Gaming Stocks

I'm not referring to the popular video gaming stocks everyones been blasting for Q4 2007, I'm referring to casino gaming stocks. Casino stocks have been hit as much as as the NASDAQ. Within the past few months LVS, WYNN, and MGM have built stellar casinos in Asia's "Las Vegas" and till this day, there has been no evidence of a slowdown, yet it's been beaten up. Why? It's the flow of the market. From these past months, the market has been going through cycles of beating down stocks that have run up. First came the financials, 2nd casino, 3rd tech, and 4th energy. I believe this is the result of funds hedging their positions. Could Au be next? I like casino gaming stocks for 2 reasons.

1. Although people are less likely to gamble more during a recession, I do not believe it will be significantly lower. In a recent interview of the governor of a certain state, he stated that had noticed a small slowdown in . Honestly, I never believe what individuals with assets more than a million have to say on public television. Who knows, he could have made a statement for stocks to fall so that he could purchase at a lower price. I've witnessed it many times on broadcasts, with CEOs dimming their outlook and buying back their shares the following quarter, or a top investment bank firm saying that GOLD is too high and that they are selling to take profits only to repurchase on the dip the next day. The risk and reward associated with gambling remains static despite a slowdown in the economy. In addition, any slowdown in their revenue growth will be more than fulfilled by the revenue gained overseas in Macau.

2. From the past 2 years, many people from China and Hong Kong have obtained enormous amounts of wealth from the stock market boom. Although Asians tend to be frugal with their money, ironically, they love to gamble. Just visit Las Vegas and you'll see that more than 35% of casino revenue probably comes from the Asian population. As such, I foresee an exponential number of people from Asia Pacific visiting Macau providing a revenue booming for LVS, MGM, and WYNN.

I'm keeping MGM on my watch list.chart source - bigcharts.com

Above, is the 2 year chart on MGM. You can see that it's testing the 60 support and note the sell off in November. Note, The Wall Street Journal reported that, “Dubai World increased its stake in casino operator MGM Mirage to 6.5% after agreeing to buy five million shares from a foundation founded by MGM controlling shareholder Kirk Kerkorian.”