19 December 2008
	Diamonds & Dogs By Jamie Carr

Diamond BAT When Paul the Apostle was dashing off his Epistle to the Romans, he lobbed in the rather gloomy thought that "the wages of sin is death". If he'd had the chance to study the list of the JSE's largest companies by market cap, he might have changed his tune once he spotted fags cantering in at number one and booze just out of the places at number four. Death may indeed come to the puffers and the quaffers but, for the manufacturers, sin stocks offer a tidy little earner that should hold up pretty well in a recession. BAT's emergence from under the skirts of Richemont gives the investor a clear choice - luxury goods or gaspers. While it may be more glamorous to own a slither of the world's fanciest brands, the gut suggests that when recession bites, 20 Rothmans is going to be a more sustainable purchase for the battered consumer than a US$500 000 watch. BAT is by far the biggest company on the JSE, now that the miners are behaving like Alice in Wonderland after she tucked into the bottle marked "Drink me". It may not be the most ethical investment on the market, but when times are hard it may prove one of the safest. Dog Recession For a while now the recession has been behaving like a traditional variety of swamp thing - the music's gone all creepy and you know it's lurking around somewhere, but it is yet to come leaping from the foetid depths with a mighty roar and a massed scattering of popcorn. To a large extent this is due to our glorious banks, who somehow managed to resist the temptation to lend vast quantities of loot to individuals whose income would just about cover their grocery bill. So we were able to avoid much of the initial horror, but the global slowdown is bringing the carnage to a wallet near you, and the impact is going to be horrific. We are already seeing announcements of job losses, and this is likely to increase exponentially next year. Rio Tinto's decision to lay off 14 000 workers worldwide is a pretty accurate reflection of the health of extractive industries, and retailers are bracing themselves for a massive downturn. It's one hell of a gloomy picture to take with you to the beaches, and the only philosophy to employ is to plonk yourself somewhere pretty, forget the year of value destruction, eat, drink, and be as merry as possible under the circumstances.