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Wednesday, November 24, 2010

Splitting the Stock Market into Digital Products and Hardware Products would help stabilize the stock market.

A few years back I noticed that stock market analysts were big on digital software technologies, and down on hardware based technologies. The simplistic and opportunistic reason for this profit based bent was that digital software products can be easily replicated, and can be periodically upgraded as well. Whereas investor analysts saw a well made hardware product in many instances as a one time sale with a one time profit margin.

With the advent of the internet, hardware products faced an additional disadvantage. If the hardware product was well made and was given well deserved platitudes on the internet, price competitions could heat up resulting in low profit margins for the well made products. Box houses would sacrifice profit margins in exchange for large volume sales, and this tended to trickle back to the manufacturer who needed to keep market share over cheap "knock off" versions.

However, if a digital software product was "buggy", internet forum groups would spring up as a form of "support" and anytime a bug was identified and/or fixed, everybody on the forums seemed happy to have played a part in the ongoing growth and improvement of the product. The product may have been defective, but we (the forum) helped make it better, "so we like it and support it, and look forward to PAYING for the IMPROVED version!

Well, thanks for nothing wall street investor analysts who overwhelmingly chose digital over hardware. Or should I say, thanks for the negative result. It has become clear to me that no economy can only rely on creating digital software products that once made and replicated, results in huge ongoing profits.

Clamoring primarily for Digital Software products versus Hardware products is like consuming an all carbohydrate diet, or an all protein diet, or an all fat diet. At some point we should recognize and separate each type of food product into its own food group.

I see a correlation between film vs digital, and hardware (film) vs software (digital). Most people don't see a correlation and relationship between a digitally created economy versus one comprised of hardware based products. My involvement in first film, and then video production and editing, allowed me to analyze the benefits and detriments of both film and video formats, and I feel both actually have a place in our creative world.

Until the world's economy recognizes each of these two components, software versus hardware, as being separate but interdependent, the stock market will continue to twitch in a spasmodic sequence of hope and failure.

I believe separating stock market hardware products from stock market digitally based products by creating two stock markets will allow the financial experts to assess what percentage of each "food group" is necessary for an "efficient" economy.

As long as our stock markets continue to jumble together hardware and software technologies, the resulting mess will continue to obfuscate the ideal percentage of these two components that is necessasry to run an effective economy.

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