Friday, August 28, 2009

Your obligatory investment thread

From: QuantGuy
To: The Maestro
Subject: End of an era

I finally just sold my whopping five shares of PNC Bank (what was left of my National City stock). With the ridiculous $36 full-service commission, I netted $175. That's all that remained of my once, approximately $4000 investment made only two years ago.

On the bright side, I'm going to take that money and buy a few chances at the $350M Megamillions lottery!

From: The Maestro
To: QuantGuy
Subject: RE: End of an era

I would recommend dumping $135 into LVS (Las Vegas Sands). Unlike its peers -- MGM Grand and Wynn -- over 60% of LVS' operations are in Asia, where growth is considerably (say, an 8 to 10% annual rate) higher than the developed countries. When people become wealthier, they want entertainment. And casinos, especially the Vegas types, will do a fabulous job. If you believe the real estate slump in Vegas will linger (i.e., gloom and doom in CMBS), LVS will definitely outperform its peers.

And, unlike MGM, LVS still has some borrowing capacity... just in case the credit crunch continues. And -- it does not have anything like City Center, a giant development project created by MGM and Dubai World.

Of course, I must provide my standard disclaimer: my analysis does not guarantee performance.

Given your patience, your $135 will have an 80% of making a positive return of 100% or more. On the other hand, the lottery will give you 0.00000000000001% chance of winning $350 million.

It's your call.

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