There’s lot I’ve learned and realized about trading from playing a game.
Most people think that this is not really possible, I mean it’s a game, what type of valuable knowledge could you get from a game? And a game from my smartphone at that.
It’s a game called Adventure Capitalist. (iOS, Android) In this game you start with a lemonade stand and you press the button and you start to make money (wish it was that easy) and as you press the button the progress bar runs across the screen and when it reaches the end you get a payout. As you get paid you have the option to buy more lemonade stands. It increases the amount of cash you get plus speeds up the progress bar. As you make more and more money you have the ability to hire a manager and then the bar will start to go across on its own and you no longer have to press the button.
However, you can continue to buy more lemonade stands or you can buy a newspaper stand and the same goes for it as the lemon stand. It keeps going and going until you end up being able to buy an oil company. I’m still playing it as I write this and so far I’ve made a few hundred quadrillion dollars. It’s a pretty neat game that gets the brain gears turning a little bit in the respect of what I’m getting ready to share.
So what does a game on my phone have to do with trading? Well think about it like this, if you go back to above where it starts with the lemonade stand, it was cheap to get started and you couldn’t buy the other businesses until you made enough from the other. So what if that same strategy was used to buy stocks?
Start with the cheaper stocks that are growth stocks, cheap as in price to book or in price to earnings. Stay with them to collect dividends and use that money to buy more stock either of the same stock or something different like stock in a bigger, better company. Just don’t start with the penny stocks.
I’m not saying follow this convention completely, it’s just an idea that I kind of hit me while I was messing around with it. I think it helps change the mindset and maybe eliminate some of the fear that’s associated with investing. Not saying you won’t lose money, but it’ll help keep your mind on the bigger picture and not worry about losses. Your net worth doesn’t come from how much cash you have, that’s one important thing to keep in mind.