David Stafford's  Instablog

I've been a huge fan of video games for years. Having grown up around the world, I've noticed that this is a global phenomen. Regardless of where someone's from, one can always create bonds with others even if there is a language barrier over video games. In fact I remember at an early age, the only interactions I often had with the recently immigrated asian communities in the northern Virginia area, often entailed our pseudo-tournaments we would engage in over the newest games at our local arcade, which sadly has disappeared, but needless to say over the years I have come to appreciate video games.

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As I've gotten older, I don't play them as often obviously as I once did but I've noticed something that may have crept into the video game world. Namely the "boardroom" effect.

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Having just sat down to the first game that I've played in years that had a "demo", or free stab at the game, I've noticed something very different about this game I'm currently playing. It's not as in your face pop-song polished as other games, but its also great. Its much more fun than other games, and it doesn't feel as though its being presented to me as a VH1 or MTV show. There isn't over the top cgi in my face, there aren't odd pop-culture references, there aren't worthless "gimmes"(vanity items) thrown at me. Instead there just kind of a fun little mystical story, that I can easily follow and understand.

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In recent years, video game companies have been swollowed up by more board-centric companies and it shows. Eisner's "gong" style throw out an idea in a meeting style company creates kind of a disjointed video games, that often have sort of overdone or bloated qualities that kind of ruin the experience.(see overly intricate stories, novelists are hired to produce, which in turn aim at selling merchanise through literature, overly epic and sort of out of place orchestra style music, also for sale seperately, etc.)

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If a company has spent tens or hundred of thousands of dollar on rendered cutscenes or whatnot, that kind of is unnecessary, and kind of removes the participant from the actual game play and makes them more of sort of like a third party observer to the game. Other qualities such as unexpected surprises like "loot goblins" presented in some games have a similar effect, they are kind of irrelevant from a players perspective, and are about as fish out of water in a video game as is a mime in one of these companies board meetings.

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I'm happy to say that some of these games that allow the player's imagination to kind of propel the momentum of the game stilll exist. Its kind of odd when games are full of "winks" from developers and the like, and just kind of make the game disjointed. Maybey these sort of "brainstorm session" based ideas, are great for creating new merchandising lines, but they tend to kind of disturb the creative flow of a video game, and having played "big name" one of a series of too many video games for a while, I'm happy to see that some smaller shops still put out games that are more player centric, than board room centric, and that hence some games, actually give you room to imagine, as opposed to stringing the player along, and constantly trying to package developer imagination into bite size affordable downloadable content or add on packages.

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Thus, perhaps video games, ironically like hedge funds, are kind of often most productive when small to medium sized. As more cash-flow emphatic companies swallow up profitable shops, its been kind of interesting to see once creative game design companies, turn into very money hungry, and less creative organizations. In a way it kind of reminds me of Damien Hirsch. Now forgive me for not being completely up to date with Mr. Hirsch's work but there was a distinct change in his style as he became even more fabulously wealthy between the 1990s to late 2000's. His 40 million a piece works, shifted from for example, depicting dead sharks, in massive formaldehyde containing tanks, to diamond encrusted skulls. One, the former, in my humble opinion is odd and kind of interesting and intriguing, and the other is seemingly just a somewhat creative display of exorbitance, this is kind of what its like playing a smallshop vs big shop video game. One allows room for imagination, and is kind of funnily odd and intriguing, while the other is sort of "oh wow", and thats that. One engages the viewer/players imagination and sense of curiosity, and the other is seemingly simply a spectacle, and is functionally just a creative veneer over the worship of excess.(Hirsch may have been elaborating on his own opinions concerning excess though his work, but who can say)

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As the news and discussion surrounding the new marijuana legalization efforts begins to sink in, I'm starting to think that there may be a short possible depending on the outcome of the ballot.

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Regardless of what the real ramifications of said legislation/referendum could be, it is possible that given its long and storied tradition of trading sentiment/emotion, that were marijuana to be legalized in Colorado or Oregon, etc, that this could be the first of many holes to open up concerning the war on marijuana in the United States.

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From making a crop once good enough to pay one's taxes in it(hemp) illegal, to raiding pseudo-legal marijuana dispensaries, the federalist debate rages on, however, this time it concerns a fragile little plant that people sneakily grow ironically enough quite often on public land(see marijuana being illegally grown in CA national parks etc.)

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Either way, if these referendums go in favor of legalizing marijuana, it is possible that sooner or later, the slow descent into full legalization could come to pass.

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Who is this good for, who is this bad for? Well, its good for individual states, due to potential boosts to tax revenue etc, and its good for people who like to recreationally use marijuana. Why is good for the part time dope smoker? Well, because now they won't go to prison for being caught smoking, and or in possession of said interesting plant. Hence, who is this bad for? Clearly, prisons. Hence who do we short? Private prisons!

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I'm not suggesting anyone short, CXW in the event of a positive referendum for marijuana, because I don't want to end up in solitary confinement forever, if I ever forget to pay a few traffic tickets, however, it would seem like a logical thing to do given its notoriety, and "the streets" tendency to cut down the tallest trees first, whenever some sort of noteworthy piece of information flashes across a Bloomberg terminal.

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And let us not forget, these referendums results, are by no means written in stone, hence one might want to go long CXW in the case of an anti-marijuana legalization decision vis a vis these referenda.

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Hence, I hope this piece of reflection, perhaps helps others think about these interesting pieces of potential legislation, and keeps us all from letting any profit from said legislation, "go, up in smoke".

As I look over my watchlist, I see that quite a Wiley-Coyote esque event happened today. It looks like stocks had some moment of clarity, realizing they were standing off the lip of a cliff, and hence proceeded to plunge several hundred feet to a new state of inertia hehe.

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Either way, however, one sees it, I was similarly surprised by the survivors who managed to flap their hands fast enough to get back to the cliff face,and proceed up the to the next peak in this chain of stock activity.

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Amongst these champion arm-flappers are, a shipping name, not too surpising, NMM(Navios Maritime..) , Templeton Asia Growth, lead by the masterful Mark Mobius(I don't know how that ever goes down honestly), the good old "Corrections Corp of America(CXW) with a surprising .52% gain, and somewhat notably, a couple of investments I see as a somewhat good beta-normalizing hedge, which also have a decent payout.

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What two investments are these, well they are two very cheap Credit Suisse, Dividend paying Funds per se. They pay about 3 or 4 cents per month and cost about 3-4 dollars each. They're kind of convenient portfolio balancing tools in a high yielding payout portfolio imho, because they still have a somewhat attractive payout, but have a beta of less than 1, so they in essence, help reduce the kind of high portfolio beta one can end up with in a high yielding portfolio.

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They're utility as a beta hedge one could say is only eclipsed by a somewhat more expensive investment(5x), offered by Nuveen which is simillarly concerned with high yielding bond and or muni's which is around 15 dollars and has an attractive yield, and a beta of .4, which is really even more effective in bringing a high yield beta which could scare away some 1-dimensional analysts, and which in-turn give on the ability to sleep extra soundly, if not all the time, while making a constant dividend income that is disproportionately large relative to one AUM, or in this case, assets personally invested, or whatever. Unfortunately, it looks as though the nuveen investments price was a little ruffled today, but I'm pretty sure its dividend would still make up for it, even if inexplicably the QE upward momentum somehow fizzled out, and stocks remained at this level into the foreseeable future.

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If we're looking at the movie-theatre fire moment's beginnings than I guess savvy portfolio construction is a little irrelevant as people might have to get out of things eventually at "fire sale prices". Either way, I was happy to see that my happy hedges had survived the forest fire, and that the little family of credit suisse-hedge hogs had gone on to succeed in their little woodland creature life irregardless of the spreading flames sweeping through their neck of the woods.