Sin Pays...now that's my kind of back-testing
Everyone has seen the funds and investment strategies that are focused on "sin" stocks, like tobacco, alcohol, gambling, etc, however I've never seen statistical evidence that these stocks outperform the overall market...until now.
A professor from the NYU Stern School of Business recently published a paper called "The Price of Sin: The Effects of Social Norms on Markets." The study found that an investment in sin stocks outperforms an investment in comparable non-sin stocks (beverage, food, and entertainment companies) by 2.5% per year.
Also of note, the study found that the societal norm against funding "sinful" operations prevents many funds and institutional investors, such as pension plans from holding any or at least as much stock in these companies. Furthermore, "sin" stocks receive less analyst coverage than comparable stocks from less controversial industries.
The price of sin: The effects of social norms on markets
Long PM and MO, bot no other "sinful" companies