I haven't time to comment much on the economy recently, thanks to Super Smash Bros. Brawl and… oh who am I kidding… I didn't even do a portfolio postmortem for last year. We are clearly in a recession right now, something I predicted in 2005 after much research, and my wishes go out to everyone in the American workforce… except those in the game industry! We don't need it! We are recession-proof! Hah!
Well, predicted sounds arrogant… I didn't predict a recession, I just tried to point out the mountain of evidence that it would happen. It's no surprise to me that games are recession-proof, though. Entertainment in general follows different fundamentals than other industries. Games often get compared to film, but there are two key differences that have made us an industry that has begun to intimidate Hollywood in size. …
First, games are simply a better dollar per enjoyment time offer. A $50 RPG can net you over 40 hours of gameplay, whereas a $10 movie ticket gets you two hours. Let's not even talk about Super Smash Bros. Brawl or World of Warcraft. Doing everything in The Elder Scrolls IV: Oblivion would be like watching all of The Sopranos episodes, twice over.
Secondly, games address a niche. Typical movie-goers head to the cinema and pick a headliner, one with more than two famous actors, or try to narrow it down to an action movie, drama, or comedy. But the kinds of games we play are far more specific and personal, and when we find the right one, they wholly suck us in. I've played over 400 hours of Tetris Attack, far more than all my favorite shows and movies and their multiple viewings put together.
I don't want to say I'm disaffected as I watch Bernanke repeat the mistakes Arthur Burns made. I think we will soon see a jump in unemployment as we reach levels we had in the past, and as long as interest rates keep getting sacrificed to the Inflation God, we will most likely be trapped in these doldrums for 2-5 years. I can only hope that financial institutions will finally learn how fleeting debt-powered earnings are, but the way we keep bailing them out isn't helping.
I haven't done a portfolio postmortem for 2007 because I am frankly a bit embarassed I didn't hold onto that year's earnings as well as I could have (although I still walked away up +25% 😀 ), and my busy work schedule kept me from being on my game as the world markets slid into a volatile mess. This will be my first bear market since I've started trading, so I hope to learn a lot. I see this as an opportunity, while I am still young and flexible, to learn to build a stronger foundation for me and Xstine's future. Unfortunately, we (including you dear reader) are paying the price for not just this war, but the last 40 years of fiscal irresponsibility, with no end in sight.
Everyone I know wants to do good in the world, for their families, their clients, and themselves, and the way to do that is to NOT be a statistic. Don't be one of the "average American household" with no savings, tons of debt, and a consumerist lifestyle. Saving, not spending, is what will push this country into a full recession (depression?), but that is the only thing that will galvanize our government into doing what's right, rather than what's easy. And of course, it will let you do the maximum good, because I have faith in you.