Will the gambling industry collapse?
The world is changing and while we will certainly recover from this recession, it could be much worse in the long run than anyone can possibly fathom.
With that said, I am looking to throw a bunch of $ into the Casino biz. (MGM @ ~$11, Trump @ ~$.30)
I don't have much money, but I am willing to lose this money for a nice bet.
Just gauging some thoughts...thanks!
It's really hard to predict what's going to happen in the space in the coming months and years. Likely, you'll see a lot of consolidation and a few strong names will survive. If you were to make any kind of bet, I would stick with Wynn or one of the other casinos that has done relatively well throughout the crisis.
With that said, think about current consumer confidence. Yes, some people resort to gambling when they're having money troubles, but a large percentage of customers are a lot more casual. And those customers no longer have the discretionary income to gamble. Moreover, people are scared! They're not going to risk losing their hard-earned dollars. With a well-timed bet you could make a lot of money. However, I don't think that now is the time to buy.
I think you are asking two different questions here.
Will the gambling industry collapse? Should I invest in casinos?
The gambling industry has gone through and will continue to go through a transformational shift..Online. Gambling online grows popular year over year. So traditional casinos have joined up with VG's to develop online platforms. People wanting to gamble may choose the internet since it cuts out a lot of the hassle and costs (transportation, room, food).
Should you invest in casinos? I would say not right now. Look, they're overleveraged, demand sucks, and the investors are in and out of the market everyday causing random volatility.
Sure you could buy up some stock on the cheap, but if the company goes bankrupt, you'll be out of the money.
But as it seems you are a betting man, I'm sure you'll invest in MGM or Trump.
Didn't trump himself go bankrupt a bunch of times? That guy has got a lot of smart people working for him.
We're about to enter a Great Depression. Don't you want a president who's already dressed for it?
There's a reason for that. Trips to Vegas and such should be way down.
I like booze and cigarrettes in recessions (I have big chunck in MO & DEO).
gambling is a counter-cyclical industry, and casino earnings are fairly resilient to downturns; they often grow.
you should try to differentiate between gambling, though, and hotels. disney's domestic hotels and parks did comparably well in 2007 because the depressed dollar forced people to vacation stateside instead of going abroad. with a stronger dollar, albeit worse economic conditions, it is difficult to determine how worldwide hotel/casino operations will be affected.
to make a pure play on gambling, consider companies that make/repair slot machines, online games, etc.
LOL, tell that to the deal team on Caesar's
I also like booze and tobacco - I have big chunks in Constellation Brands and Altria (the latter is the best performing stock of all time, and the only stock Bernanke owned before he had to put all his funds in a blind trust).
I'm also big on candy/sweets, though it's a difficult play to make now - I used to own a lot of Wrigley and Rocky Mountain Chocolate.
I'd like to make a play in guns, but most are private. I also own a bit of Ely Lilly, because they make prozac.
This mindset is why the gambling industry will never collapse.
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