We say gambling on gambling stocks is good bet. No worries about politics wars or acts of God. No worries about what Goldman Sachs JP Morgan going to do not going to do. People just like to gamble that will never change.
That goes triple for Asian people everywhere. Chinese clients know about gambling see gambling as good business. Gambling investment understood as sound basis for conservative investing.
Conservative investing does not mean same thing for Bill Gross as for smaller investors. In low no interest world the Bond King can afford derivatives to make bond markets pay. Smaller investors must create alternatives with same function.
Dynamic growth potential of big four US and big four Asia gambling companies generates conservative pair trade opportunities for excess returns with limited risk. More conservative gambling pair trades replace bonds and less conservative gambling pair trades generate alpha.
Favorite more conservative pair trade in 2012 and 2013 was long Sands China (1928.HK) short Las Vegas Sands (LVS.NYSE). Performed wonderfully even with LVS dividend stream costs. Much better than betting on Fed at same table as the Bond King.
Fundamental arbitrage between Macau and Singapore set up less conservative gambling pair trade long Galaxy Entertainment (0027.HK) short Genting Singapore (G13.SI). No dividend issues and good liquidity.
Looks like 2014 another big year in Macau another stable year in Singapore. Venue arbitrage on reliable exchanges. Chinese gambling dynamics positive only question how positive. New venues cut Singapore growth more than Macau.
These trades stay risk on for 2014. Presently evaluating MGM China (2282.HK) and Melco Crown (MPEL.NASDAQ) longs to pair with SJM Holdings (0880.HK) shorts in straight Macau management arbitrages.
Moneymaking focus on gambling not so risky in 2014 with US elections near. Whatever bad news left to come will not touch Macau much. Gambling revenues more keyed to house advantage in baccarat rather than to US macroeconomics and global political winds that drive blue chip stocks.
Gambling on gambling stocks remains good bet just like gamblers play best casinos in tried and true US Macau Singapore venues.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.