The stock market looks like a war zone, whether it's viewed at the grass-roots level of individual investors, from the perspective of local public companies or in the market averages.
"I wished I'd pulled everything out of the market now," said Marinus Baadsgaard, 59, senior engineer with the Clark County Water Reclamation District. "I might still pull it out if things keep going down the drain."
Baadsgaard said he's glad he cut his stock holdings to 30 percent and boosted fixed-income investments to 70 percent in his retirement accounts before the market started to crumble.
While some advisers urge him to buy stocks because they are cheaper, he wonders: "How long can you afford to wait (for stock prices to rebound)?"
Some friends tell him they have lost one-third of their money in 401(k) retirement accounts and now will need to work longer before retiring.
His father-in-law lost $1 million of a $1.2 million investment portfolio in the dot-com bubble in 2001 and died the following year.
The Dow Jones industrial average dropped 678.91 points, or 7.33 percent, Thursday, bringing the year-to-date loss to 35.32 percent.
Casino stocks have been the real losers this year, however. The S&P Casino and Gaming Index closed at 180.37, down 64.6 percent for the year. The index dropped 6.1 percent on Thursday, a small bump on a sickening roller-coaster ride.
Las Vegas Sands Corp., Riviera Holdings Corp., Boyd Gaming Corp. and MGM Grand have lost 84 percent or more of their market value since reaching their 52-week highs. Wynn Resorts Ltd. is off 68 percent from its high.
Wynn could take comfort Thursday in news it won a decision at the Nevada Supreme Court against a legal challenge over tip-sharing practices.
Yet casino operators have bigger problems than tip disputes. The Nevada gaming win for August fell 8.1 percent from a year ago, the state reported, and analysts were quick to point to casino debt problems.
"Reported gaming revenue in Las Vegas and Atlantic City continues to decline, and the consequent decrease in (cash flow) at many of the larger operators is likely to cause bank covenant violations by the end of the year," Gimme Credit Research reported Thursday.
"MGM Mirage and Wynn Resorts have already sought and achieved amendments to relax bank covenants," the firm said. "Both MGM and Wynn are spending heavily on new developments in Las Vegas that are straining their balance sheets."
Riviera Holdings Corp. has more debt than capital. Its debt represents 127 percent of total capital, according to Bloomberg.
Other Strip casino operators have less onerous but still heavy debt loads.
Las Vegas Sands' debt represents 77 percent of total capital. Wynn Resorts and MGM Mirage both show debt at about 65 percent of total capital. Boyd Gaming follows with debt at 62 percent of total capital.
Banks stocks sold off locally and nationally Thursday as the Securities and Exchange Commission lifted a ban on shorting financial stocks. In a short sale, a speculator borrows shares and sells them in hopes he can buy the shares back at a lower price later.
Western Alliance Bancorporation and Community Bancorp both dropped more than 20 percent Thursday. Community Bancorp has fallen 83 percent from its 52-week high, and Western Alliance shares have dropped 63 percent from their 52-week high.
"It's short or sell first and ask questions later (on bank stocks)," said Tim Coffey, vice president of research at FIG Partners, a brokerage specializing in bank stocks.
"You'll see some quality banks that are fine operationally being sold off 10 to 20 percent," Coffey said.
The price declines are particularly steep at bank holding companies that investors believe need to raise capital, which has become increasingly difficult, he said.
Even utility shares were slammed Thursday. Southwest Gas Corp. shares fell 9 percent, and Sierra Pacific Resources shed 1.3 percent. The two Nevada-based utilities are trading near 52-week lows.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
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