The high end market is in monopoly!!!

[thoreau]

Originally Posted by Konve

Has anyone seen the movie Blood Diamond? I have and it's interesting how the "big company" in that movie (handling diamonds) store them in a vault to keep the supply low and the price high. Why would anyone do that?

to keep supply low. the diamond industry also keep demand high through advertising. low supply and high demand = big profits for the diamond companies.

http://www.edwardjayepstein.com/diamond/prologue.htm (a must read)

[Tussi]

What's happening here?

Taking a step back and looking from a historical perspective on the stock market:

First there were the first cooperations which were build because there were things to do which a single being couldn't handly alone anymore (eg. building a big bridge over a river). These cooperations were mostly financed by the state.

Around the same time small groups of people began pooling their resources to archive a common goal. Shares in such a company were normally not tradeable.

Some time later the first public owned cooperations emerged, which gave out shares to shareholders to obtain the funds needed for big long-term projects. Shares were bought as an inventment to profit from the dividend in the long run.

The shares became tradeable, the first stock markets emerged.

For quite a long time all was quite fine, ppl had their long-term investment in shares from corporations which payed dividend to them. It really didn't matter if the quotation went up or down a bit, because the driving force was the yearly dividend payed by the companies.

But at some point in time as money accumulated on a minority the view on stocks shifted - dividend became more and more irrellevant, the focus came more and more onto the rise of the stock price.

Why invest into a company to get dividend if you can speculate on the rise of the stock price and make more money faster?

Shares became speculative trading goods and bubbles began to fill.

Normal small people joined it hoping to make their cut to.

Now people gamble on short-term share price fluctuations, or even (hedge-fonds) try to manipulate the quotation in the direction they want to make a quick profit.

Bubbles burst here and then.

[hr]

The view in the virtual universe goes like the following:

A player obtained an item because he was positive that the higher eco/effect it does will pay off the tt+ markup over the projected usage time.

So he invested into it and consumed the dividend the item gave.

As time went by he outgrew the item (or sold out or whatever) so he got rid of it two ways:

Either the item was tt-food then and went the way of all beings (TTed), which was no problem because the item already had payed off - or someone else wanted to have such an item, so he traded it.

Maybe with a small profit. And the next player started the cycle again.

But then on not that few items something went wrong. There came a point where the dividend of an item no longer can cover the markup on it.
It's now impossible to get such an item, use it for an extended period of time and then dump it into tt without a major dent in the bottom line.

So now we're from investing on to speculation. The bubble begins to fill.

It's no longer about the investment on an item paying off in the long run by using it, it's about the speculation that an item will increase in price and thus make profit.

The bubble will burst some day too.

[Skippie]

and some say it has burst, already, so many times.

[Witte]

Originally Posted by Tussi

But then on not that few items something went wrong. There came a point where the dividend of an item no longer can cover the markup on it.
It's now impossible to get such an item, use it for an extended period of time and then dump it into tt without a major dent in the bottom line.

So now we're from investing on to speculation. The bubble begins to fill.

It's no longer about the investment on an item paying off in the long run by using it, it's about the speculation that an item will increase in price and thus make profit.

The bubble will burst some day too.

Although this is partly true, its abit more complex. Its not just about "the item paying off". Its also about fun and status. Example: People dont buy a car purely for transportation, but also for luxery, status and fun. So it doesnt pay off at all. Still people buy expensive cars.

Another example are clothes in EU. They dont have any function at all (or pay off), and some still sell for over 10k PED.

[Skippie]

Originally Posted by Witte

Although this is partly true, its abit more complex. Its not just about "the item paying off". Its also about fun and status. Example: People dont buy a car purely for transportation, but also for luxery, status and fun. So it doesnt pay off at all. Still people buy expensive cars.

Another example are clothes in EU. They dont have any function at all (or pay off), and some still sell for over 10k PED.

yeah, ppl pay for perceived value here, more than they pay for actual value more times than most.