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

A month ago, I asked my colleagues at TFN to think about the year ahead… the events that will shape the year both politically and financially. In short, to come up with realistic “Predictions for 2009″. As history is fast-forwarding, some of these events have already taken place. Others look increasingly probable… and not half as far out as they appeared just a month ago.

Here they are, in no particular order

*** Dollar hits parity against euro by June 2009.

*** Oil bottoms at $12 per barrel by April 2009.

*** Gold falls to $500 as Indian economy crashes and Dubai abandons spending spree.

*** Russian troops wearing Gazprom uniforms invade Ukraine to “protect” natural gas pipeline. The Russian stock market collapses. Three European energy stocks soar. (Yes, there’s still time to buy!)

*** US inflation dips to zero; interest rates too.

*** US unemployment hits 10% by January, 15% by April

*** Despite $25 billion in loans, GM files for bankruptcy

*** Abu Dhabi, Dubai and Bahrain abandon building projects for lack of credit and crashing oil revs. “Tower of Babel Syndrome”

*** China hit by bad loan scandal, excessive government spending, faltering exports, rampant inflation, civil unrest

*** China turns aggressive toward Taiwan, buoyed by pacifist White House

*** Australia and Canada have credit rating slashed, economies hit hard; currencies plummet

*** Junior mining companies, green energy tech, and marginal oil exploration (shale, sands, deep sea) go bankrupt by the hundreds

*** France jockeys for superpower position within EU

*** Major terrorist attack on US soil; Obama declares national emergency, establishes National Security Force

*** MRSA epidemic turns deadly

*** The healthcare industry will be burdened by increasing costs and regulations. But this news has been discounted for several months. Instead of trying to pick the winners and the losers in the industry, play a sector-wide ETF likes VHT and XLV. Short Big Pharma as companies are hit by government-backed liability suits and new influence of the trial lawyer lobby; watch anti-business courts penalize companies for research and development.

*** Obama will raise the cap gains rate to 30%, knocking out new capital inflows into market, triggering stampede of asset sales as investors rush to avoid Obama’s doubling of the tax rates next year.

***US Economy turns European: Unemployment extends towards double-digit territory. Wages drop and Washington creates massive infrastructure spending initiatives and corporate incentives to bring manufacturing back within American borders. Efforts fail because no company would want to do major capital investments in a country w/ 60+% income taxes, unfirable workers, compulsory health insurance even for temps. Despite showcase infrastructure projects, lack of community tax base and dying private initiatibve, American cities start looking like East Baltimore.

***  Tata Motors aready bought Jaguar & Range Rover: Maybe now it will buy Ford or GM? Detroit gets its bailout, but it is not enough to keep GM from asking for more. The core assets of the company are bought by a better-positioned rival like Volkswagen and its pension burden is dumped on the federal government. Car dealerships, at least the ones still around, are empty. You have to blow the dust off the windshield to see the sticker price. Major dealers like AN go bankrupt as they are too big to hide from the storm.

***US Auto parts industry goes bankrupt as its main customers wither. Foreign manufactures  like Wonder Auto thrive as used cars require increased maintenance.

*** Churches will see greatly increased attendance. Alcoholism and drug abuse will rise. Crime will be out of control in many suburban neighborhoods (racial tensions). Buy a gun and invest in VICEX. Casinos go broke for lack of travel, penny-ante online gambling runs rampant.

*** The value of the American dollar continues to gain strength. Boeing sees large forex bonus as it gets back in business. U.S. exporters are reeling from the double hit of global recession and increased cost to overseas customers.

*** No action is  taken against Iran, even during a military attack on Israel. The withdrawal from Iraq will be rapid, followed by withdrawal from Afghanistan and abandonment of the region to Taliban, Russia & China. Millions of dead in subsequent Iraqi civil war. Nobel Prize for Peace 2010 goes to Obama & Ahmadinejad as Shiites commit genocide in Iraq.

Source: Major Financial Events and Developments of 2009