Throughout the mania of the expansion of the moneyed class in China, I've watched the gambling stocks with the frustration of "I should have seen this coming" as Las Vegas Sands (NYSE:LVS) ($118.76) made its meteoric rise. But for much of this year I've been thinking that the gambling stocks were overvalued, and didn't want to short them until I saw a catalyst that would drive them down. Perhaps this Barrons article that focuses on Las Vegas Sands, Wynn Resorts (NASDAQ:WYNN) ($134.50 ) and MGM (NYSE:MGM) ($88.62) is it. Judy Weil, Seeking Alpha editor, provides a nice summary. If you want to read the actual article at Barrons.com, it will cost you.
I do think gambling will continue to have a great future for those who invest in it. As I heard Charlie Munger say at the 2007 Berkshire Hathaway shareholder meeting, gambling is a tax on the uninformed. But heck, the uninformed just keep getting richer. For now, these gambling stocks with a Chinese connection are way ahead of themselves. They are pricing in google-like growth rates in earnings. I do not think they will see that type of earnings growth, which can only mean that stock prices have to drop to meet reality.
Disclosure: I have no position in (LVS) ($118.76), (WYNN) ($134.50 ) or (MGM) ($88.62). Depending on market action, I may enter a short position in one or all of them this week. I gamble at casinos for entertainment (not for profit). I am a nerd when it comes to gambling and I know exactly how much edge I'm giving away with every roll of the dice. Yeah, craps is about the only game I'll play. Slots is boring and you don't meet anybody, black jack is too much like work with all that counting I have to do - and counting just gets me to even anyway - I'm not good enough at it with six decks to actually get ahead. But craps is free drinks, people yelling, human interaction with people who don't understand the independent trials concept from probability. I can usually handle it for an evening or two, after that I get craps burnout that lasts nearly a year. Luckily for my income I've never caught trader burnout.