BALTIMORE (Stockpickr) -- Want protection from downside risk in 2014? Bet on peoples' vices.
Stocks are pressing up against new highs this morning, with the S&P 500 index up more than 5.6% since the calendar flipped over to February. That's on top of the 32% total returns that the big index gave investors last year -- and the 91% cumulative returns since 2009. Put simply, this market has been an equity investor's dream for the last five years.
That's exactly why it makes sense to play a little defense in 2014.
To do that, we're turning to a new set of "sin stocks" that could crash-proof your portfolio this year. Don't let the name fool you; sin stock companies aren't in the business of burning down old folks' homes. Instead, alcohol, tobacco, gambling and weapons firms are all classical examples of businesses that qualify as sin stocks.
The important benefit to sin stocks is that they don't just protect downside. Many of them offer upside growth when markets are frothy and consumer takes move up the value chain. That's why recession-resistant revenues and sticky customer bases are the norm. The devil's in the details with sin stocks; because these firms generally sport wide economic moats and deeper margins than traditional consumer plays, sin stocks benefit from an extra qualitative boost that you can't find in any other group right now.
To be fair, sin stocks won't completely crash-proof your portfolio. No stock can do that. But they do offer a very attractive mix of defense and offense right now, which is more than most investment strategies can offer in 2014.
Without further ado, here's a look at five sin stocks that could outperform in this market.