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I agree with you on several points Tipsy, we know there will be some net economic affect, but it is unclear about the online entertainment sector and how it will directly affected... Congrats Tradermcduck on your MA in econ work.
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The primary reason the market is going through a process of devaluation is tons of younger analysists and economists were caught up in irrational exhuberance... People simply do not want to listen to negative and positive evaluation based on LONG TERM investment strategy. The market price is the net present value of a companies future prospects, not how people ?feel? about how the stock price will go up or down next week, or even a year.
With that in mind, please analysize the current situation market. Now is precisely the time to evaluate and invest LONG term market investments. Sell real estate to the lemmings, and invest in fundamentally sound publicly traded companies.
For instance, you have Warren Buffet placing money into Level 3. That is Mr. Long Term investing in a telecom. Telecom is not going away like most gadet web sites or gadet technology. Psychologically, people are depressing the fundamentally sound telecom companies far more than necessary.
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Ok...when it comes to our industry...
I'm not sure the NET effect on spending on online entertainment will be negative...
Consider this
1.) Gambling particpation INCREASES in economic slumps.
Several studies on this. I wish I could site them, but hopefully the common sense argument is sufficient==> In precieved poor economic times, more people need "dreams."
To quote Sam Rothstein in casino (played by deniro) "[the gambling industry] is like selling dreams for cash."
If you must find some study do a search on google.
2. Consumers are still spending money
Wal-mart, Kohl's and Target all exceeded June's expectations
(NY times 7-21-02)
3. What type of ?good? is porn?
For example, it has been a long time since I have picked up an econ book, but here is the basics. There are types of goods ?inferior? and ?regular." All of them have different demand curves, that is income rises and falls people buy more or less of these goods.
Inferior good is exactly as it sounds. As income rises consumption increases to a point and then bends backward and Decreases. Regular has a demand curve depending on how necessary it is.
An example is food. You eat bologna when you are poor, you eat it, you get more money you eat more, but you get a certain point you are going to eat something tastier like pizza (regular good) and stop eating the inferior good, then you get rich and you eat pate.
I'm not sure what kind of "good" porn is.
Consider the "summer slump" itself... Is it because people have other things to do perhaps? What entertainment activity do to they substitute for consumption of porn?
Interesting evidence to use on our model for lowered income...
What effect will lowered income have on entertainment options? If they decrease spending on vacations and precieved luxury goods, etc... where will that entertainment money/discretionary income go?
Will consumers be forced to work more and consume less luxuries?
No more big vactions?
Videos, small vacations and perhaps porn?
I look at porn as sort of an inferior good.
You look at porn when you have NOTHING else to do. After all, why would you choose to look at porn if you could go fuck some hottie or even go out on a date?
Given the choice would you masterbate or get some ass?
anyway...sorry for the long post
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