Sunday, 22 February 2009

Betting against the future

I used to work on a financial spread betting client, which involved learning a lot about how that sector worked, how people with different attitudes to risk used the site, what helped someone using the site for the first time start off with realistic expectations, etc. The main thing that every serious spread better is looking for is the 'edge' - the approach or the knowledge that will make them successful. The simplest approach is to watch out for news stories or interviews and be able to react quickest; many spread betters never get beyond trading this way. However, it is time and labour intensive and relies heavily on luck.

So the article in the Times today in which the CEO of EMI explains why his company will be betting against the 21st century and investing heavily in the 20th reminded me of this. The skill in spreadbetting off news stories is getting information about something about to go wrong, and then selling it before the market does. If I had the time or money to still play around with these sites, I would be selling every bit of EMI I could get my hands on. Any sort of long term bet against this company's future looks a pretty safe investment.
As The Music Industry Manifesto points out , this is a corporate suicide note. Actually, it's not even that: a suicide note shows intention, whereas this interview just shows lack of understanding at a fatal level (in the same way that intentionally jumping in front of a train would be suicidal, whereas not realising the danger of playing on train tracks is fatal stupidity).

You might expect that Terra Firma, the VC that owns EMI, might be considering backing a more clued up CEO in the near future.
(Hat tip to Jonathon MacDonald for the sources)


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