Despite the sharp decline realized in the stock market the last couple of weeks, horsemen readying for the Aug. 6-7 Fasig-Tipton Saratoga select yearling sale aren’t particularly worried about its effects on purchasing action at the auction – at least for now.
After reaching a high of 14000.40 a little more than two weeks ago, the Dow Jones Industrial closed Aug. 3 trading at 13181.91 – a drop of 5.85%. But even though many buyers of horseflesh are also invested into stocks, many horsemen interviewed Aug. 4 on the sale grounds in Saratoga Springs, N.Y., weren’t overly concerned.
“If you see it dip like that, I don’t think it typically affects a sale that is right on its heels,” said Kerry Cauthen of Four Star Sales. “But if it maintains and continues, you might see it affect future sales. If you see it continue it might affect (sales in) November or beyond, and maybe even September if it is drastic enough.”
Denali Stud’s Craig Bandoroff echoed Cauthen’s sentiments.
“I think if (the stock market) is down all year and we are having trouble, then it is more significant,” he said. “But I don’t think you can look at a couple of days and get nervous. I think there is a lot of money out there, and you just hope (horses are) one of the products they want to spend their money on.
"Besides, I think (the market) is up pretty good for the year,” he added.
Indeed, the market opened the year at 12463.15. So the Aug. 3 closing, though a fall-off from the record 14000, was still up 5.77% for 2007. And it’s up 17.25% over the last year, when it stood at 11242.59 on the eve of the 2006 Saratoga sale.
Fasig-Tipton president Walt Robertson said a stock market decline doesn’t necessarily mean there is less money to invest in horses.
“If there is a sellout, where does the money go?” he asked. “It might find its way here.”
More than 47 billion shares have been traded since mid-July, including a record 5.2 billion Aug. 1.
Robertson speculated a bullish stock market might even have a negative impact on horse auctions.
“In the 1990s, it was like every spare nickel was in ‘dot-com’ stock,” he said of the technology stock boom that eventually collapsed in 2002-2003. “In 1999 and 2000, I think that we suffered a little bit because people were scared to get out.”
Still, Tom VanMeter of Eaton Sales said he remembered a study by Keeneland’s Harvie Wilkinson that charted the relationship between the stock market and auctions over a 30-year period.
“Every blip in the (Thoroughbred) market seemed to mirror every little up and down in the stock market,” he said. “When the stock market went up 5%, the (Thoroughbred) market went up.
“But I think people that want to own horses, and have the ability to own horses financially, I personally don’t think it matters what happens to the stock market,” he added.
