I Love Tobacco ? 6400 Personal Finance

Tobacco companies that is.

Why do I love them so much? Because not only have they figured out how to continue to sell a lethal product to their customers in the face of relentless anti-smoking campaigns but also because?they have excelled at it.

Think about it: this is an industry that sells products that everybody from the federal government on down tries to keep out of the hands of their customers and still turns a profit. Sure they have learned to diversify their product base a bit but at the end of the day if it looks like a duck, quacks like a duck, and walks like a duck, then it?s a freaking duck that is rolling in cash.

For a matter of perspective think about what happened to Blockbuster when Netflix came out with a better way to deliver movies and TV shows to your living room:

This chart, courtesy of this guy, is from 2010. Why an old chart? Because it is really hard to find charts for companies that get bought out.

Its not like the federal government told Blockbuster that they had to put warning labels on the DVD and VHS cases warning about cancer, damaged vision, damaged hearing, or brain cells dying. ?Netflix just came out with something better and took over the market before Blockbuster could adapt and overcome. ?Such is (business) life.

On the other hand if you are of those unfortunate souls who ?just can?t seem to kick the habit? you have the?unique?privilege?of purchasing over and over again a product that is covered with reasons?to not buy it because it will kill you. ?It?s as if Wal-Mart sold hand grenades as long as they were contained in a box with a label that contained everything that the exploding fragments could do to you on the day you decided to fiddle with the pin a little too much. ?Buying the things is lunacy, selling them successfully in 2012 is almost incredible (keeping in mind the cheat factor of nicotine).

So just how well are these corporations doing? Well, here is what the market thinks about Altria:

That blue line you see is the 200-day simple moving average. ?Simply put if that line is steadily moving up and to the right it means the stock is in a strong uptrend. ?For comparison here is the darling of the S&P 500, Apple:

So yeah, Altria is having a grand old time. ?Care to guess how Phillip Morris International is doing?

And for good measure here is Reynolds American, maker of Grizzy Wintergreen, perhaps the most popular brand of chew used by US Army officers. ?At least with smokers you can kick them outside in the middle of winter and force them to choose between the cold and their nicotine fix. ?Chewers present a whole different set of problems like making sure to not accidentally knock over their spit bottle when it is sitting right next to your keyboard. ?Seriously, that s**t is disgusting. ?But holy crap do I wish I had dumped some cash into Reynolds at the same time I was buying Altria and Phillip Morris:

Think about this for a second. ?What we have here is a typical transaction between two parties: the buyers (smokers/chewers), and the sellers (tobacco companies). ?The former spends significant amounts of cash on the product, consumes the product, and then proceeds along this repetitive path to a slow, miserable, and painful death. ?The latter sells the products for profit and takes the cash generated by the transactions to grow their businesses and pay dividends to shareholders.

Which side of that transaction do you want to be on? #EasiestDecisionI?veEverHadToMake

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Source: http://6400personalfinance.com/2012/08/20/i-love-tobacco/

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