Tuesday, February 14, 2012
How to Profit off Addicts
If you want to get rich, don't invest in things people want. Invest in things people need.
Of course, besides food, shelter, and safety, needs change. Those changing needs are often the most profitable, and the more people need, the more suppliers can profit.
History shows us that one of the most profitable needs of all is the need for an addictive drug. Before being shot by Colombian security forces, Pablo Escobar was one of the wealthiest men in the world, with a personal fortune near $25 billion. Thanks to an unstoppable demand for cocaine, Escobar rose from poverty by smuggling tons of cocaine into the United States back when the white powder was the drug of choice of American yuppies and junkies alike. Such is the wealth to be had in feeding addictions.
Tobacco companies have known for a long time how profitably supplying addicts can be, and the firms have become the dividend darlings that yield-hungry investors dream of. Reynolds American (NYSE: RAI [FREE Stock Trend Analysis]), producer of Camel, Pall Mall, and Winston cigarettes through its R. J. Reynolds subsidiary, has been offering dividends of around 5 percent (usually much higher) since the middle of 2004, while its stockprice has climbed steadily despite lower cigarette smoking rates from 2005 to 2010. Meanwhile, stock in Reynolds increased nearly 4 percent--and that's including the market crash of 2008.
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Are you paying more than $5 per pack of cigs? I buy high quality cigarettes over at Duty Free Depot and I save over 50% from cigarettes.
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