Capital Ingenuity Blog

What Can Super Bowl Ticket Prices Tell You About The Economy?

2012-02-01T13:31:00.000-08:00

By Ryan Snefsky

The average price of a Superbowl ticket on the secondary market this year is currently $4,054. Last year, the average was $4,140. That's a decrease of roughly 2%. What can this information possibly tell us about the state of our economy?

We could certainly hypothesize that our economy is in a slightly worse place this year than last. But if we really want to have a better idea, we have to dive into the data even further.

There are certainly a variety of factors that could also be in play here. For example, different teams have fan bases of different sizes. Also, some might be more attracted to traveling to a city in the South during this time of year.

But even if we ballparked the impact of some of those factors, you can't help but notice that they can be countered by the supply side of supply and demand. The maximum capacity of the stadium in Dallas is 111,000, compared to 70,000 in Indianapolis. On a percentage basis, we're looking at a lot less availability, yet the average price is still 2% lower year over year?

While I can't be sure without access to much more data, I think we're seeing an overall decrease in confidence in consumer spending among those who can afford a $4,000+ ticket.

Is there any other data that could support this thesis? Yes. The Consumer Confidence Index was at 61.1 for the month of January, down from 64.8 in December, suggesting that consumer spending is on the decline. This index doesn't necessarily isolate the group of consumers that can afford a Superbowl ticket. But if consumers are feeling the pinch at this level, you can bet that consumer spending for average Americans is being hit even harder.

If consumers are still cutting spending, despite some of the recent positive jobs data that's been reported, there may still be some opportunities in stocks that give consumers an opportunity to "trade down."

Say a consumer usually shops for clothing at Macy's, and they start shopping at Kohl's or J.C. Penney instead. The consumer is said to be "trading down" to a replacement with a lower price point.

Based on this thesis, I plan to take a look at some trade down stocks for opportunities. Some of them have already experienced significant gains over the last couple years as a result of the challenging economy, so I'm a little skeptical of the valuations. But, if the trend is still that consumer spending is on the decline, there may be more room to the upside.

Examples of trade down stocks include companies like McDonalds (Symbol: MCD), Yum Brands (Symbol: YUM), Family Dollar Stores (Symbol: FDO), and Walmart (Symbol: WMT). There are many more examples out there, but I think you get the idea.

In the meantime, never forget that investment ideas can come from from anywhere, including the Superbowl. If you're looking to make uncommon profits from your investments, you need to have uncommon ways of thinking. When you hear of a popular topic of discussion in the media, always stop and ask yourself, "Is there anything here I can use for an investment angle?" Sometimes, the best investment opportunities are hiding in plain sight.

Facebook's IPO: Should You Buy?

2012-01-30T10:42:00.000-08:00

By Ryan Snefsky

The most common question I’m asked right now is, “Should I get in on the Facebook IPO?” This question isn’t being asked now for the first time. I originally started getting this around the time of the LinkedIn IPO.

I heard people say, “I’m not getting in on the LinkedIn IPO. I’m going to wait and get in on Facebook.” But, does this way of thinking make financial sense?

Understanding Friday the 13th Psychology Can Help Make You a Lot of Money

2012-01-13T16:54:00.000-08:00

By Ryan Snefsky

Many people have a thing, or maybe even a fear, about Friday the 13^th. Why? It is a superstition that Friday the 13th is a very unlucky day. But, once you understand the psychology behind superstition, you'll have some new knowledge that is essential to your financial success.
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The Truth Behind the U.S. Credit Rating Downgrade - Capital Ingenuity Audio Blog - 8/10/11

2011-08-10T07:34:00.000-07:00

By Ryan Snefsky

This is the very first recording of the Capital Ingenuity Audio Blog! This is a discussion about the implications of the recent downgrade to the U.S. credit rating, the politics behind the rating agencies, and the relevance of the rating agencies going forward.

Possible Effects of a U.S. Credit Rating Downgrade

2011-08-01T11:47:00.000-07:00

By Ryan Snefsky

The other day, a good friend of mine asked what I think would happen if there was a downgrade to the credit rating of the United States. In order to really understand the effects, we first have to look at two key pieces of background information.
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How Will My Investments be Affected by the Deadline to Raise the Debt Ceiling?

2011-07-28T09:40:00.000-07:00

By Ryan Snefsky

Last weekend (July 23rd and 24th), the media obsessed over the idea that the Asian markets would get crushed if a deal to raise the debt ceiling was not reached by 4:00PM EST, which is shortly before Asian markets begin their trading day. Then they told us that the U.S. markets would get crushed if the Asian markets took a shot on the chin.

After the media's weekend long obsession, the Asian markets did not get crushed on Monday and neither did the markets in the U.S. On Monday, the Dow Jones Industrial Average closed 88.36 points lower at 12,681.16. On a percentage basis, this was only a loss of just under 0.7%.

Was all the obsession merely a negotiating tactic by our politicians to get a deal done faster? Maybe. But, I think even the politicians accurately expected the market's reaction Monday. If they actually expected something much worse, I think we would have seen a deal by 4:00PM.

Understanding why the markets reacted the way they did on Monday will help you understand what is likely to happen to your portfolio from now until August 2nd.
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What do Harry Potter and Successful Investors Have in Common?

2011-07-20T05:00:00.000-07:00

By Ryan Snefsky

Fortunately for you, the answer is not that successful investors have magical powers or access to a Divination class to learn how to gain insight into the future. While investors do not have the benefit of being able to attend Hogwarts School of Witchcraft and Wizardry, there is something to be said for how they educate and prepare their wizards.
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Today's Intraday Market Rally Was An Overreaction

2011-07-13T14:09:00.000-07:00

by Ryan Snefsky

At one point, the Dow Jones Industrial Average (DJII) was up over 160 points today on renewed hopes for a QE3 spawned by comments from Fed Chairman Ben Bernanke. However, the index gave up most of its earlier gains to close up only 44.73 points at the end of the trading day.

The fact that the market gave away much of its rally today should not be very much of a surprise. In my opinion, I think the odds of a QE3 happening sooner went up slightly today, but not nearly as much as many traders think.
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Unemployment Number "Conspiracy" Unraveled

2011-06-21T10:25:00.000-07:00

By Ryan Snefsky

The other day, a friend of mine asked me on Facebook, "Why are the jobless numbers always 'unexpectedly higher' and [seemingly] every month 'revised upward from the previous report?' Is the algorithm they use wrong or do they just lie to the public to keep confidence up knowing most people won't remember 'revised upward' the next month?"

This is a great question. When the numbers are "revised" a month or two down the road in a way that shows the economy isn't doing as well as the Government originally reported, it's easy to become suspicious of an unemployment number "conspiracy."
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Commercial Real Estate Fears Are Overinflated

2010-05-17T19:34:00.000-07:00

By Ryan Snefsky

Commercial real estate has been on the radar of fear for many people for quite some time now. The basic investment thesis is that with unemployment high and many Americans continuing to lose their jobs, the demand for commercial office space will likely continue downward. Additionally, with consumer spending relatively low compared to historical standards, an argument can be made that the demand for retail space will continue to go down as well. While at first glance these theories seem to have some merit, I strongly disagree with the notion that commercial real estate as a whole will be the "next shoe to fall."
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Brokerage Order Errors Can Harm Individual Investors, Too

2010-05-10T18:03:00.000-07:00

By Ryan Snefsky

On Thursday, May 6th, 2010, there was a highly unusual market event which resulted in a nearly 1,000 point loss to the Dow Jones Industrial Average in nearly 15 minutes. The actual cause of this event is still under investigation, though speculation has arisen as to whether or not this event was the result of one or more erroneous trades by an institutional investor.

Whether or not the final investigation does discover an error on the part of a trader or computer program, all the public discussion about erroneous trades should create awareness for investors to be on the lookout for errors when entering brokerage orders for themselves, particularly with online brokers.
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Beware of the Hidden Risks of "Safe" Bond Investments

2010-05-05T22:15:00.000-07:00

By Ryan Snefsky

Traditionally, many investors in the general public have considered bonds to be less risky than many other types of securities. However, the current market conditions may pose some risks to that generality over the mid- to long-term.
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