What the Auction Business Needs: A Sustained Stock Market Rally

Some people believe newspapers are dead, but I still enjoy reading USA Today in its print form. In the Sept. 26 edition, there was an interesting article quoting Federal Reserve Chief Alan Greenspan, who said in a speech that a sustained stock rally would be the "most effective" stimulus for the sluggish American economy.

It also would be a big boost to Thoroughbred auction prices.

According to the story, the three benefits of a rising stock market to the economy are that it makes people feel richer, it inspires confidence, and it signals optimism in the future.

Horses are luxury items and those same three benefits are needed to convince people to purchase them.

In 2008, when the American recession turned into a global financial crisis, "I don't care how much money you had, it seemed like the world was coming to an end and you just didn't want to spend money," said racehorse owner and pinhooker Robert LaPenta recently.

And many Americans are still feeling jittery in that economic disaster's aftermath.

Even though the rally in stocks this month is the best September performance since 1954, there are questions about how long it can continue, the USA Today story said. While there has been an increase in the percentage of individual investors who say they are optimistic, they are continuing to pull cash out of the stock market and that trend works against the development of a bull market.

It will be interesting to see what happens over the next few months. I know I'll be keeping a close eye on the Dow Jones Industrial Average and rooting for it to keep moving upward, especially as Kentucky's November breeding stock sales approach. Buying a broodmare is the ultimate reflection of confidence, because breeding her foals to race or sell requires a long-term commitment.

If the stock market is booming, maybe all the Thoroughbred industry's internal woes won't seem so insurmountable.