DISCLAIMER: Mike is not a certified stock analyst; he's a self-taught stock trader, and this is not to be considered official stock market advice. This post is only meant to shed insight on how he personally invests. If you read the legal disclaimer of the website, you'll know and fully acknowledge that if you were to take inspiration from anything he writes on this website, especially what to do with money, you are doing so at your own risk. Mike is not to be held liable or responsible for any negative consequences that you may or may not suffer from taking what you read below as official advice.
There Are Many Ways To Be A Professional Video-Gamer
There are many different ways to become a pro-gamer. I define an amateur gamer as anyone who brings in at least one penny of profit from their experience with gaming; I define a professional gamer as anyone who brings in enough money to live off of their experience with games.
One way is to start a YouTube channel, like FightinCowboy713's; you get paid to play video-games in a way that makes for great online content, which you then make money from via advertising and sponsorships.
A second way is to become a test gamer for developers.
A third way is to just get so ridiculously good at a specific game, such as Call Of Duty or Starcraft, that you make money in competitions, directly off of what your pure skill can win alone.
I used to be a Starcraft amateur gamer; I wouldn't call myself pro, because I didn't actually fly to Korea and cut any huge contracts, but I made some money gaming in small-time competitions, and ranked as one of the top-ranked players on the east coast of America. In order to reach that level of skill, I had to dedicate over 10 hours per day gaming. These were during my teen years, so, forget homework and good grades.
The economy at the time was in a recession, recovering from the wars encouraged by Bush and the beginning of Obama's reign as president. This means that jobs teenagers would usually get were scarce, and my family was particularly poor. Thus, I financially sustained myself by doing other people's homework for them (since there was no money in doing my own), and fighting in the streets for money.
However, at about the age of 17, I reached a fork in the road: either I was going to continue Starcraft as a legitimate career and go all the way to Korea (which was a finite career, since the popularity of games rises and falls), or I could start to get serious about something a bit more lasting. At this point, because of my grades, I wasn't a suitable candidate for getting into a good college, and my family couldn't even afford a community college at the time, so the only way to progress forward into becoming a member of society that didn't involve working a dead-end job at some restaurant somewhere forever was to join the military.
Even as a young lad, I was smart enough to foresee this fork in the road years before I decided to eschew my homework; I was intrinsically motivated to go into the military anyway because of how games like Metal Gear Solid, and movies like TopGun inspired me to. So, I would have joined, even if my grades were Harvard-worthy. I just wanted to do it, and knowing that the military was there, I cared even less about my grades.
This was a childish reason, I know, to enlist in the military because a movie or video-game inspired me to, but it is a reason nonetheless, and people have enlisted for worse.
It wasn't until I was in the Middle East did I realize that there's yet another way to make money as a gamer: the stock market.
Games don't just appear out of thin air; you can't just pluck them from trees. Entire teams of very intelligent, educated people with financial backers are needed for the creation of a game. What gamers see and play with is just a final product; there's actually so much more that goes on behind the scenes in order to produce what we buy and play on our television screens and computer monitors.
When Metal Gear Solid 4 came out, I was in Manama, Bahrain.
The epiphany came to me while just researching information about the game, before it was released, because I was just such a fanboy.
At some point, I read about Konami and its share prices. You can see the icon for Konami at the bottom right of the picture to the left.
That's when it hit me: I could invest in Konami before the game was released (because I knew beyond the shadow of any doubt that it was going to be a bestseller), and then sell my shares when the price of Konami's stock price spikes, for profit.
You can potentially make, literally, millions and billions of dollars with this strategy (over time, of course) if you continually reinvest your money (instead of spending it) for each game that you know will sell well for each individual game developer that you follow.
So, according to the technical denotations of what it means to buy stock, I technically owned a small percentage of Konami, relatively around the time of Metal Gear Solid 4's release. I made about $300 in profit. I could have made far more if I had the capital at the time to risk, but it was a wonderful experiment that proved true, which I now personally use as a part of my portfolio development strategy. But it's not an exact science. If you were to look up the specific date of when the game was released, you won't see a massively sharp spike; you'll see smaller spikes the closer you zoom into the data, which is what is very difficult to trace and time correctly, especially when you're on a limited Internet connection in the Middle East. That's the challenge of day traders, but I wouldn't necessarily consider myself a day trader.
I wouldn't necessarily consider myself a day trader because I don't close out my stocks on a day-to-day basis; I get info about a game months (or even years) before it's released and, with enough info, I buy-in early. Then I set a stop-limit for myself to exit just as early, to avoid any losses. Ergo, this is not a quick way to make money; in order to play the stock market game correctly, I have to be in it for the medium to long-term, which is why it's essential to set a quality of life cap, and only invest money that I can afford to lose, that I can say goodbye to for three, six, twelve, twenty-four months (or more) at a time.
So, I set aside a percentage of the money that I bring in on a regular basis and transfer it to my stock account.
In order to be good at this, in this specific industry, I feel as if I need to game. This keeps my investment instincts sharp, which, to me, counts as being an unorthodox kind of pro-gamer.
This creates the demand for me to go to events like E3, and to get Beta keys, and such, in order to have a more accurate understanding of how well a game is going to sell before the mass market does, and in combination with the knowledge that I gained from my business degree in Internet marketing, I can mentally analyze how each company is marketing its products, and understand the digital metrics of how well their advertising is doing on social media, the links that they're building on search engines, etc. to know where best to put my money.
This makes investing in games, with all of this knowledge and calculation, more akin to card-counting at blackjack, rather than gambling. But it requires a ton of research to perform accurately, which I've done, and continue to do.
Breaking The Investment Analytics In Conversation
So, my friend and I were talking about what was, at the time, the new Berserk game coming out. Berserk was originally a Japanese manga that's gained a massive, albeit underground, following over the past two decades. How I invest in stocks can be summed up by this conversation between he and I.
Me -- "It looks like a repetitive hack-and-slash, like what we've already seen before with Dynasty Warriors, but with upgraded graphics; nonetheless, I'd still buy the game itself as a consumer simply because I'm a Berserk fan, but I wouldn't necessarily invest money in it expecting a huge return as an investor. It looks like a niche game."
Him -- "Well considering that Berserk has been going on since 1988 and they just revamped it not too long ago, it has a fantastic storyline so I think it'll pan out pretty well."
Me -- "Oh, I have no doubt that it'll sell well...within the realm of its target audience, but it's got a mature rating, repetitive mechanics, and the fact that its developer (Koei) has a stock price of 2,032.00 JPY ($19.41), I don't think that the value of the company would rise enough from the release of this game past what it is to make considerable profit from just this one release.
From what I can see, Koei has an impressive 5-year history in the stock market with a stock value definitely on the incline, but you'd need about $97,000 to buy into this game at 5,000 shares.
I mean, you could technically just pay $19 for one share, but the commission price of buying and selling just one share would be approximately $14. If the value of the share goes up 1 point, then you'll have made one dollar, which means that you'll have actually lost $13.
If you're looking to do what I'm doing, you have to go into it with the mindset that you're going to buy several thousand shares. The more shares at the beginning, the less you need the company's value to go up in order to make a profit.
And vice-versa. The fewer shares you buy, the higher you're going to need the company's stock value to go up in order to make any profit. It's about balancing, in your mind, how much you think the stock price is going to raise, over how much amount of time, based on their 5- and 10-year history.
I try to follow what I've created to be a 5,000 minimum buy-in rule. That's absolutely not a legal requirement; I just set that standard for myself, because I'm more of a bearish investor. When I invest, I go into it with the mindset that the stock is only going to raise 1 to 5 points. I don't gamble with betting all of my money on the next Apple.
I set an investment budget for myself, money that I can totally afford to lose. Let's say: $10,000 (which may absolutely be different for you; I know for most people that's actually a ton of money, but the same logic could even apply with an amount as little as $1; it's relative to the price of the stock and how much you have to invest. $10,000 is just a random pick from my head. You don't need that much to get started). What company can I buy 5,000 shares of with merely $10,000? Doing the math, this means that the price of the share must be approximately $2.00(+/-).
I then take the time to research each individual company one...by....one...like what games they've produced to what markets over the past 5 to 10 years and how that's made their stock prices jump and when.
When I find what my analytical judgment tells me to be the right one, I put my money in.
Then, all I need is the stock to go up 1 point in order to make a profit of $5,000.
The stock going up 1 point is a lot more likely and realistic than buying 495 stocks (for instance) for only $1,000, but needing the company to go up 10 whole points to make the same profit.
The company would need to invent the next computer or some shit for that to happen.
While Koei's stock is definitely going to go up a point or two from the release of this game, for your investment to not be a waste of time, you're going to need to buy several thousand at the current price that they're selling at: $19.41.
5000 shares at $19.41 each is $97,050.
If the stock goes up one point on the release of this game, you'll make a profit of $5,000.
Each point is how much profit you'll make per share. If you buy 5,000 shares, and it goes up 1 point, you'll make a profit of $5,000.
If you buy 10,000 shares, and it goes up 1 point, you'll make a profit of $10,000.
In order to buy 10,000 shares of Koei in order to profit from the release of this game, I'd need $194,100, for a 1-point exit (by "exit" I mean to pull out by selling your shares).
In order to make any considerable amount of money with this company upon the release of this specific game, it's not within my budget, nor is it worth it at this point in time for me.
I could bet for a 2- or a 3-, 4-, or 5-, point exit , but their stock doesn't seem that volatile, when looking at their 5-year history. Their stock shows gradual increase over years.
This means that, I'd have to buy in at that much money now, NOT sell my shares when they release Berserk...and just hope that the stock continues to rise at the rate that it's at...to sell them two to three+ years later.
To me...that's gambling, not card-counting...because anything could happen to the company 3+ years from now...and you could lose everything."
Those are companies that you can follow online; they have employees, investors, and many of them are publicly traded. What I do is monitor the upcoming video-game releases and rely on my 27 years of experience as a gamer to judge how well a game for any given company is going to sell.
Like the conversation above, my decision-making is not about what I personally like; it's about what I know will sell. I, as an individual, am only part of a small demographic group with very niche tastes; you'll virtually never catch someone like me playing the new Taylor Swift smartphone game coming out, but I know that it will sell well, even if I'm not a personal fan.
So, I research the company that's making the variable game, and if I think the stock is going to rise in a way that I can reasonably profit from upon its release, I buy into that company and hold shares until the release, when the stock temporarily spikes. Then I sell my shares for profit. And voilà.
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