| Hello and welcome to this week's edition of Money | | | | couldn't really recommend them. Sam Adams seems |
| Talk Monday! The Dow slid another 150 points or so | | | | like they are a company on the rise, but a recent |
| this week, but that's OK. That just means everything | | | | increase in the cost of hops could hurt them. Then |
| is still on clearance. This is no time to put the wallet | | | | we come to Miller Lite, which is operated by |
| away. I'm going to talk today a little bit about some | | | | South-African Brewing Company, which oddly enough |
| precautionary moves in a time like this. I know that | | | | is owned (28%) by Phillip Morris, a cigarette company! |
| the general rule of thumb is that "chicks dig the long | | | | So we have cigarettes and beer under the same |
| ball", but if I may quote a tried but true adage, | | | | ticker...I'm in! Phillip Morris, in fact, has always beaten |
| "sometimes the best offense is a good defense." | | | | the odds, whether it be litigation or Truth campaigns, |
| During a recession, or even a correction, the stocks | | | | and there is no end in sight. The company is as |
| that generally perform the greatest (or the least | | | | strong as ever and as historically provided a hefty |
| worst) are stocks that supply goods that have | | | | dividend (which we will of course reinvest). |
| inelastic demand. A good with inelastic demand, as | | | | The other vice Americans can't get their hands off, |
| you may remember from your finance class, is a | | | | of course, is oil. Regardless of the price of a gallon, |
| good that generally carries the same demand | | | | we are still going to fill up our tanks and neglect public |
| regardless of the price. For example, a commuter is | | | | transportation. You really can't go wrong with any of |
| going to purchase gas whether the price is $2.50 per | | | | the big oil companies like Exxon Mobile, Royal Dutch |
| gallon or $3.50, but would more likely pass on an | | | | Shell, or Conoco Phillips, but at the moment, I prefer |
| airline ticket that is above average price. During a | | | | British Petroleum. The company is currently near it's |
| recession, even if the price of a good does not | | | | 52-week low and offering a higher yield than their |
| change, the average citizen carries less purchasing | | | | counterparts. Plus, at the end of the year, you'll |
| power, so the goods with the most inelastic | | | | receive a Foreign Tax Credit for the dividend tax you |
| demands will fare the best. | | | | pay during the year, and that's always fun. |
| Now that we have a better understanding of the | | | | Don't feel guilty about investing in these companies. |
| term, what is a consumer good with very inelastic | | | | You're not investing in cigarettes, beer, and oil- you're |
| demand? I can't think of anything more inelastic than | | | | investing in companies for a share of their earnings. |
| the products we are addicted to. I'm thinking | | | | And if "The Man" is going to continue to supply the |
| cigarettes and beer. Anheuser Busch has seen a | | | | world with these poisons, well, it wouldn't hurt to |
| decline in sales over the past two decades, so I | | | | make a buck off it, too. |
