Strategy Games and the Stock Market

Strategy Games and the Stock Market

Image by ErikaWittlieb from Pixabay

I love monopoly.

Like many of you, I’ve played the game since childhood. Good memories. Sometimes the game lasts a day or two.

Monopoly teaches us that there is strategy in winning the game, but there is also a certain amount of luck or chance. Thus, the Chance and Community Chest cards, which can determine good fortune or bad luck.

The stock market, in my humble opinion, is no different than a strategy game. Strategy games can be a lot of fun, and so can the Stock Market. But like any game, you will lose some one day, and you’ll win some. The objective is to win more times than not.

And in the world of fast paced trading on computers, everything is just numbers. But the goal is to make the numbers go up instead of down. The strategy is to win. But, winning by applying the right amount of risk tolerance based on a planned strategy.

Worst case scenario: Betting your life savings on one single stock.

Overly safe scenario: Putting your hard earned savings into a regular savings account.

In the worst case scenario you could win supremely big, but at the same time your risk tolerance is zero, and you’re basically gambling. And you stand the chance of losing it all, if not losing a substantial portion of your savings.

In a regular savings account, the money is safer but it will appreciate very slowly. Institutional traders are actually taking your money and trading on the stock market. So either way, your money is being used to trade stocks.

Best case strategy: You probably want to invest in the 5 best performing stocks out there. Each stock will be from a different sector (banking, tech, healthcare, etc) and you practice diversification just in case you made a bad choice. And hopefully, in the long run, whatever losses you incurred gets ironed out over time. You may have bought a stock that was close to its 52 week high, so it’s a matter of time until it becomes profitable.

One of the strategies with investing in stocks or any investment vehicle, is to do your due dilligence. Do the research beforehand before even buying a stock. Check with the analysts to see what they say about a stock, professionals with a stellar reputation. So many options and resources online these days regarding the stock market.

Don’t fall for day traders who’ll teach you how to make money quickly. I don’t trust any of them and I have a sixth sense now for people like that… if it sounds too good to be true, it probably is too good to be true. I’ve been scammed once or twice, and learned some hard lessons. So, don’t trust all those advertisements on YouTube, etc.

There is no substitute for knowledge when it comes to investing in the stock market. And, at this point in time I would never trust my hard earned money to someone else. Too many Bernie Madoff’s out there who are more than happy to take your money.

Key strategy: Self-Knowledge

That is how you learn the game!

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randomguru

Portfolio Manager & Musician

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