What would you do if you could have a business model with almost no risk, a 70% profit margin at worst and no innovation or research to work on? That is pretty much what the lotter business enjoys. Even though they make the headlines when they offer prizes that can often reach hundreds of millions of dollars, the fact is that they have the best odds of all. For each ticket of one dollar, they might give you a 1/50,000,000 shot at winning $5M.. that is a 90% profit margin. Sure, you might be unlucky and have a few lucky players. But since it is possible to get insurance on all gains, you really have nothing to lose now do you?
The problem of course is that in most places, especially in North America, lotteries are public games run by the government. No surprise of couse as it is an important source of revenue for the state and provincial governments and they thus have very little incentive to let it go.
It will be interesting to see how this evolves as the government does of course have a difficult role as it also must try to prevent its citizens from being addicted or having gaming addiction problems. Not an easy thing to balance when you consider that the government wants as many people as possible to participate in these lotters and games. As well, lotteries can be seen as a tax for the poor. Studies have shown time and time again that those most eager to enter lottery or other luck games are often the least fortunate, and it becomes very difficult morally for governments to continue to take money from the poor when it usually is designed to do the exact opposite. The sense is usually that private companies would only have 1 goal in mind; profits. But do you think the government is really trying to do anything different?
What do you think? Do you agree with governments running such lotteries? Or do you think they should let the private sectors take care of it but impose taxes on those companies? Another point to consider is that usually governments to not feel like they have to disclose what they do with the huge lottery profits. It is often completely unknown where the money was spent and what was done with it because the reality is that most citizens care about one thing only; if they won or loss….Estimates are that a state like California could earn between $16 and $37 billions per year by leasing lottery rights. Such amounts of money could certainly do a lot of good…
In 2009, the world is seen by many as smaller than ever, or “flatter than ever”. That is certainly true of finance as capital flows around the world. However, countries have very different levels of structure which can result in different degrees of complexity in their capital markets. In geographical terms, the investments are usually classified as following:
Insider trading is one of those stats that I take a peak at but rarely act on. What is it? Basically, executives of public companies usually must disclose their holdings and transactions of their own stock. Many analysts look at these informations and pay great attention to them. The logic being of course that if a CEO is selling his stock, chances are the company’s future prospects are not as dazzling as he would have you believe in the company conference calls. That being said, there are many ways for executives to act around this law by doing OTC trades that will not be disclosed and can change quite significantly the stats of insider trading. Because of that, I usually take such numbers and barely glance at them.
When advertising a product, especially an online one, advertising or marketing it usually goes one of two ways; paid or viral. Paid advertising, the more known method, is the one Microsoft is currently using to promote Bing, paying millions of dollars to have advertisements in magazines, on tv, on websites, paying other websites to use its brand, etc. It is a method that can work very well of course, but can prove very costly. The major challenge is having a good enough product for users to end up using it even when the paid promotions cool off.
Think Japan being out of a recession will help stocks go higher? Think again
In fact, when the numbers were announced, the Nikkei index actually dropped 2,4% prompting many to wonder what investors were actually anticipating. That problem might occur when numbers start to turn positive in the US as investors might be expecting a V-shaped recovery which most economists agree is very unlikely.
To be fair, Japan’s GDP was due to rebound after dropping a spectacular 11,7% in the last quarter, a number that is difficult to even imagine for most US investors. Of course, Japan’s economy always provides a good view of the world economy as an important portion of its economy is based on exports, of cars, technology, all things that have been going through very difficult times in these tough economic times.
Now the question remains how investors will react when the US actually does move out of the recession, especially considering a lot of the current growth actually originates from the US government as long as that is the case, it can be viewed as being unsustainable by many….