by RBBI
Originally posted 1 Sept 1998

The Dow Jones dropped 550 point in three days and then followed up with a 512 point loss Monday August 31st and a 288 point gain on Sept. 1st. What does this mean for us?

1. If you are dealing with professionals over the next few days, don't expect to receive their full attention. They have one eye rivetted on their investments.

2. Don't expect to see any more families dropping in to buy a boat with their recent stock market earnings for a while.

3. Public confidence is a major factor in large discretionary purchase decisions. We have been in an era of high public confidence. If a few other indicators go sour, the tide could change. Impeachment hearings could also put a damper on things.

4. It could certainly effect on the "blend" of boats sold. In recent times big boats have sold well. A major drop in the stock market and other indicators could push buyers to smaller boats, or delay "big boat" purchases.

5. The financing industry could get nervous. If a large number of buyers have been making payments from growth in their stock market investments, whoops!

6. There might be some "good deals" in the used boat market from individuals strapped for cash?

7. If it were to reach major proportions, actual on-water activity would decline along with tourist dollars in water recreation areas.

8. Sinking stock prices might bring out another round of acquisitions, perhaps of industry suppliers this time?

9. Management's attention is diverted from day to day operations to trying to prop up stock prices.

10. More stockholder insistence upon an active "hands on board" of directors.

11. Manufacturers may delay major capital investments.

12. Other boating companies may follow Brunswick's example of diversifying into other areas?

13. The idea of a "world economy" may gain some believers. As businesses and countries interact more rapidly, major problems in one area are felt everywhere almost simultaneously.

14. Many individuals may "ease" out of the market because they don't have the stomach for it. Others may get out immediately by moving funds to a money market account. These accounts might be "tapped" by a wantabe boater?

15. Investment capital (IPO's) such as the one that launched Marine Max will dry up. Much of this capital was coming from stock market earnings.

16. Keep an eye on your own company stock.
    • If you are a top level executive or board member, you might want to try to do something to prop up your stock price (buy back shares).

    • If you are an executive and were counting on your stock options to make a big down payment on your new house - forget it. Executives will be reviewing their compensation package and may ask for some changes if the down turn persists. Some companies are already talking about repricing options, but stockholders are hard to convince.

    • If you are a employee with a major portion of your retirement fund in your company's stock, you might want to be following along closely. If your retirement is in a more broad based or indexed fund, you might want to follow your fund.

    Only time will tell, but market jitters of the past few days could have a very significant effect upon the boating industry.

    Some Specific Stocks

    Stocks that were already down, took an additional beating - Brunswick (BC) was at 14 7/8 (annual low) this morning (Sep 1). Some companies are buying back their stock in an effort to stabilize prices.
    

    Brunswick Stock Chart from http://quote.yahoo.com/

    A Brunswick stockholder placed the following note in the Yahoo Brunswick financial message board this morning.

    " If management is not willing to step up its share repurchases in light of the move to 1990 stock level, then I see no hope for this stock. Too bad, because the dynamics of this company are still good enough to be a great long-term investment. Number 1 in marine sales, number 1 in bowling, Zebco, etc. etc. But why can't management show some confidence in their stock? Does anyone know how to let management know this is what the shareholders expect? "

    MarineMax (HZO) was already struggling with its stock price. The stock market jitters comes at a very bad time for them. They are trying to show themselves off as a good investment as soon as possible. With all the normal problems of a startup, plus a few more, a major plunge in the market could put them at great risk. But from the stock chart below, it may already be too late.
    

    Marine Max Stock Chart from http://quote.yahoo.co

    Mr. Wizard contacted us recently about doing a story on Marine Max. After looking at this stock price chart, we told him we did not think it took a wizard to make a prediction on this one. (Brunswick holds a good sized stake in them).

    OMC is now private, but you can certainly expect their major banks and lending institutions to devalue them, based on the general stock market slump.

    

    

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    Do you have any comments on the market's impact on the industry or this article? E-mail us at polsong@virtualpet.com

    

    

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