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The SWIFT Sensation and the Balloting Experience
"While there are moments when I feel insecure or overwhelmed by the vastness of the music industry, I remind myself that money and success do not define my worth as an artist or as a person." - Taylor Swift
The SWIFT Sensation and the Balloting Experience
One of the latest sensations in Singapore for this month is the panic rush for the Taylor Swift concert tickets, whereby Singapore is chosen as an exclusive destination for talented artistes to host their music concerts. As a strategic and safe location between the East and the West, Singapore has gained a reputation for the organization and hosting of multiple music concerts for artistes such as BlackPink, Jacky Leung, and many others for the foreseeable future. As a fellow Swiftie whom grew up listening to her songs since my JC days, the music scalping market particularly caught my attention and I decided to do a short writeup about it.
The economics of the concert ticket industry is erringly similar to how an investment bank conducts an IPO.
1) In an investment bank, the underwriters will firstly look at market sentiment and dress up their candidate so that it will be in its prime form in public speaking and image branding before it will make a public appearance.
2) Secondly, the underwriters of the IPO will initially do a sentiment analysis by leaking selective information to the public / interested parties to gauge the interest and appetite of public investors towards the company.
3) Thirdly, the underwriters will work towards (pricing) the company by making an estimate / projection of its future performance and generating hype. As the number of tickers / shares are not limited by absolute constraints, the underwriter can choose to print as many tickets as they can, while setting an appropriate price / differentiated price tiers to generate artificial hype, while balancing affordability and exclusivity.
4) Fourthly, exclusive tickets could be distributed through investment banks (exclusive distributors like ticketmaster) via (Private placements) to exclusive / high Net Worth clients. Separately, the mass public will have to do a public balloting (IPO application) just to have a chance to obtain an allocation of the shares.
5) Once the tickets are allocated, a secondary (scalping) market will be created by scalpers who intend to generate profits off the hype of this artificial scarcity and (IPO Pop). As there will be a subset of people who will demand the tickets for its intangible values at all costs, scalpers can profit off this anomaly in the short term off the hype and sentiment! In the professional scalper scene, there are bots / professional scalpers (hedge fund equivalents) who utilize high speed execution algos, and low latency internet to have an advantage to register for the tickets, and to sell them off to parties whom are less price sensitive.
As I did not manage to get an allocation of the tickets I balloted for it this time round, I just have to be content with professing myself as part of the (SWIFT Alliance), the system I work with on a daily basis. I also learnt a lot from the balloting experience and appreciated the animal spirits in financial markets and ticketing market. This also ignited my interest in exploring companies such as Universal Music and BigHit, which controls the (money printer) and considerable pricing power in ticket creation / distribution space.
Personal Updates for the month of July
I did not make any capital allocation decisions as I plan to increase my cash allocation for potential larger expenses for the next coming months. The increased interest rate environment also made Fixed deposits / SSB rates more attractive as a savings engine in the event I can ballot for a HDB for the next few years. The US market has recovered largely and the China markets seem to be signaling the end of the regulator crackdown in China, and I see no urgent need to allocate cash into the markets for now.
I am fortunate that I am able to join the investor group (with actual businessmen) from my Berkshire Trip and began attending their monthly sessions. I enjoyed learning about business insights from their operational experiences in running their businesses, and their investing experience in the equity markets. Notably, as they are from different industry groups ranging from technology, real estate, banking tech, FMCG, logistics etc, their insights of the competitive landscape and market trends in their respective industries are remarkable. The previous month discussion about Berkshire and this month discussion about Tencent also cleared out some of the blind spots I have on my portfolio holdings and how to better allocate capital to gain exposure to these companies.
I count myself blessed and fortunate that I managed to survive through the rough patch in my personal life for the past few months. I also gained a lot of new life experiences along the journey. Although the storm is hardly considered over, I strive to break away from the shadows / constraints I imposed myself in the past, and be a more positive and optimistic son, investor, cousin, friend and co-worker every single day! Until then, I will strive to be optimistic and cheerful as I work towards my life goals!
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