Buying Concert Tickets vs Buying Stocks

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Billy Duffy from the Cult, in sync with the universe

Last night my man and I went to see the Cult play live–they are one of the greatest bands to watch live as they are masters of sound. When the Cult’s March 31 show tickets were available for pre-sale, we were locked and loaded and ready to buy what was available in the floor seating, which was…TWO SEATS?!? Before we could even hit “BUY,” those seats were gone. We had to be faster than, ahem, day traders to get these tickets. When the general ticket sales opened up, we weren’t crazy about the next best seating which was much higher up, but we got what we could get.

Most of the best seats are already held by the promoters and those connected to the event; the tickets for these seats go to VIPs, the media, promotional contests, fan clubbers, and the connected. The other tickets are snatched up quickly by scalpers who apply their techniques and buying programs; then these tickets are sold at inflated prices through the secondary market. These ticket prices fluctuate depending on the demand of buyers.

This sounds a lot like the stock market. Publicly traded stocks are stocks being sold in the secondary market. A new company needs money to grow, so to seek financing, it’ll go to an investment dealer, like a bank or a brokerage firm. So now, the dealer has the responsibility of finding investors at this early stage. The dealer sells shares of ownership of the company at lower prices, but owning these cheap shares often come with conditions and restrictions. This is the primary market involving the dealer and early investors, kind of like the event promoter issuing tickets during pre-sale. As the company grows, it needs more money to fund further growth, so the dealer goes to the public seeking to sell the rest of its shares. The share prices in the secondary market are often set higher but they could go down if people don’t want to pay those prices for them.

Just out of interest, here is a screenshot of Apple’s stock trading this morning. You can see the orders of bids to buy shares of Apple in the first column. In the second, it’s a list of the orders of people wanting to sell their shares. In the third, it shows the actual buy and sell orders that had just gone through and the times they were bought or sold at.

AAPL

Imagine being able to see ticket sales like this! I mean, to get this feed of live information on stock orders, I have to pay through my brokerage or trade a certain number of times a month to get this for free. The truth is there are additional markets (called dark pools) where shares are being bought and sold which the public can’t access. How refreshing it would be to achieve full transparency in all the different markets out there, so buyers can see ALL the prices things are going for!

I trade stocks with my own money. I study their share prices first, and if they seem fair, I buy them. If they look like they might go down in price later, I’ll wait. I have missed opportunities waiting for cheaper prices; however, I try as a trader–and in general as a consumer–to only pay at prices that seem fair to me.

We felt severely disadvantaged by the ticket sale experience for last night’s show, but we refused to go through the secondary market and pay much more to ticket re-sellers. As you can see from the up-close photo of Billy Duffy that I took with my phone, we worked our edge and got closer seats.

The Trend: To Spend and Lend

This week I had the honour of meeting my MP, Kim Rudd. She is a fascinating woman; you could write an entire book about her inspiring tenacity alone. She’s a true community leader, a successful entrepreneur, and a genuine, cool lady. She had been told about my book, Loonie to Toonie, and wanted me to meet with her in person to talk about it.

While in that meeting, I received some great tips on how to promote the book. I also got to participate in an open discussion of the challenges many Canadians face from not having their finances under control. This is a big problem that stretches across all the generations. The main question that came up was: Why don’t we all know more about money? There were many answers to that question. The solutions are simple, but not easy. My book is my own way of seeking an answer to that question, but it’s only one solution. I have no control over what people take away from my book. I can only hope to empower people with knowledge. But is that enough to transform a culture from spending to investing?

Imagine going to the mall and there was a store that sold all sorts of investments. Whatever you bought, you left the store with more money. How popular would that store be? I think we would all go to that store first before spending our money anywhere else. We would know all the features to investments like we would for the latest smartphone or pair of Jimmy Choo shoes.

The reality is, investing doesn’t offer the same instant feedback we get when we actually purchase an item. There’s a wait time for the payoff which sometimes take years. This means that we don’t have many chances to make corrections if an investment doesn’t work out. In general, the longer we have to wait for something, the more antsy and uncertain we feel about it. Then add to the length of time the element of risk, which is the uncertainty of the investment’s outcome. If an investment doesn’t work out like you expected it to, you can’t refund it or get all your money back. Thankfully investing doesn’t have to look like a scary game of risk, thanks to the strategy of diversification, which is having different financial assets of various risk levels. Similar to having a closet of clothes for different occasions, your savings should be comprised of different kinds of investments for various stages and goals of your life. 

So how do we enhance our relationship with money? Divide your pay cheque up like this: bills, food, future goals, then the rest for fun. This way, you take care of your basic necessities now, your needs for the future, and you can still enjoy some instant gratification for your hard-earned money.

If you haven’t done so yet, go to your bank and just ask to speak with a financial advisor about what you can do about your future goals. Advisors are always friendly, helpful, informative, and they’re there to make the processes easy for you. Whenever I go to the bank, I look for reasons to chat with the advisors. Sometimes I’ll ask a question and suddenly there’s a bunch of us standing around the reception area chatting and sharing ideas. They always tell me of the different options available and they give me new things to consider. I recognize that I’m not shy to talk about financial stuff, but that comes with being empowered with knowledge, even if it’s just some knowledge. No matter how much or how little you know, these advisors are always there to help.

This week, the global markets finished in neutral / positive territory, still above the losses that began in January. On Wednesday, the “Feds” (the FOMC – Federal Open Market Committee – of the U.S. Federal Reserve who make decisions that affect their economy and markets) announced that they don’t expect to be increasing their interest rates as they previously thought they would. Lower lending rates encourage borrowing and spending to stimulate the economy. This makes the stock market go up because people anticipate further growth in business. This reaction could be temporary. If the oil sector’s recent rebound is short-lived, another plunge in oil could still take us all down. I’m not saying this will happen, it’s just something to keep in mind. All the major global economies are doing many things to boost and stimulate their economies–this could also mean these economies are on the weak side and need to experience actual growth. 

Does my cautious sentiment mean not to invest? No. Whether the stock market is strong, the economy is weakening, or if we’re in a recession, there are always investment opportunities. This is why I try to be aware of my other options so that I can strike when the time is right. At the moment, I’m still waiting for a chance to get into the metals (see last week’s write-up on precious metals). I’m also thinking of getting a bond fund that’ll pay me interest for the very, very long term.