Adam Lass at Contrarian Profits has this grim advice:
The deep recession expected in 2009 will likely lead to higher rates of crime. Adam Lass says investors can play this trend by picking up shares of commercial jails. Florida-based Geo Group (NYSE:GEO) operates in several countries and is rapidly expanding its detention facilities. Adam says investors could be in line to double their money by the summer.
I don’t know anything about the Geo Group, but there’s a straightforward economic argument that I should invest in the prison industry—I get something good either way: If Lass is right, and the prison industry expands in the near future, I’ll make a lot of money. On the other hand, if the prison-industrial complex implodes and dies, I will get to experience the joy of watching the prison-industrial complex implode and die.
In other words, I’m hedging my investment, balancing the financial and psychic rewards.
The AIDS viatical business in the late 1980’s is another example of this kind of hedge. If you invested in these viatical settlements—paying a large lump sum to someone with AIDS in return for the right to collect their life insurance payment when they died—you probably lost money when anti-retroviral drugs started knocking AIDS back and lengthening the lives of AIDS patients. On the other hand, it wasn’t a total loss because you got to live in a better world where AIDS was no longer a death sentence.
Note that these kinds of investments are only hedges if you invest in something you hate. If you think putting ever increasing numbers of Americans in prison is a great idea, then investing in the prison industry is a high-risk investment: If the prison business fails, you lose a lot of money, and you have to endure all the people getting out of prison.
It’s this kind of thinking, of course, that makes people think economists are crazy. Who in their right mind would tie their fortune to a business they hate? Personally, I’d rather invest in something I like, so that if it wins, I get both the money and the joy of winning. High risks are part of the price for high rewards.
Still, if you hate some company—Microsoft, Wal-Mart, Halliburton—consider investing a few thousand dollars in it. That way if it hasn’t gone out of business ten years from now…at least you’ll have the money.
(Hat tip: Guither)
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