Modern gaming stocks have never seen a secular bear market. Sounds crazy right? It’s true. They’ve certainly seen cyclical bear markets. Vicious ones that’ll make you sick and destroy your finances if you’re leveraged. The crash of ‘08 was certainly a cyclical bear market. The Macau crash of 2014 was, too. But for long term holders they’re just aberrations of one kind or another on a long term uptrend.
The oldest of modern gaming stocks have only been around since the late 1980’s. MGM, among the oldest, went public in May 1988, only 30 years ago. Secular market trends span longer periods than that. Bonds were in a secular bull market from 1981 to 2016 for example. Since its IPO, MGM has been in a secular bull market along with most other large cap gaming stocks.
The oldest and most veteran UK gaming companies have only been public in their modern incarnations since the late 1990’s. There have been great years and there have been horrible years, but buy and hold still hasn’t failed. Even Las Vegas Sands, which suffered a 99% collapse from 2007 to 2009, is still above its 2004 IPO. Wynn’s long term chart looks like riding an especially enraged mechanical bull, but the secular bull trend is clearly intact nonetheless. Macau stocks are way too young to even be on the time scale of anything secular. These casinos spent their adolescence in a time of extreme global monetary stimulus. It’s like being surrounded as a child by a bunch of cocaine addicts and thinking it’s totally normal. Modern gaming companies simply don’t know any other type of environment.
Right now we are clearly in the midst of yet another cyclical bear. The question is will it turn into a secular trend. The bellwether Macau gaming stocks are collapsing faster than they did in 2014 without a clear catalyst that affects fundamentals like an attack on the VIP sector. Galaxy is down 45% in 7 months. Back in 2014 that degree of collapse took 10 months. Las Vegas Sands is down 38% in 4 months. That level of decline took 10 months to materialize from the 2014 top. Wynn is down 53.5%. The same decline took over a year in 2014.