Episode 135: 2021 Halloween Nightmare

Welcome back.  The kids needed a well-deserved break, and my voice is coming back, so I thought I’d do this one by myself.  I have to admit, I do like Halloween a bit, and have been known to put a motorized skeleton playing the guitar on the front porch, sitting on a bale of hay to scare kids when it’s activated as they pass by.  Maybe I got that from dad. He liked to come to the front door with a mask on when giving out candy and scare kids.  He’d look out the window to make sure it was age-appropriate, but there was a time or two it didn’t end well.  

Anyway, it’s been a long time since I snuck off and watched a horror movie.  My wife simply doesn’t like watching them.  I’m not a huge fan, but when I was younger, there was something super scary about Freddy Kruger.  That guy would come after you IN YOUR SLEEP.  That was scary for me because when I got tired, there was no chance I could keep my eyes open.

I can’t believe Jason, from Friday the 13th is STILL around.  The first one was in 1980, then Part II, III, and the Final chapter followed in 81, 82, and 84. There were 7 others since then.  One of them pitted Jason against my boy Freddy in a big fight.  But, this year, after being away for several years, Jason Rising came out.  The guy dies, he lives, he dies, he lives, he dies, and so on.

The first Friday the 13th movie cost $550,000 to make and had a total worldwide box office of $60 million.  I just read that almost 15 million tickets were sold. That’s amazing.  So, guess what, they produced the next one for a cost of $1.25million but got less than $22million in worldwide receipts. Still good, but not as good as the first.  Can you ever be as good as the first??? Overall, the franchise averaged about $6.5 million to make and grossed about $39million each.  They had 12 movies, cost around $79mm and it brought in $466mm.  It’s not an exact analysis, as this has been going on for 40 years, and you’d have to do the time value of money calculation, but that’s pretty huge. 

I was a fan of Freddy Kruger. He had only 9 movies, costing around $100mm to make them all, and brought in about $450mm.  He started 4 years after Jason. That’s pretty close to the Friday the 13th Franchise. Those are both ½ billion-dollar. So, the wife went with the kids to grandma’s, and I went back and watched the first Nightmare on Elm Street. Pretty weird to see how much special effects have changed, and some of the frightening scenes weren’t as scary-like the end when Johnny Depp, yes Johnny Depp got sucked in the bed.  But, I’ll admit I did hesitate one second that night before going to sleep thinking about Freddy coming to visit me in my dreams.

I love to talk about money and try to understand these interesting money makers. It leads me to investing.  There is a bit of magic in movie making, as someone had to invest in the first Friday the 13th and the first Nightmare on Elm Street.  Before Streaming, you had movie theaters.  Investing is about seeing trends or opportunities.  And, you’re not always right.  There’s an old saying that you make all your money when you buy, not when you sell.  It simply means that if you buy at the right price, when prices are down, and nobody wants it, you may get a super deep discount.  That’s only if the company has some value. If that’s the case, you’ll make money.

Speaking of movies, I think most of us have heard of AMC Entertainment Holdings which was founded in 1920.  They provide the movie experience in their theaters.  They’re trying to re-invent themselves a bit due to our current normal.  They got beat up with COVID because people stopped going to the movies, as big crowds were a big no-no.  The stock dipped down to $2.26 in 2020 from the mid 30’s in 2018 or around $7 before COVID.  The stock wasn’t doing much for almost a year and even went down to around $2.14 in early 2021. But, due to many things, they almost peaked at $60 in June and they’re hovering around $36.  They have been part of Wall Street Bets which was the group that propelled Game Stop to enormous heights. However, the point is that buying at the right price is a very good thing. I would NEVER tell you to put your life savings in something like this.  Way too many questions, but if you were buying a little stock in the $2 range a year and ½ ago and could get out around $40, that’s one heck of a return. I’ve said it before…. Warren Buffet is quoted as saying “When there’s blood in the streets, you buy.” Definitely easier said than done.

This Halloween, we’re dealing with a new normal.  Can you say it with me…. Supply Chain issues. Pretty scary stuff which has not only affected Halloween but it will continue to affect us for some time to come.  The National Retail Federation tells us that in 2021, we’ll hit a new level of spending on Halloween of over $10 Billion from the $8 Billion in 2020.  That’s HUGE!! People want to get back to normal, but prices are rising too.

Almost everyone celebrating Halloween will purchase candy, with almost 80% purchasing decorations, 70% will buy costumes, and around 45% will purchase a greeting card, wear a costume and carve a pumpkin.

That’s a lot of dough. Even with Easter and Valentine’s day far in our rearview mirror, Halloween is the biggest candy holiday of them all. Hershey’s announced a price increase this year on mini chocolate bars, Kisses and seasonal shapes for the 2021 holiday.  With as crazy as things have been, this hasn’t happened since about 2014.  Back then, there were four major factors.  The reason for the price increase 7 years ago were interesting and a bit scary. 

One was that cocoa production. The Ivory Coast of Africa is the biggest producer, and with outbreaks of Ebola in countries around the Ivory Coast, there was uncertainty if there’d be enough workers to harvest the crops which would reduce supply and push prices higher. We know markets don’t like uncertainty, and we know supply and demand affect prices.  In addition, it appears that crops weren’t as large as in the past due to Climate Change, which, as you guessed it, further constricts supply.  Both of those are seriously spooky-Ebola and Climate change… Understanding the issues surrounding an investment is a really good part of investing.

Many of us know the store called Party City.  Pick up some balloons, napkins, streamers, and numerous other party favors. It’s open all year round, selling all kinds of supplies for the holidays, but Halloween is their busiest and most lucrative time of year.  I didn’t know that.  Seriously, isn’t that interesting.  What’s wrong with us?  I like Halloween, so I’m part of the problem.  I think it’s fun being someone else for a day or so.  Especially a superhero.  One of my favorite memories is when I got the same costume as Grant when he was very little and surprised him at school. When he figured it out, he was so excited.  Sorry Mak, but I just couldn’t put on Princess dress, no matter how hard I tried.

Stores simply can’t keep items on the shelves.  Some retailers “feel” there is almost 3 times the purchasing from consumers this year for Halloween.  They say “nothing can be kept on the shelves”. If we use what we’ve learned about Supply and Demand, we know that it drives prices.  For AMC, they had the supply, but no demand.  That tanked prices.

For Halloween, I’m hearing prices are being pushed up.  If demand is the same but supply is less, that will do it.  Or, if demand increases with the same supply, that will move the price up as well.  But when you have both higher demand and lower supply, that’s a mix for disaster.

Plus, the pieces to make these products AND the cost to ship them is increasing.  If you weren’t aware, a 40-foot shipping container to bring items made from China, for instance, was going for a couple of thousand dollars prior to COVID and peaked at over $20k in early September. Prices have come down since then, but those costs need to be passed on to consumers somehow because businesses can’t absorb it all.  So, what the heck is happening.

I want to make sure not to inundate you with information.  But, how about a couple of fun things:

1. The Wunderlee Candy Company of Philadelphia invented a tri-color candy in the 1880s.  It became a phenomenon when another company brought it to the masses in 1898 and called it Chicken Feed.  It was sold in boxes with the slogan “Something worth crowing for.” It was put out in the autumn because it was associated with harvest time.  And, in the 1950’s it became part of Halloween.  That’s candy corn for you cock a doodle doo.
2. Popular costumes this year…
   
   1. Marvel Comic characters, witch, rabbit, Cruella de Vil, Harley Quin and cowboy
3. Weird costumes this year…
   
   1. Flamin Hot Cheetos, Rubber Chicken, cockroach and butter, but there are a lot of weird costumes out there you can buy.  

Thanks for being here, watch your spending over Halloween.  It’s one day of fun that may cost you all year long.  Be careful, have a fantastic week and make sure to stay away from anyone looking like Jason or Freddy….moooohaaahhaaa

See you next time for more…..

For more….Money with Mak & G.  Bye!!