Calling Gamers: Time to Trade and Level-Up

Ever gone from playing alongside a tutorial to breezing through that final boss battle in a game? What if I told you the skills you hone playing online games are quite transferable to investing?

According to Finance Magnates, gamers have turned out to be better investors than your average Joe. Many gamers are on the cutting edge of tech, and with the tech sector’s recent performance — it’s not much of a surprise.

It’s not just the exposure that automatically makes you a good investor, the skill required in competitive gaming translates to better decision-making overall.

Let’s break it down, so you’ll understand why gamers often make great investors, and how you can apply your prowess to level up your trading in the stock market.

 Strategy is Everything

Remember that adrenaline rush despite the initial feeling of being lost on your first play-through but slowly everything falls into place? You now understand what works and what doesn’t, you map out an idea of how to survive and thrive.

Trading for the first time gives you that same feeling. Initially, it may seem like that scary boss fight in a dungeon, but once you learn the ropes — it can be a wild adrenaline high. Crafting a winning strategy may take time, but just like grinding to get that next power spike, you’ve got to put the hours in.

Allocating stat points to your character in an RPG or crafting a diversified portfolio, the objective is one and the same. Analyze what’s in front of you, assess the risk, and make the best possible decision.

Risk and Reward

Every gamer knows the thrill of a high-stakes mission — take that risk for a shot at that epic loot! Similarly, in the stock market, higher risks can lead to greater rewards.

Companies with a smaller market cap have the potential for bigger price swings. Of course, smaller companies come without blazing track records and thus, higher risk. But if you do your research and put your faith in the right businesses, you could be shopping for diamonds in the bargain bin.

It's extremely risky to put your money on just small-cap stocks, so blending your strategies for a well-balanced portfolio is crucial. Just like managing your health bar in a game, understanding how much you're willing to risk is essential for long-term success.

The Grind: Research and Leveling Up

Knowledge is your superpower in this arena. How do you get better at PvP or RPG games? You research builds, gear, and strategies. In trading, doing your homework is even more vital.

Learn the patterns that drive businesses, analyze company performance, look at economic indicators, and keep an eye on market trends. The more you know, the better your chances of leveling up your investments and making winning trades.

Adapt and Overcome

Have you ever stumbled onto a new area, only to be one cutscene away and (queue the boss music) encounter an S-tier threat? Well, the market does that to you sometimes. But volatility is part of the game!

Know when to cut your losses and when to ride out the storm. Staying adaptive and adjusting your strategy based on real-time data can be the difference between winning and losing.

The Gaming Industry

According to Motley Fool, the video game industry is a large, fast-growing sector that still has significant long-term expansion potential. It is valued at USD57.2 billion -- more than the American film, music, and book-publishing industries combined. While performance for leading companies in the space tends to be hit-dependent and somewhat cyclical, the future looks bright for the video game industry.

In 2023,

• American families spent an average of USD435 on video games (including consoles and accessories) in 2023.
• The top 20% of earners spend 2.6 times as much on entertainment products (including video games) as the average household.
• Married couples with kids spend almost 50% more on entertainment products (including video games) than the average household.

Based on these numbers and the fact that you’ve made it this far in the article, we’re going to take a wild guess: gaming is something you’re passionate about. So why not turn that passion into real cash?

 How? Take for example Nvidia.

If you had invested RM880 in Nvidia’s stock at the start of 2024, those shares would be worth RM2,574[1] today (+203% YTD). Of course, hindsight is always 20/20.

 The gaming industry will be here for the long run, so check out these companies behind the scenes of the most familiar games:

 Take-Two Interactive (NASDAQ: TTWO)

Known for flagship franchises like Grand Theft Auto, Red Dead Redemption, and NBA 2K.

Electronic Arts (NASDAQ: EA)

Publisher of popular titles like FIFA (now EA Sports FC), Madden NFL, and The Sims. It has a significant foothold in sports and casual gaming.

Roblox Corp (NYSE: RBLX)

Roblox thrives on the younger generation and social gaming trends. The unique platform allows users to program and play games created by themselves or other users.

Sony Group (NYSE: SONY)

If you're a gamer, you've probably owned a PlayStation, one of the world's most popular gaming consoles. Sony’s gaming division is a key profit driver.

Join the Community
When you game, you connect with others, whether through multiplayer modes or forums. In the stock market, we’re all playing the same game together.

Join communities, share insights, and learn from fellow investors. There’s a wealth of knowledge out there. Engaging with others and reading analysis will take your trading to the next level.

 So, whether you’re raiding dungeons or analyzing stock charts, remember that the skills you’ve already sharpened can give you that competitive edge in the stock market.

Ready to trade? Let’s go!

[1] Nvidia 5-year stock performance taken as of closing on 5 November, 2024