There are many very serious people with trillions of dollars that take the stock market very seriously. They work extremely hard to find ways to produce exceptional gains but the truth is that the best way to navigate the market in the shorter term is to treat it like a glorified game.
This is not a new insight. Some very intelligent people have already figured this out. One of the most success fund managers in history is Edward Thorp, who wrote a book called 'Beat the Dealer', which proved mathematically that the house advantage in blackjack could be overcome with a card counting strategy. Over the year he devised many different 'game' based strategies to the market and produced 20% annual returns over 30 years mainly trading options.
The only stock that Thorp owns for the long term is Berkshire Hathaway (BRK.A) (BRK.B) . He doesn't try to compete against the likes of Warren Buffett because it isn't worth the time. He made his money looking at the stock market in a very different way.
In recent years the gaming approach has been take a step further with computer algorithms that dominate daily volume and use a variety of mathematical and other strategies to gain an edge. This is what moves the market day to day but you would never know it from the news coverage.
If you listen to the vast majority of financial media you would have no idea that the great bulk of money trading the market each day really doesn't care about all the news that they cover. A fundamental discussion of an individual stock may have appeal to longer term investors but it provides no edge to the traders navigating the market looking for a way to gain an advantage.
For the most part the fundamental discussions of big cap stocks provide some comfort to those that already own the stock. It can also be of interest to those that enjoy the stories but to make money dealing in these stocks in shorter time frames you need to apply game theory.
The current weak market provides a very good illustration of how focusing on fundamental investing will do little help to you. The great bulk of stocks in the market have been struggling lately. There are a few that have been doing well, like Roku (ROKU) or Beyond Meat (BYND) , but the main reason they do well isn't because of superior valuations but because they are working for those that use gaming strategy. The reason they are bought and are trending higher is because there is a sufficient number of other 'gamers' that are attracted to the action. That creates movement and movement creates opportunity.
The important point here is that the only way to profit from the market in the short term is to use some form of game theory. Fundamentals only matter in so far as that other 'players' may recognize them as being attractive in the very short term. The appeal of superior fundamentals quickly morphs into a shift in price action which attracts trading attention and then the game is on.
Most market participants view the stock market as an exercise in finding good quality stocks that will go up substantially over the longer term. Many great fortunes have been build that way and it is actually requires very little work if you are able to identify the small number of stocks that will perform well for many decades.
If you can't find great stocks at an early point like Warren Buffett did, then the alternative is to use game theory like Thorp did for so long. Rather than simply wait and hope that your carefully selected stocks will perform, you make fundamental evaluation a secondary matter and focus first and foremost on price action.
Trading is all about finding an approach to the 'game' of the stock market that works. The folks in the news media want you to believe that it is the coverage of individual stocks and the economic news that will help you to navigate but that is not true. It is the application of game strategy that will help you the most. It is important to understand the economic issues and news that is driving emotions because that will help determine your game strategy but the news is just a secondary factor.
In the business media, markets that are going up are 'good' and those that are going down are 'bad'. In a gaming approach to the market that is never true. Movement in the market always provides some sort of new opportunity. Devising a strategy to benefit from it is what gamers do.
Don't handicap yourself by thinking about the stock market like they taught in school or the way that the news media presents it. The market is an endlessly fascinating opportunity to play a very lucrative game. You will be playing against some of the smartest people in the world and it will be extremely frustrating but you'll appreciate the challenge and think about ways to gain an edge. It isn't easy but it can be not only profitable but more fun than Fortnite.
Be an investor for the long term but be a gamer in the short term.
