Start your own stock exchange
Rather than invest on the London Stock Exchange, I have an alternative idea. Why not form your own exchange, and trade there?
Such a thought may seem ridiculous, but it is not entirely fantasy. The potential of the web for aggregating buyers and sellers is remarkable – just look at the astounding success of eBay. And others have already pioneered the concept. For example, there is the Hollywood Stock Exchange, (www.hsx.com). This ingenious site permits punters to trade “moviestocks” and “starbonds” on a virtual movie market.
While it is in reality an online game, it has proved accurate at predicting the likely performance of new movies at the box office. The website includes clever devices that mimic the real stock market, such as Movie IPO of the Day and “announcements” about new releases and average gross numbers for films.
There is even the Hollywood Stock Brokerage Resource and the Hollywood Stock Journal. You can short starbonds if you think the actor’s popularity is likely to wane; you can go long on moviestocks if you’re confident a sleeper movie is going to become a hit.
So it seems obvious that someone should set up the West End Stock Exchange, a site dedicated to plays and stars of the London theatre. You could trade “shares” in famous actors, musicals and dramas and predict the hits and flops. It would be a fantastic place to actually raise capital for new theatrical productions, instead of relying on a haphazard collection of “angels”. And someone should establish a rock’n’roll stock exchange, trying to predict the best-selling bands.
In a way, the securitisation of royalties by artists such as David Bowie and James Brown is the realisation of such an idea. Of course, there could be a TV stock exchange, where fans can punt on the likely success of a new soap opera and particular stars.
And why not an artworld stock exchange, where you can speculate on the success of a particular artist or painting, or even a book stock market, where you buy shares in authors and their novels?
Does this sort of online gambling do any harm? Betting on culture and entertainment like this – does it corrupt the essential integrity of the artists’ output? Well films, television, music, art and books are all big business anyway. Singers want to be top of the charts; writers want to publish bestsellers.
The entertainment industry as a whole is one of Britain’s largest. And admirers might like the idea of owning a piece of their favourite novelist or popstar – even if it’s all entirely theoretical. For fans, it’s probably a lot easier to get enthusiastic about an “investment” in a musical hero than in a quoted heavy chemicals company.
In May this year the first public offer to invest in a Formula 1 driver, Justin Wilson plc, raised more than £1.2m with the issue oversubscribed. More recently, a funding called Sam Hancock plc was launched to finance another driver, with the shares due to be quoted on Ofex. I’m surprised the technique hasn’t been used to finance the careers of more sports and entertainment hopefuls.
After all, sports betting has been the fastest-growing part of the gaming business for some years. Gambling on the outcome of important football, tennis, rugby, cricket and other major sporting contests has attracted new speculators who aren’t interested in traditional wagers such as horseracing or the dogs. And spread betting has been a popular alternative to playing financial markets directly for some years.
Organisations such as City Index permit punters to wager on shares, currencies, commodities and bonds. Such transactions are free of capital gains tax and avoid commission, brokerage and stamp duty. For private investors, they offer a simple, tax-efficient method of trading in complex instruments.
Another electronic exchange is www.liv-ex.com, or the London International Vintners Exchange. It is an online market for fine wines, open to private collectors and wine merchants. Like other exchanges, there are price histories, charts and indices, with market comment and analysis. Once more, the internet has enabled the public to become better informed, and so better equipped to deal more expertly with the trade.
I haven’t discovered an impressive UK-based online antique exchange, but no doubt a dominant player will emerge in due course.
All these electronic marketplaces have sprung up because the technology is cheap and trading can be instant and transparent. The lines between investing and betting seem to be blurring. As long as the punters have a reasonable idea of what they’re doing, then I say good luck to them.
- Luke Johnson is chairman of Signature Restaurants