eGaming investment: knowledge and wisdom
Numis Securities leisure research director Ivor Jones offers his definition of wisdom in the online gambling investment space. In his own idiosyncratic way...
“FATHER,” said handsome son, “how would you define the difference between knowledge and wisdom?”
I thought long and hard and replied “Knowledge, in the online gaming sector, is being aware that the companies are stuffed full of possible value.
“For example, organic revenue has proven much more economically sensitive than I expected before the recession. I know this means that there should be potential for upside surprise when economies recover.
“Furthermore I know that companies may choose to release cost and revenue synergies from M&A. I know regulators in many countries may regulate online gaming in such a way that the benefits of increased revenues and reduced marketing costs are more than enough to offset increased taxation.
“I know that online gaming is too often represented as simply a sub-set of the gaming market when, in fact, it is also part of the much larger ‘home entertainment’ market. And, being part of home entertainment, there are opportunities for companies astute enough to build on their core skills. However, wisdom is different,” I said to handsome son.
“Wisdom is being aware that positive industry trends should not make one positive about the prospects for all industry participants. Buy shares only in companies that can actually capture a recovery in organic growth, that have troubled to put foundations in place for expansion into newly-regulated markets, that have shown they can innovate with attractive products and that are ambitious to participate in M&A. That is wisdom”.
I shook the sleeping handsome son awake.
“You asked me ‘How would you define the difference between knowledge and wisdom’,” I said.
“I already know” he said “Knowledge is knowing that a tomato is a fruit, wisdom is not putting it in a fruit salad”.
And he slipped back off to sleep with a seraphic smile upon his lips.