Feb

6

 Sooner or later, Free Markets uncover the true value of assets. I don't think this law can be argued to any legitimate extent, so long as Free Markets are kept free.

As a soon to be married man, my friends across the country have decided to make Las Vegas the bachelor party destination taking place over the middle weekend in March. I have been to Las Vegas four times over the last year and change - October 2007, March 2008, August 2008, and December 2008. The decline in overall business activity has been dramatic over this time period for the obvious reasons plaguing the overall global economy, mainly an evaporation of liquidity and wealth destruction. Perhaps only in financials has there been poorer performance and a market cap destruction greater on a percentage basis than in the leading casino names - LVS, MGM, BYD, WYNN, etc.

The action in the casino shares is a good reflection of the fundamental decay of the business. The market has been working here perfectly, but I am wondering if something else is going on. Las Vegas is an interesting place. There are hundreds of thousands of good people there for sure. They show up to work, they provide good personal service, they cook delicious meals, they offer amazing choices to the consumer, they go to church and temple, etc. But the main component to the economy there surrounds around Deception. Deception in the form of free rooms, free drinks, free private jet travel (it's tremendously tempting), free golf, free entertainment, free Armani shopping sprees, etc. But, all of these efforts are to deceive you into sitting down at a table game so that you part with your money. Just because something is legal does not necessarily mean that it is ethical. Yes, gamblers are cautioned to bet with their heads, not over them, etc. It is also common knowledge that odds suggest each game is designed to take the gambler's money. The gambler sits at their own risk, etc.

Las Vegas even deceived the market for a while. The astronomic rise in shares into October 2007 was symbolic of the market buying into the concept that Las Vegas had transitioned itself from a gambling destination to an entertainment/resort destination. Credit Ratings went higher for every star or diamond the megaplexes received in service ratings.

But alas, the market has finally woken up after it's liquor-filled weekend at the Wynn. Though there are similar elements, the Deception of Las Vegas is different from the Deception of the Market, unless of course your trading station has women in skimpy outfits parading around you, "Coffee, Juice, Soda….", or worse, "Cocktails, Beer, Champagne…..".

James Lackey comments:

Feb '91, Saudi Desert,  15 minutes after we arrived in our left hook stage… BBC reported some new peace deal in the works. I reported it to my commander.. He looked at me like I was the sucker at the tables. "Lack we didn't bring all these tanks out to the desert not to kill them all"

Same for Vegas. and if you wish to remain married……………………………………


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