Thursday, December 31, 2009

Get rich quick with bowling stocks!

Since I am incapable of making any money through my standard bowling activities (i.e., league bowling, writing about bowling, bowling spreadsheets, etc.), I decided to check out the exciting world of publicly owned and traded bowling companies. I was intrigued by a Charles Schwab quote I read on the tubes. According to Chuck:

When I got started in the business, the first bubble we had was in the spring and summer of 1961 -- the bubble of the bowling industry. Yes, bowling. B-O-W-L-I-N-G. According to industry analysts, every American, on average, was going to be bowling about two hours per week. Compute it out -- 180 million people times two hours per week, for 52 weeks ? That's a lot of bowling. And all of a sudden, it became a very valuable thing to own bowling stocks.

Is that true? Was there a bubble in bowling stocks in 1961? It seems there was. Although I am personally incapable of finding historical stock data for bowling companies traded back then, it is possible to read various news snippets of financial news from 1961. From those, it is clear that bowling stock was the hot ticket. I was able to do Google News archive search for the phrase "bowling stock", which produces a nifty bar graph showing how frequently that term has appeared in major newspapers over time. You can see from the histogram below that bowling stocks like AMF and Brunswick were in the news quite a bit during the decade of free love. In fact, the phrase was in the news more then than at any other time.

So, what's out there today for the savvy bowling investor? Would you like to buy shares of AMF? It was one of the hot stocks of the 60's. (AMF stands for American Machine and Foundry) Well, you can't. In the summer of 2001, AMF went bankrupt. Afterward, it was purchased privately, broken up, and the bowling division was sold to a private firm, Code Hennessy and Simmons, LLC.

From what I can tell, there are only a couple of options, Brunswick Corporation (BC) and Bowl America Incorporated (AMEX:BWL.A). Are these good investments? I have no idea. My success at stock picking is similar to my success at picking up spares... about 50%, so I'm not going to give any advice. I will note that if you had invested $10,000 in Bowl America in January of 1978, today, it would be worth nearly $180,000. (The company went public in 1958) That's an annual return of about 9%. What about Brunswick? Over the same time period, your 10k would have grown to around 75k. If you were lucky enough to sell your Brunswick stock at its peak in December of 2004, it would have been worth nearly $300,000. Lately, however, the company has been bleeding cash, which probably explains its precipitous drop over the last five years, but this year, it's up more than 150%.

In the end, I must admit that I have no idea if bowling is growing at a rate that would sustain substantial growth in the industry. Despite somewhat impressive 30 year returns of Bowl America and Brunswick, you should keep in mind that most of the growth can simply be attributed to time... the old buy and hold strategy. Some 30 years down the road, your investment might payoff, but it ain't no sure thing... If you had put $10,000 into AMF in 1978, today it would be worth as much as a used house ball.

4 comments:

  1. I think I'd put more stock in bowlers (pros, I mean-- even up-and-coming almost-pros) than in bowling itself... Too many houses are barely making it and league membership seems to be dropping. (Our lanes look like they're owned by a slumlord.)

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  2. Like I said, I have no ability to see the fiscal future, but as for the dinge of your bowling alley, isn't that normal? I really want to check out one of those new fancy urban lanes, like this one in Denver: http:\\www.bowlluckystrike.com/locations/info/?id=21

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  3. We have affinity lanes popping up around here, like a place called Splitsville, where you can rest your ass on couch between frames and sip a $7 cosmopolitan. I'll take Spare Parts Lanes where we bowl, thankyouverymuch (and my beer in a dirty glass).

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  4. So it is really pretentious? I just wanted to check one out for the feel. I like a dingy alley, too, especially once it feels like home.

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