Porn Investment

Francis Koenig, 31, previously an executive at a Wall Street hedge fund (New World Partners) but now based in Los Angeles. Last year he launched an Adult Entertainment based investment vehicle called AdultVest (www.adultvest.com) which is raising funds to invest in the $12 billion a year porn industry.

He is looking to launch 2 funds. The first is a $100 million fund which requires a minimum investment of $1 million so no more than 100 investors in this one. The second is a bit more accessible to the average John with a minimum investment of $100,000 to create a $10 million fund.

Investors are signing up on his web site (www.adultvest.com) at a rate of 15 per day and approximately 300 companies have registered with him.

Is there space in your portfolio for porn? Or does porn stock skirt around the edges of non-ethical investments like tobacco?

The ethical question! The problem with ethics is that it is very subjective. What might be ethical for you is not ethical for someone else.

Two people may both call themselves Christians and one of them may consider that it is against his/her faith to read Playboy and the other may say that it has no relation to his/her faith and is therefore irrelevant in the discussion.

If ethics are part of a person's faith then either of these attitudes would effect the ethical decision in this case. (Remember that this is just an example and instead of religion you could substitute something else.)

If you ask any man or woman in the street in America if looking at naked or nude images of people is porn then you will have many different answers. Where does art stop and where does porn begin? Is a topless photograph of Jennifer Aniston. If Winona Ryder poses naked for photographs and those are in turn sold on to adults then have any body's ethics been compromised.

In my opinion this is ethical because unlike alcohol, drugs and tobacco, this does not directly lead to death.

You can think of the Adult Entertain Industry like the Firearms Industry. It's not the firearms that are the problem but the way that people use them. So long as you keep minors away from the porn industry and you operate it in a respectable, professional and legal manner then it is 100% ethical to invest in it.

What are the risks that the adult entertainment industry face that are not inherent in any other business or perhaps only a few businesses? For example, government regulation... Can the government shut down certain parts of the adult entertainment industry without warning? Can class action lawsuits (like with tobacco) put a dampener on things?

Governments, lobby groups, class actions, and special interest groups will always cause different types of problems for any type of business. This is part of the nature of business and it goes with the territory and will always be there. In the adult entertainment industry it will be the same as in any other industry just that it will be a different group of people.

One of the advantages of the US and Western European markets is that the governments have limited ability to maliciously or unjustifiably enter the markets and impose regulations. This type of risk is seen more often in third market economies.

Pornography and "adult entertainment" has never interested me and so I find that doing research into this type of investment uninteresting. I remember reading a book by Peter Lynch that discussed the advantages of investing in stuff that you know about. His book went on about the l'eggs investment that got him a gazillion bagger. If you are not "in tune" with adult entertainment then I thinking that this is risky.

Ethical? Sure it is ethical but not for everyone.

A good point super trader. By specializing in certain areas you can make better investment decisions because you understand the industry and where it is heading. If the industry does not interest you or disgusts you then it is difficult to make objective or informed decisions.

If it does not interest you then you may not have the knowledge. If it disgusts you then you may be unfairly biased about the company and not look at it's potential objectively.

For example, you may hope that a tobacco company to fails and therefore want to short it instead of going long.

In order to be a truly great trader you need to check your emotions at the door and trade 100% objectively and forget about anything else. Forget about morals and ethics and maximize profits.

Now I am not saying that you should do this. I am just saying that in order to be a truly great trader that is what you need to do. You do not need to be a truly great trader to make heaps of money out of the markets.

I think that the days of maximizing profits at the expense of all else are long gone. I believe that there is space for ethics and morality in everyones portfolio which extends beyond the futures, forex, commodities, and stock markets.

The ethical question! The problem with ethics is that it is very subjective. What might be ethical for you is not ethical for someone else.

Two people may both call themselves Christians and one of them may consider that it is against his/her faith to read Playboy and the other may say that it has no relation to his/her faith and is therefore irrelevant in the discussion.

It's amazing how many who seek to justify their morals on what "people" do as is "popular" to do. Christians or even Muslims for that matter, (following their faith in full), are not given of justification by what is popular, but to follow the guidance of the written Word. That is to "deny" what is popular or "feels" just, as we won't normally side for what is just, or right or moral, but quite the opposite, left to our own. There's really little about it that's subjective, at all.

If one will judge the question of supporting pornography by acknowledging it, even for trading, then one is definitely not following the pursuit of most faith based mentalities. Of course, that would point to one who's motives are given of self, greed, and one who weighs success based upon personal wealth primarily.

The growing / marketing of tobacco is no more non-ethical, than growing corn which is made into whiskey. In fact, in these areas "moderation" is what is called for among a body designed to heal, morally speaking. Porn on the other hand is explicitly identified as a matter of "lust" in an industry which mainly exploits females, where emotional injury is deemed quite life altering and permanent. Not subjective.

urbansound:

As George Soros mentioned the question of ethics is very subjective. Also, the question of what is adult entertainment and what is artistic photography is subjective.

If you take 2 photos of the same naked woman in 2 very different poses then you might consider one to be an artistic photo and the other a pornographic image.

If you then look at the religious angle you could argue that from almost any religions point of view that the artistic photo of a naked girl is praise and respect for what the creator (whoever that might be: God, Allah etc.) has created. Not...?

If you buy the S&P500 through an index tracking fund then I think by definition you are investing in ever industry in the world. I can't imagine anything being left out by the top 500 and their subsidiaries.