Market Activity, Economic Turmoil and SL

How do you think recent turmoil on the stock markets and the world economy will affect SL, if at all?
Will personal losses have repercussions on your activities in sl?
I don't intend to alter or decrease my own activity or spending habits, but I think this may prove to be an interesting year on sl.
Any thoughts on this?

My Real Life will always take precedence over my Second Life. Time will tell how it will effect my activities in any virtual endeavers.

I'm sure some people will be altering their habits, based upon their circunmstances. I won't much, I voluntarily made myself unemplyed at the beginning of the summer, setting myself up to where I can finsih out the year without much worry, and recent events haven't changed that . But I imagne a lot of people may have to divert money they would spend on SL to other mor important things. Also it may make some spend more time in SL as their primary source of entertainment, instead of going out, using gas etc.

money is safe and i do what i normally do

but...

when the bubble has totally collapsed, i`ll be buying stock off the street to put aside for a long time and laugh the neighbourhood awake when cashing out

My friend was renting this low cost place for new residents that had been around
for a while they just abruptly sold all of their sims because they lost their
retirement and were quitting SL so they focus on getting new 2nd jobs to
get there retirement funds back in order.
A friend is in process of selling her land too because she lost her retirement.
There will probably be more downsizing in sims, and land holdings, people
needing to take on second jobs to get their retirement funds back some
may leave SL.
How it effects me?
I don't have one of my friends living next door any more.

If anything, my inworld estate has been getting stronger during this whole episode. Land list starting to stretch out pretty good again too.

Sure, some residents have been hit by the economic conditions. But many more are coming in, and in a big way. At least for the last few weeks.

but you have made it very clear on many occasions that you have a backup in place so having land with you is kind of a secure thing while on the rest of the grid it is unknown

It will only effect my SL spending if I should lose my job. Then I'd probably have to sacrifice my cable service entirely. I'm already living fairly green (other than spending gobs of energy keeping my avatars alive on the SL servers). I ride a bike as much as possible, take a train in to work, rarely eat out. Much of my entertainment is free or nearly so. Besides SL, I like to read, listen to and study music, create artwork. I'd be willing to bet a lot of this describes much of the SL population.

Because the Australian dollar is tanking so bad in comparison to the US dollar, I will probably give up my land next month.

A couple of months ago, my $US40 tier cost me about $AUD42. Next month, it will cost me $AUD58

I've spent very little in SL as far as actual money out of my pocket. I've bought $L twice. The rest I've made in world. I don't own a sim, I rent and I don't plan to go premium until the incentives for doing so improve.

The current and future state of the economy won't much affect my spending in SL. One of the last things to go before food for my family will be my internet connection and considering that I can and do create almost anything that I need in world barring clothing, I don't see where my in world spending will be affected. Renting land might get slim and spensive though and there's always the chance that those you rent from might have to cut their SL cost by letting go of a sim you may rent on. There is where I would be affected.

I carry about three months reserves, but that's not terribly uncommon. I'm pretty sure that's what Incanus does too, or just about any land baron that takes the business seriously.

Some estates, such as the Confederation of Democratic Simulators, will even carry *more* - in fact, ridiculously under-using their capital but rock, rock, rock solid. This is more of a side effect of their slow growth pattern.

Nothing wrong with growing slow, of course. So if you only roll out four regions in 3,5 years, your cash might build waaaay up - as opposed to someone who rolled out forty-four regions in 2.5 years.

The real magic is this: carry enough tier reserves such that you can react. Say you need to down-convert or shrink your estate in tough times, you'll need time to do that. Forty four regions is a lot to transform, but three months is a lot of time. And that would be at zero occupancy. If occupancy went to say, a more realistic 60% in a very, very serious downturn - I'd still have years before I really *had* to do anything. I'd not make money, but I'd also not be pulled under for a loooong time. Haven't ever seen anything close to that, but am prepared.

Why so conservative? Land barons don't have the ability to do funky accounting like Wall Street or the government - tier is due every month, no two ways about it

A final comment - I think you'll see a lot of SL profit-taking before the end of 2008. Why? Simply this: which direction do you think United States taxes will go in 2009? The election year will be over, the global financial issues will be with us for a long time by then, and it will really be time to pay the piper.

I'd guess that after taxes, $L 1 million cashed out a minute before midnight 31 Dec 2008 will be worth more than the same thing cashed out at 12:01am, 1 Jan 2009.

My activities in SL earn a small profit, so if anything, the current economic woes mean I'll be working more inside SL, trying to pick up some extra spending money.

As a non-business person in SL and really, primarily, using SL as an entertainment platform, I have had to tier down and also drop one account from premium to basic.

While I was comfortable paying for my half sim tier, I am now down to the 1/8 region level and should be able to hold there.

Living in the northeast US and having the prices for fuel oil for heating nearly double over last year has been something of a shock to the bank account.

I probably won't be spending as much in world as I have but I don't plan on cutting my time in world by any significant amount.

I think another reason why we may see some large scale cash outs on the Lindex is the US stock market. Not because people are losing so much now, but because there is so much opportunity out there now. Barring something on the order of the Great Depression (which happened in large part because of the lack of the FDIC insurance that's in place now), the market will be significantly higher a year from now. It may go down more from here, but a year from now we'll look back and be amazed at how cheap it got.

As far as the SL economy goes, according to the monthly statistics, the past 6 months have been great for SL while the RL economy has completely sucked. Every group in the PMLF table is up significantly from 6 months ago. Most RL corporations would beat their mom in the head with a shovel for that kind of growth.

I'm back to not having enough large mainland parcels and having to turn people away. We have had our economic crises here with the gambling and bank bans and we came through them a whole lot better than RL

If I have to tighten up on my "fun" spending, then I would likely be spending more time in SL because it is far cheaper to be inworld than to be out at a bar or eating at a restaurant or shopping in RL or even many of my outdoor recreational activities -- unless I had to work more, that is.

Thats not true of everyone though.

A lot of people seem to need to spend GOBS of money in Second Life to enjoy it.

Of course those people usually burn out within a few months anyway.

True. The majority of my enjoyment in SL comes from exploring, doing many hunts, chasing down decent freebies so that I can explode my inventory faster, and chatting/dancing with friends -- and none of that costs me much at all.

RL dinners and bars cost me an absolute fortune. I can play in SL for many months on the money of one RL dinner/drinks out -- but then when we go out to dinner, we usually go costly.

Doing nicely and under the radar of the crash going on around me. and in sl i work and work and work, which is my fun.

This might be true for some, but not for everyone. Many sim owners do this as a hobby, and are not going to fold under any SL circumstances. Some could "bail out" their tier at any time, for years. Now that's funky accounting on par with the Feds and Wall Steet.

I'm not too concerned about the SL customer base, and their spending habits in this economic crisis. As Ciaran pointed out, business actually seems better now. Spending Lindens for fun in SL is more attractive than spending whole dollars out in RL, when dollars get tighter.

I'm far more concerned about the long term stability of Linden Lab. How will they fare through a world-wide stock market crash and potential recession? Holy cats, there are companies out there that have been around for 100 years that have gone bankrupt. In short, I have confidence in the SL marketplace, but fear for the SL universe itself.

--Avion

I might reduce my landholding to cut my tier if I have to, but no pressing need at the moment.