| #ffffff;" /> | | | | aficionado and the cigar industry in recent months. |
| If cigar magazines such as Cigar Aficionado and | | | | Among other things, a new increase in the SCHIP |
| Smoke can be believed--and demographic studies | | | | children's insurance program has been paid for in part |
| indicate that, on this issue, they can--premium cigar | | | | by increased tobacco taxes, including a closing of the |
| smokers tend to be the types of folks who also | | | | federal tax loophole that a premium cigar aficionado |
| make savvy investments. | | | | had secretly appreciated for decades. This loophole |
| But even the most dedicated cigar aficionado and | | | | meant that cigars, cigar tobacco and premium cigars |
| premium cigar smoker may not realize the unique and | | | | were taxed at a much lower rate than were |
| interesting role that premium cigars play in the stock | | | | cigarettes. It has been closed at the federal level |
| market, especially during recessions like the one we | | | | with a ten-time increase in taxes on cigars, and more |
| are all currently lamenting. | | | | and more states are moving to close similar loopholes |
| When the stock market crashes, or when stocks | | | | in state tax policies in order to make up budget |
| undergo a longer-term, severe price contraction, | | | | shortfalls. Also, with United States policy toward |
| investors seek safe stocks to place their money in. | | | | Cuba easing slightly--signaling, just possibly, that the |
| Their reasoning makes sense enough: after all, in a | | | | longtime United States trade embargo against Cuba |
| shaky economy, even a company with great profits | | | | may not last forever, or even through the four to |
| in its future may present a fairly bad short-term | | | | eight years of the Obama administration--premium |
| investment. In troubled times, then, it makes sense | | | | cigar manufacturers are sweating somewhat the |
| to put money in something that has a tendency to | | | | prospect of having to compete, for American dollars, |
| remain profitable even when the economy's bad. | | | | against one of the finest cigar companies in the |
| And, given that demand for tobacco is fairly | | | | world, the government-owned Cuban cigar |
| inelastic--meaning that the demand doesn't change | | | | monopolists at Habanos S.A. |
| even as households and companies seek to shrink | | | | So, it's a good time for cigar tobacco companies to |
| their budgets and tighten their belts--tobacco | | | | be enjoying their new allure as defensive stocks. But |
| represents one of those fairly durable investments. | | | | not everyone agrees. A New York City Council |
| All this makes tobacco look like a good investment | | | | member has recently argued, on ethical grounds, that |
| when times are bad. Investors even have a word for | | | | his city should divest itself of the more than five |
| this kind of stock (the fairly sure bet that you turn | | | | million shares, valued at over a hundred million, that its |
| to when nothing's a sure bet): they call it a defensive | | | | various pension boards owns. Those stocks, if |
| stock. As in, self-defensive. Self-defense of the | | | | relinquished now, could end up a windfall for those |
| monetary kind, that is. | | | | pensioners. |
| So, for example, during the recent recession, a | | | | On the other hand, maybe not. With the economic |
| number of tobacco companies have found their | | | | signals still mixed, but many forecasters foreseeing an |
| stocks immensely saleable--and immensely successful. | | | | end to the recession in late 2009 or early 2010, some |
| Investors have enjoyed the extra security these | | | | investors have already switched over to recovery |
| stocks offer. And tobacco companies, including the | | | | stocks--stocks that tend to do well during periods of |
| premium cigar tobacco giant Altadis S.A., which was | | | | economic recovery. A premium cigar aficionado, in |
| recently acquired by a still larger tobacco company, | | | | any case, might want to consider going beyond mere |
| have appreciated the vote of confidence, especially | | | | fandom to investment, the next time (let it be many, |
| given the other challenges roiling the dedicated cigar | | | | many years from now! |