We’ll soon be drowning in the statistics of, and the reactions to, a flood of first-quarter earnings reports and financial outlooks.
Yet, as important as this deluge of numbers will be for the near- and mid-term, they will be mere background noise to long-term investors.
For those looking to, as Warren Buffet says, get rich slowly, the trick is to identify companies with clear growth strategies that execute excellently.
Or, to employ another Buffet phrase: Wall Street is full of really smart people trying to find needles in a haystack. He searches for haystacks, thus his decades-long positions in the likes of Coke and American Express.
Similarly, long-term prospects depend more on major societal trends than on whether the Fed will raise interest rates next month.
In that spirit, here are some major trends to consider for their long-term impact:
Artificial intelligence.
Water.
Asia.
Responsible gaming.
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Artificial intelligence is the buzzword of the year, but unlike previous buzzwords, like skill-based gaming, this one is for real. It is the result of the ineluctable progress of ever-greater computer power and speeds.
For gaming, it represents threat and opportunity.The threat is that creation of life-like remote gaming might give many people far less reason to visit a brick-and-mortar casino. The opportunity is two-fold: 1) that the real, tangible-world casino experience will be highly valued by e-fatigued future patrons looking to party in real life, while 2) the companies that lead in the digital world will generate huge investment returns.
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Water. Las Vegas is perhaps the most water-efficient city on the planet. It will have to become even more efficient to maintain the population growth that promises to grow locals casino revenues for years to come.
The bad news is that Nevada has just a tiny allocation of Colorado River water and a far smaller Congressional delegation to influence federal water policies than California and Arizona.The good news is that where there is a will there is a way. And the voting and financial clout of modern-day Las Vegas means there’s a will so, someway, there will be a way.
- Asia isn’t just Macau anymore. And it’s possible that, as Thailand opens and countries like the Philippines and Vietnam continue to develop, land-sparse Macau may become the Atlantic City of the Far East. Add to that the inescapable political risks of the Chinese Communist Party and Macau, while a gaming center with a future, does not have an unlimited or secure one.
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Responsible gaming. We have long held that online sports betting and iCasino operators in the U.S. cannot just brag about a huge addressable market, bombard every teenager in America with aggressive advertising, slap a perfunctory “if you have a gambling problem” tag on the end of ads and blithely expect policy makers to stay away.
As such, the move by the American Gaming Association to have its members sign on to common sense guidelines on advertising is a step in the right direction.But it will not–we repeat, it will not–stop legislators from throughout the country from imposing their own limits on online gambling and then race each other for who can be the strictest.
Combine the inevitable heavier regulation with the need for companies to get their marketing costs under control and it means investors will be wise to look soberly at the future.
Over time, there will be far fewer online operators. And most of the long-term winners will have familiar names like MGM, Caesars, FanDuel, DraftKings, Evolution and PENN Entertainment.
