The night started at 2:45 on a Thursday afternoon. I arrived for Off-Track Betting in midtown Manhattan, eager to learn what made gambling stocks a necessary part of the Texas-based Vice Fund (VICEX). It was apparent as soon as I approached—men in wrinkled suits ready for a hiatus from their workday, retirees, others who had lost their jobs in need of a quick thrill. The dark room was quiet and smelled of body odor. People stared at bright monitors in a zombie-like daze, longing for a miracle. It was soon obvious The Inside Track was a breeding ground for addiction. Flipping through one of the OTB magazines, the first page featured a large ad. In all bold, capitalized letters: “GAMBLING PROBLEM?” The question mark was emphasized. Thirty minutes after entering, Grey Heart’s Girl and Hidden Value had lost me $20, yet won me my first insight into investing in vice.
While stock markets fluctuate, people worldwide continue to drink, smoke, and gamble as their nations defend themselves. Thus, the genesis of the Vice Fund: Dan Ahrens, its founder and former manager, says that, after the market’s severe dip in early 2000, he found alcohol, tobacco, and gaming ranked among the top industries for 1-, 3-, and 5-year performance. What began as a joke turned into the creation of the now $77 million investment vehicle, a mutual fund targeting about 30 “sin stocks”—in contrast with socially responsible investing (SRI).
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