Great. Get paid to wait for the recovery esp. USB, WFC. I have been thinking about Tobacco as well but get turned off by ethical considerations, even though financially they make sense.

Pravchaw,

Don't worry about the tobacco ethical issues - you owning the stock personally does not benefit tobacco companies at all, unless you buy into a stock offering. I have owned MO/PM since 2003 (now 20% of stock portfolio [25% excluding cash] - got rid of KFT at spin) - the easy money has been made, but I expect PM/MO to continue churning out 10%+ returns including dividends (hopefully Obama does not raise the dividend tax).

I remember WEB said he would love to buy a tobacco company ("cigarettes cost 10 cents to make and you can sell them for a dollar and its addictive"), but he did not want the bad PR given his squeaky clean reputation.

IMHO, you should buy 2/3 PM and 1/3 MO as PM has much higher long-term growth with international markets gaining momentum (China should be huge and PM has nationwide partnership with gov't) and with MO, U.S. consumption will decline about 3-3.5%/year long term (more than offset by price increases and cost efficiencies) and I love the 5.8% dividend.

PM and MO are the quintessential wonderful businesses. Philip Morris International has perhaps the most wonderful brand in the world with a highly addictive product. If there is ever a no-brainer longterm investment it is PMI. I put 1/3 of my net worth in MO back in 2000 when the lawsuits were flying thick as thieves. My analysis at the time was that there was a very low probability that MO would go broke, so the stock should be worth a lot more than the $18 a share price. I always wanted to ask WEB why he didn't take advantage of this opportunity and what he didn't like about MO at the time.

I think you are right that Buffett like to avoid some bad PR. I have seen in the past his holding include Reynolds and UST.

V

I think you are right that Buffett like to avoid some bad PR. I have seen in the past his holding include Reynolds and UST.

V

magalengo Wrote:
> I put
> 1/3 of my net worth in MO back in 2000 when the
> lawsuits were flying thick as thieves.

Speaking of lawsuits and thieves, the lead lawyer on the anti-tobacco class action suits, Dickie Scruggs, was in the last couple of weeks sentenced to 5 years in prison for attempting to bribe a judge to rule in his favor. Couldn't have happened to a more deserving thief.

Jeremy Siegel found out in his research that from 1957-2007, MO was the best performing stock in the S&P 500 by delivering a total return of about 20% annually. I also think that holding PM and MO is a good long-term income strategy.

I dont think Obama has to raise the dividend tax, in fact, all politicians have to do is to do absolutely nothing and many if not all the tax cuts will expire. If there's one thing politicians are good at it is doing nothing.

cm1750 Wrote:
-------------------------------------------------------
> Don't worry about the tobacco ethical issues - you
> owning the stock personally does not benefit
> tobacco companies at all, unless you buy into a
> stock offering.

I don't have a strong opinion on investing in tobacco stocks (I think it's fine; the only thing I personally avoid are weapons manufacturers)... but I don't buy your reasoning at all...

I disagree wtih your thinking; that's completely false in my eyes. Anyone that finances a company, whether equity or debt, is helping that company. You buying a share props up the price and finances the company. It may not seem like you are directly financing the company if you are simply involved in the secondary market. But imagine if shares didn't trade at all. Then if the company did have to raise capital through equity offerings, they would not be able to do so, or pay a much higher cost. Therefore, you help the company even if you, like most of us, are just involved in the secondary market.

The other point, which is even more important, and which is where I completely disagree with Buffett's thinking, is the following. Ignore whether you are or are not financing the company for a minute. The important thing to me, from an ethical point of view, is whether you are profitting off it! If you directly profit off something then you are behaving unethically. In fact, in my eyes (I admit that this is just a personal opinion), those who profit matters even more.

Having said all that, I am cool with tobacco (I'm a liberal-libertarian and am in favour of tobacco, not to mention legalizing drugs)... nevertheless, if you are talking about ethics, I think one should not finance the businesses they feel are unethical, and should not profit off them that they feel are unethical. Whether tobacco is unethical or not is your decision.