I do not believe that I have ever written a finance article advocating the purchase of gaming stocks like Activision or Electronic Arts. It’s not that video games aren’t profitable—far from it, intellectual property that costs a few bucks to manufacture per disk and can be sold for $50 is a great way to make money while putting down a small amount of initial capital.
Instead, the challenge is sustainability. When Nestle sells a cookie, I can make intelligent guesses about how many cookies are going to be sold several years into the future. For the past century, the world consumes about 4.5% more cookies each year, and the Nestle Tollhouse usually sells 4% more cookies than the year previous. If someone is in the habit of buying 6-8 cookie rolls per year, that behavior is likely going to continue indefinitely. Through technological advances, boom and bust cycles, and the changing dietary preferences of Americans, it’s still pretty easy to figure out that people will be eating cookies ten years from now.