Tobacco Stock Gains and Smoking Deaths Go Hand In Hand

Cigarette stocks like Altria Group (MO), the maker of Marlboro, Virginia Slims and other popular brands of cigarettes, have been good to long-term term shareholders. Despite numerous law suits and subsequent legal rulings against it and other big tobacco companies, MO has maintained a long-term price upside, albeit volatile, which has rewarded many investors with large gains.

On the other hand cigarette smokers have not fared so well. Millions of smokers have died from smoking-related diseases usually affecting the heart or lungs. Many others are afflicted by cancers of the mouth and throat - not a pleasant outcome. And as the worldwide population increases many more millions will die in the next few decades.

Although cigarettes give smokers short-term pleasure, habitual smokers do not have very good odds for a long life. Cigarettes kill half of their life-time users. And half of these deaths occur in smokers between the age of 35 and 69. So one in four habitual smokers will die in the prime of their life.

The relationship of cigarette smoking and investing outcomes in tobacco stocks goes something like this: As the population increases with time, more and more people will smoke. Tobacco companies will sell more and more cigarettes thus increasing revenues and profits. Therefore, stock prices of tobacco companies will rise making their investors happy. But as more and more people smoke, the number of smoking related deaths and infirmities also will rise - while investors make money and celebrate, smokers cough, wheeze, get sick and die.

It seems that increasing numbers of deaths related to cigarette use and rising stock prices of tobacco companies go hand in hand. What a strange world in which to live and die.

Read Cigarette Makers Deliver More Nicotine to Smokers for more chilling news about smoking.

Posted July 12, 2006.Updated January 12, 2007.