With a month left in the year, U.S. stocks, including those of gaming companies, appear headed towards a healthy 2019.
The Fantini Index of North American Gaming Stocks, for example, is up nearly 25 percent.
The rise about matches that of the broader indices that have danced at record levels such as the S&P 500, Nasdaq Composite, Russell 2000 and, of course, the venerable non-index, the Dow Jones Industrial Average.
The strength has come despite a stream of news and worries that in past times rattled stocks—fear of an oncoming recession, trade war, impeachment inquiries into the president of the United States.
It would not be unreasonable to say that there is a complacence that may be prelude to a comeuppance.
And yet, the statistical evidence shows little sign of the kind of froth that precedes a downfall, no less a bubble to be burst.
Stock valuations are reasonable given rising earnings. The higher home rental and for-sale housing prices that seemed to be building to worrisome levels appear to be slowing. When a report is released that sparks fears, such as a decline in durable goods orders, the next month brings a bounce-back. The economy continues to create jobs. Wages are growing, giving purchasing power and parity of wealth to consumers in what some fear is a new gilded age of wealth inequality. And while incomes grow, inflation remains below targets, perhaps suggesting the targets are becoming anachronistic and that a new balance has been struck between growth and prices in our increasingly technologized society.
Even the national political mood appears sanguine, despite the daily excitement over the latest Twitterverse hullaballoo or viral video or predictions of apocalypse from the talking heads of CNN, Fox News and MSNBC. Opinion polls show basically a public non-reaction to these tempests. Yes, people respond with anger, often self-righteous and hateful, but opinions are barely shaken.
One instance of shaken opinion is of interest—the dramatic drop in support for presidential candidate Elizabeth Warren since she revealed something approaching the true cost of so-called Medicare For All. Apparently, all the anger that spews out in social media and all the polls about young Americans embracing socialism, dissipates in a common-sense reaction to a truly, to use one of the politicians’ favorite phrases, bold plan.
Nor is there sign of a bubble in stock prices, at least not in gaming stocks. Prices might be higher, but they are supported by better earnings, more efficient management by casino operators and, as mentioned, financially healthy consumers.
And while stocks overall are up double digits, companies with profits growing sluggishly have stocks prices that have moved sluggishly. For those who stumble, such as games provider AGS, the market has shown it can be punitive, cutting the stock in half despite a sound long-term story. Those are not signs of a bubble.
So here we are in the final month of this year that has been rewarding to stock investors so far. There are a lot of green lights out there, few yellow ones and perhaps no red lights.
However, before we get too comfortable in projecting a trouble-free near-term future, one last thought: The conditions described above are the very elements that comprise complacence. And complacence can be fatal.
