When people deal in large amounts of dollars the common theme is to take the sure bet, or investment as they would say, and, just as important, to get the safest return of principle as possible. The ever famous words of Mark Twain, “I am more concerned about the return OF my money than the return ON my money” was probably penned after a deep recession and holds true in these trying times. During this deep recession, one of the deepest in a generation, everyone has been hit in some fashion or other.
The poor lost jobs, benefits and mobility. The rich lost huge sums of capital in real estate, business operating profit and bottom line wealth. The wealthy have been decimated in a very large scale but it’s only relative to the percentage of what was lost. But when the percentages are put into real dollars it has some startling effects on an individual. The tendency is to become more conservative and more concerned with getting what was lost back as well as preserving their balance.
When the economy is slow the wealthy “wheelin’ and dealin’” tends to become a game of who can sit on one’s hands the longest. In property ownership, like horses for example, the opportunity to get high breeding fees are great when times are good and slim when times are bad. However, the prospect of a great return on a quality horse is still available at some major race tracks. The sale values of new thoroughbred stock has dropped by 40% to 60% from several years ago, whereas purses of graded stakes only fell off 10% to 20%. When the money in the barn dries up, you have to take it to the track. This is just one of the reasons we are seeing the classiest of thoroughbreds staying in the racing game a little longer than usual.
Economists recently declared the recession was officially over in June of last year. And I really don’t know what flavor of Kool Aide they were slurping with unemployment continuing to rise, GDP flat, retail sales stagnate, real estate values declining and consumer confidence in the tank. But this week we see a new indicator; The Rachel Retirement Factor …. this wealth indicator is showing a positive sign! Frankly, I would rather see Rachel Alexandra run for the next several years and even go head to head with Zenyatta and Blind Luck a time or two but I digress.
The fact that this great horse is moving from the race track to the pen can only mean one thing in economic terms, ie. the recession is definitely over! Speculation on breeding is coming back and the value of breeding is on an upturn. We might not clearly see it just yet but it’s there! The smart money has spoken. If Rachel can make more bottom line profit in the barn than on the track, then the wheels of the economy are beginning to turn and we as a nation are coming back. Let the good times roll!