In the United States, the tobacco industry is the one that has recorded the best economic performances for a century, according to a report by the Credit Suisse bank.
Smokers pay big. Among all industries, tobacco has been the most profitable sector for a century, according to a report from the Credit Suisse bank, which compares the economic performances in fifteen sectors of the American industry for a hundred years.
165 times more profitable
In the long run, the tobacco industry has achieved record profits, with an average annual return of around 15%. A dollar invested in tobacco companies in 1900 is worth 6.3 million today … According to site calculations Sydney Morning Herald, “It is 165 times more than the average recorded by the other industrial sectors”. None have succeeded in meeting such long-term goals.
Long-term performance of US industries
However, smokers have become increasingly rare since the 1960s and the discovery of the harmfulness of tobacco. In the United States, their number is inexorably declining. In 1981 Americans smoked 640 billion cigarettes, according to data from the Ministry of Agriculture ; in 2007 they consumed “only” 360 billion – a drop of 44%.
In addition, the sector suffers from the constraints imposed on it by governments – taxes, price controls, advertising bans, neutral package … In fact, it would manage to generate such margins by limiting its spending on innovation, according to the economist. Morgan Housel, quoted by the newspaper. Indeed, the cigarettes sold have been much the same for decades and decades.
Few investors for more returns
In addition, this sector is popular with only a handful of investors, as it is connoted from an ethical, health and social point of view. This situation would have allowed the industry to keep rates low in the market for decades, and to generate massive dividends.
Indeed, according to the report, these profits are characteristic of “sin stocks”, the products of “sin” – alcohol, tobacco, gambling, and weapons, to some extent. In all these industrial sectors, the small number of investors generates higher returns than elsewhere.
Thus, according to the Swiss bank report, in the United Kingdom, one sector has also performed well over the last century. It is not about tobacco… but about alcohol.
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