Sunday, February 28, 2010

Hollywood Money

An on-line futures exchange site, Hollywood Stock Exchange ( hopes next month to begin selling futures on box office returns for newly released movies. Currently they are operating for play money. Futures will be offered for periods between one month and six months, and investors can bet on the receipts from sales being higher or lower than the site estimates.

Like other internet futures sites, no actual stock in the movie productions is bought or sold. What is involved here is gambling pure and simple.

One obvious difference between real investment and this buying and selling of currencies, stocks, or movie sales futures is that the "investing" will not affect the actual value of what is being gambled on. The speculation itself does not increase or decrease the demand for the limited quantity of whatever is involved in the wager. Betting patterns can be of value as market research, or public relations, but since the people involved in trading the actual article are not the same as those making bets, escalating cycles of buying and selling should not normally occur.

Speculation is a strong temptation to people who practice the art of making money. Managing it we could pass laws limiting economically dangerous activities to such gambling sites that are now springing up everywhere. In another world our politicians would be as innovative as our web site entrepreneurs.

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