFX, with a regression channel drawn from the October 2007 high.

The top of the regression channel this week is around $5.20, but for each week that passes by, the regression channel drops about $0.15. A couple of weekly closes above the regression channel should be bullish over the longer-term.

Source: There’s Money In This Sector… Literally

This from Today’s Financial News:

Revenue for Penn National Gaming Inc. (NASDAQ:PENN) in Q3 slowed, as it did at most casino operations. But due to the termination of an attempted acquisition deal, the company received a settlement of a cool $225 million. In addition, the (intended) acquisition group purchased 12,500 shares of Series B Redeemable Preferred Stock due 2015 for $1.25 billion.

As a result, Penn reported a net income of $147.5 million. That’s $100.9 million more than the same quarter last year!

Currently, Penn operates 19 facilities in 15 jurisdictions. With this influx of cash, the company has declared itself ready to expand.

Waiting for November 4

Thanks to huge budget deficits, the State of Maryland is reconsidering its former stance on slot machines. This election day, my fellow Marylanders are likely to approve a referendum that would open the state for slots.

Penn has indicated interest in contracts to run slots facilities in Maryland. If the referendum to permit the five proposed sites is passed, the company will be ready to move on the bidding process.

Priced around $20, Penn had seen a 52-week high of $62.25. And with a P/E of 6.5, this company holds promise.

I recommend you buys shares of Penn National Gaming Inc. (NASDAQ:PENN) today [Friday] at or under $21. Depending on the outcome of the referendum, you could see short-term gains of 20% within the first weeks of November.

Source: Profit referendum: How this election day could boost Penn National (PENN)