Friday, September 6, 2013

Real life is more interesting than video games

I love a good video game. I prefer an RPG or strategy game over a first-person shooter, usually puzzle games or games where resource management is prominent. For around two years I was really into World of Warcraft: in my opinion, still the finest MMO out there.

But I haven't been playing a lot of video games lately. In fact I've hardly played a video game in the past month, maybe longer. I noticed this recently and it has me interested, because as I mentioned, I do really like video games.

I have a theory about why this is. Video games haven't been holding my interest because real life is way more interesting. This seems obvious now that I've typed it out, but it hasn't felt obvious for much of my life. When you're a kid there are a lot of things you can't do, so video games expand your possibilities. Even now that I'm an adult, I can't fly space ships or cast magic spells. I think I'll always be up for a bit of escapism, but for now, here are the things that are really captivating my attention.

I love the pure resource management of allocating my cash. Once I paid off my student loans the cash had to go somewhere, and in fact, it's been going a lot of different somewheres. I have different savings and checking accounts across different banks, each of which has a different login. I have a Treasury Direct account for government bonds. I have a Schwab account for stocks and Lending Club for peer-to-peer notes. And there's Mint that aggregates everything in a slick video game-like interface. Every month there's new cash to play with. After I pay off my credit cards I have to decide where to put the rest of my money. Do I add more to my fledgling emergency fund? How much can I invest? Has my risk tolerance and time horizon changed since last paycheck? Do I feel comfortable locking up cash for at least three years in Lending Club notes, or a year with I-bonds, or do I want to sit on the cash for a little longer? Are there any attractive companies that I really want to own? These are fun questions for me. It's even more compelling because now I have skin in the game. If I mess up in a video game I can restore from a save point, or walk away entirely. With my money I have to live with my mistakes and learn from them.

Then there's my mystery speculating opportunity I haven't told you about yet. I'm still not ready, but I'll spill a little more: I'm buying things up on eBay, and planning to sit on them and sell them in a few years for a profit. This activity of trawling eBay for "deals" is highly addictive. I did something similar, albeit quite different, when I was playing World of Warcraft (WoW). WoW has an in-game auction house (for in-game currency, not real money), and there are iPhone and Android apps to access it. I spent a lot of time, and had a lot of fun, and made a lot of (fake) money by buying and selling different commodities on the market. I realized after a while that real value wasn't in farming a particular good and selling it: the value was identifying significant mismatches between supply and demand and capitalizing on them. I would pick a few goods and learn about them, like what materials go into making them, and what materials can they be made into. This was to try to identify goods with high (or at least relatively stable) demand. Then I made it my job to buy low and sell high, and to always try to keep the market clearing. Let me give you an example. In WoW's Mists of Pandaria expansion, they added cooking professions and different types of food that you needed to level up your cooking. Food was farmed by killing different mobs or fishing in different areas. I noticed that one type of meat, I think it was called "raw crocolisk belly" or something like that, was always scarce on the auction house. As any student of economics should be able to tell you, this means the price is too low! I farmed some, but more importantly, I bought all I could and re-listed it at a much higher price. I made a killing by ensuring a steady supply of this in-game commodity.

As you can probably surmise from my fevered retelling of my exploits, I enjoyed trading on the WoW auction house a whole lot (and, I should mention, I made a ton of gold doing it). I'm happy that I've found a somewhat similar opportunity, this time for real life. My game plan is to buy a particular product while supply is high, and then sell it years later at a tidy profit when the supply is low. I promise I'll fill you in soon.

I've been getting back into fundamental analysis of stocks. This type of analysis is the hardest puzzle game I can think of. It's also much more satisfying when the end result is an ever-growing stash of cash and investments, instead of completing a contrived puzzle or getting some empty achievement. Dividend Mantra has me jealous, as usual, of all the awesome companies he's part owner of, some of which I hadn't even heard of before he blogged about them. From watching him over the past year or two, I have come to understand how much of a long game it is, playing with these investments. This isn't a game of instant gratification. It's taken him years, but he's built his own little mutual fund that's covering somewhere around 15% of his expenses. It looks incredibly satisfying. Not least of all, he knows and loves every company he owns — he hand-picked them! A market crash here or an economic downturn there isn't going to harm him, and it's because of his own initiative and ingenuity. Contrast that with what happens in every MMO: a new expansion comes out, your gear is worthless, you spend countless hours getting back to where you were, so you can complete yet another dungeon, so you can have it taken away from you again. All for the thrill of the chase. It seems much more satisfying to me both to enjoy the chase, and to enjoy where the chase is taking me.


  1. I really don't like your speculative investing. High Yield, always comes with higher risk.

    I like to invest in something where I know where to money comes from. I invested 200€ in Auxmoney (like Lending Club) and already regret it, even though I didn't lose anything, yet.

    Sure you might get lucky and earn a furtune, just be aware that you might lose money and get behind in our little race :P

    Also have you seen my update?

    1. Hey, sorry for the late reply. I totally hear you. I'm not crazy about speculation either -- in theory at least. Sometimes I just get carried away. In the end I'm okay with my decisions because this is a learning process. I'm only 26, and lessons I learn now will pay dividends for the rest of my life.

      I did see your update (you last commented as Half-Borg, right?). So far so good. Keep it up!

  2. I had the same realization starting a few years ago. I actually went from video games to sewing and chickens to mostly real estate and finance now.

    I realized that you can make things in the real world that have financial and emotional value to you. I'm still into my chickens but I have got that routine figured out. I prefer to spend my spare time having real experiences or learning/doing something that will result in value to me.

    1. I love that you made chickens a part of your life. That is excellent.

      I definitely agree that I enjoy my spare time the most when I feel like I'm learning or doing something valuable. I'll have to write about how I've been doing stock research for the past month or so.