WHY I BOUGHT STOCKS IN TOBACCO COMPANIES


I’ve been an investor in the stock market for over 30 years. I’ve never owned tobacco companies…until now. The reason I bought tobacco stocks: marijuana. With pot legalized in Washington state and Colorado, and with “medical marijuana” sweeping the nation, the signs are clear that marijuana will be legalized in the next few years. But who is going to market and distribute and collect the taxes on marijuana? I’m betting it’s going to be the tobacco companies. So I bought stakes in Altria Group, Inc. (previously named Philip Morris Companies Inc.) (MO) which sells Marlboros, Lorillard (LO) which sells Newports, and R. J. Reynolds (RAI) which sells Camels, Kools, and Winstons. Sadly, I had to sell my stakes in Cisco Systems, Raytheon, Corning, Juniper Networks, and Oracle to pull this off. If I’m right, these stock prices will soar in the coming years.

11 thoughts on “WHY I BOUGHT STOCKS IN TOBACCO COMPANIES

  1. Dan

    Every time I light up a cigar, I’ll enjoy it a bit more knowing I’m helping your retirement!

    Reply
    1. george Post author

      Dan, my retirement is years away. In fact, my internist told me, “Never retire. Cut back, do less, but never stop working.” I’m not sure I can do that, but I’m going to keep working as long as I feel as good as I do now.

      Reply
  2. Deb

    Not wanting to bust your bubble, George, but the idea that legalized marihuana is just a one legislative act away isn’t a recent one. When I was in college in the 1970s, one of my professors claimed that RJR, among others, already had the packaging and marketing in place for the day marihuana was legalized. I’d love to see some of the samples of 1970s packaging that they came up with!

    Good luck with your investment strategy, but keep in mind there are vast economic, social, and religious forces for which illegal drugs of all stripes are in their best interests.

    Reply
    1. george Post author

      You’re right, Deb. I had professors back in the 1970s who predicted marijuana would be legalized “soon,” too. But the difference now is that state governments and the Feds are desperate for a new source of taxes. Legalizing weed and taxing it will bring in billions. It’s always about the money.

      Reply
  3. Richard R.

    It may pass in a few states, but I doubt the House will ever let it through. The GOP sees it in the same boat as abortion; morally Very Bad. Washington is going as slowly as they can to implement with one “study” after the other and “process analysis” actions galore. Though the law has technically taken effect licenses to grow, distribute, sell are all delayed while the state legislature “looks into” the details. Once it actually happens, the Feds are set to come down hard on the state law that’s in violation of the federal law. Arguments for revenue and against Mexican drug cartels notwithstanding, it’s a long hard questionable path. Come the day, it will be priced out of the ordinary person’s budget. An ounce of medical grass here costs about $250, plus the doctor visit every 6 months. (Back in the day, I paid $10). Then there will be all of the same 2nd hand smoke and medical issues everyone worries about now, and there have been decades of “It’s bad! It’s evil!” It would have been great if there had been voter support for it in the 1980s, now,, I’m not sure it will ever be federally legal and affordable.

    Too bad about the Cisco stock.

    Reply
    1. george Post author

      Yes, Rick, I hated to sell my technology and defense stocks. But I’m convinced that the debt crisis will force the states and the Feds to legalize marijuana in order to get their hands on the billions of tax revenue they desperately need. Money changes everything.

      Reply
  4. Cap'n Bob

    Here in Washington, where it’s supposedly legal, you still can’t buy it unless you have a medical marijuana card, and as Rick says, there are many other obstacles. A store was just closed by the Feds because federal law, which bans dope selling, pre-empts state law. You should have moved that dough into same-sex wedding cake toppers. You’d see a quicker return.

    Reply
    1. george Post author

      Bob, I’m playing the Long Game with my tobacco/marijuana strategy. The same kind of nonsense occurred when Prohibition ended. It took some time for the commerce system to get set up. I was tempted to invest in same-sex wedding cake toppers, but Bloomberg already has that market sown up.

      Reply
  5. Jeff Meyerson

    The Cap’n beat me to it – with Rhode Island, Delaware and (next) Minnesota jumping on the same sex marriage handwagon (so to speak) this is the one with the real momentum. Rick, you are dating yourself with the $10 comment but that sounds about what I remember from the Stone(d) Age.

    Reply
  6. Jeff Meyerson

    Well, they do say pot is a lot stronger today then when we were young.

    And stay off my lawn!

    Reply

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