virtual crack dens

as much as i love running around in virtual worlds and experimenting in new online places, i read an article about marketing virtual worlds to kids today and was reminded of some words in a review of there will be blood that i read yesterday.

 It is this addiction that Anderson focuses on.

America was built on addiction.

Addiction to money. Addiction to tobacco. Addiction to slave labor. Addiction to sugar. Addiction to grain alcohol.

Indeed, the first laws ever written in America, in Virginia in 1619, were against public drunkenness. By the early decades of the 19th century, Americans drank roughly three times as much alcohol as they do today. Purchase any item in a 19th century general store and you were permitted a free ladle of grain alcohol and your child was allowed a free spoonful of sugar.

It kept customers coming back.

i have witnessed how my friends’ kids are transfixed by disney and nickleodoeon’s products (among others). i also have an appreciation for the ginormous sums of cash these companies are pulling in, marketing to kids and creating a generation of überconsumers. virtual worlds, in the hands of these experts, are going to be some of the more addictive things out there. they will definitely keep customers coming back.

“There is a massive opportunity here,” said Steve Wadsworth, president of the Walt Disney Internet Group, in an interview last week.

Behind the virtual world gravy train are fraying traditional business models. As growth engines like television syndication and movie DVD sales sputter or plateau — and the Internet disrupts entertainment distribution in general — Disney, Warner Brothers and Viacom see online games and social networking as a way to keep profits growing.

But more is at stake than cultivating new revenue streams. For nearly 50 years, since the start of Saturday morning cartoons, the television set has served as the front door to the children’s entertainment business. A child encounters Mickey Mouse on the Disney Channel or Buzz Lightyear on a DVD and before long seeks out related merchandise and yearns to visit Walt Disney World.

Now the proliferation of broadband Internet access is forcing players to rethink the ways they reach young people. “Kids are starting to go to the Internet first,” Mr. Wadsworth said.

and i love the last line of the piece. although speaking a language i can appreciate as an investor, it would ring hollow to me were i a parent.

“Parents know they can trust our brand to protect kids,” said Steve Youngwood, executive vice president for digital media at Nickelodeon. “We see that as a competitive advantage.”

things i am reading

i set up a tumblr page so i can bookmark a page i am reading and have it show up on that page, and in the sidebar of this blog (the tumblr page looks kinda nice too, sweet theme). you can also drop the rss feed into your reader of choice and keep up with things i am reading that way. i mean, if you are into that sort of thing.

brief stay in LA

i will be hanging out with flora the dog over at my brother and paul’s place this week. bret is going to hawaii for christmas.

it’s a little cold here for me, and the light is at a certain angle of the sky that makes me ever so slightly depressed. actually, if it were warm, it wouldn’t matter.

i feel a little divided between two worlds. the goals, aspirations, and ambition most people have here are a bit different than those of most people in costa rica. when i first left for central america, i think there was a certain element of “turning my back” on all that here, and maybe a bit arrogantly so. i still think that for most people here it becomes an endless struggling cycle of never being satisfied and happy, but that isn’t the case for everyone. so i find myself thinking that maybe i should abandon the idea of living in paradise, get a place here and become a responsible member of society. maybe not follow the beaten path, but find one that doesn’t require a machete and a compass.

i wonder what is better suited for me, and it sometimes feels like i need to make a binding decision, and right now.  the reality of how it will turn out, i imagine, is much more subtle and complicated, just like everything else.  hopefully that means fun too.

passive investing

there is an interesting (and long) profile of blaine lourd in condé nasts’ newish portfolio magazine that hits on a bunch of different themes i think about. blaine was a stockbroker for years, making his money the way that wall street does: transferring clients’ wealth into his own pocket through money management and transaction fees while creating subpar returns. it made him miserable, until he converted to indexing and the efficient market, random walk theory. now he takes a small management fee from clients to keep them lashed to the masts of their own indexed equity portfolios, and not give in to the tempting siren calls of hot cocktail party stock picks or the allure of stock picking.

i often think about phasing into an index strategy. i enjoy following the market, waking up early and watching the open in new york, and plowing through tons of news, but i recognize that there is a limit to the appeal. i have often joked with friends that my daily return tends to be higher if i sleep in and don’t check the numbers before the afternoon session. of course the market doesn’t care whether i sleep in or not, but i endure a lot less stress and trade less frequently on the basis of emotion. i am less distracted by the daily movement of the market, which for the most part is pure noise. the article describes financial press as businessman’s porn:

He punctuates the porn show with some general lessons. One is that the financial press isn’t in the business of supplying useful information; it’s in the business of feeding people’s lust for predictions. “You keep buying the magazine regardless of how the forecasts turn out,” Wellington says, “and they’ll keep supplying the forecasts.”

i would add that the financial press’ bread is buttered by wall street firms, who generate a high percentage of revenue from the volume of client transactions. in this light, it is not surprising that business news seems to suffer from a bipolar condition, manic about the market soaring to infinity one day and gripped with fear that a replay of 1929 is imminent the next. in stock trader culture, this panicky trading mentality is expressed with a reference to the movie “trading places”: sell mortimer, sell! buy mortimer, buy!

i like the idea of putting most of my money into SPY and a combination of a few other indexes, and then forgetting about it, to pursue something interesting with the sudden windfall of free time that would create. i know a hell of a lot more about finance and economics compared with when i first started spending so much time researching them, and that effort has been well spent. i wonder if a time is coming though for me to drift with the tide.

then again, maybe i am a market junkie.

also, for the time being, i am outperforming the S&P 500.

(thanks to brooke for sending me the article).

flight confirmed

i am going back to costa rica on january 8. right now i am in oakland CA typing from under a down comforter. soon enough i will resume posting from a hammock.

the last couple of days i have been to a wedding and a party, and caught up with a lot of my friends. everyone here seems to be working on interesting things, building cool stuff, writing sweet songs, making good art. tonight, thinking of this, i responded to the question of what i do by saying “i am not really sure. my life is a mess. a really pleasant mess, but still kinda a mess”. i need to work on doing things that will help me answer the question with something a bit more interesting in the future. my life is good, i can’t complain. but i can and should probably do more.

i didn’t expect to like it back up here as much as i have. now i am going to fall asleep deciding my plan for the week.