Chris Haroun explains how to use game theory in investing: find stocks that will become popular later, not ones already loved. He calls the trigger for a stock's rise a catalyst. Lionsgate surged when it announced the Hunger Games movies. Take-Two Interactive is expected to rally before a Grand Theft Auto VI announcement.
Sam wrote, do you use game theory in business and investing? Absolutely. Absolutely. Now, Wayne Gretzky, he said that he wasn't successful because he skates where the puck is. Wayne Gretzky said he was successful because he skates where the puck is going to be. What does that mean for investing? Well, that means that we should only invest in stocks that people are going to like. Okay, so don't invest in companies everybody already loves because there aren't that many incremental investors to push it higher. So how do you invest in companies that people are going to like? Well, what the hedge fund industry does and what I used to do in the hedge fund industry is we look at catalysts. Okay? Catalyst means a reason for a stock to go up or down. So, for example, back in 2012, we invested in Lionsgate film LGF. And I read the first Hunger Game books. I remember in 2011. And in 2012, LGF, Lionsgate Film announced that they were going to be releasing several Hunger Games movies. And so those are catalysts. Those are reasons to get people excited. And so whenever a new movie came out for Hunger Games, they made four instead of the three books. Lionsgate film would go up a lot because that was a production company that made the movies. When it comes to software, the same thing works. So with Take two Ticker ttwo, it's the parent company that owns Rockstar Games and makes Grand Theft Auto, when they release GTA 6, the stock is going to rip to the upside. And so you want to be there before that. Now, obviously you can't have insider information about it, but we do know that eventually, likely within the next 12 months, take two ticker ttwo is going to announce that they are going to be releasing GTA 6 and investors will get excited. So the bottom line is this. You want to skate to where the puck is going to be and only buy stocks that people are going to like by analyzing catalysts.
