The stock market isn’t for everybody. Yet, for those who could know how to tinker with the system, it does offer some great potential and is greatly rewarding. It’s actually one of the reasons that gaming companies are intending to invest in the stock market.
Unfortunately, the learning curve does seem a tad too much for some of them, as they still are learning how to go about it. In fact, there are some companies like Winner who have been successful with it, and as a result, even offer Winner welcome promotions to its customers. However, on the large, the gaming community still does get its basics wrong when it comes to the stock market.
What is the Main Worry for Gaming Companies Investing in the Stock Market?
Volatility is a major factor of the stock market and one that you need to be wary of as an investor and trader. In a volatile market, the movements can be dramatic. Normally, people associate volatile markets with low returns and increased risks of losses. However, a volatile market can generate great returns. It’s something that gaming companies are looking to learn, yet.
Technically, volatility is defined as the measure of dispersion around average or mean return of security. If you understand the relationship between market volatility and returns, you will be able to take advantage of it. When the stock prices are bunched together, the standard deviation will be small. If prices are spread out, standard deviations are relatively large. Higher the standard deviation, the more dispersed the returns are and higher will the risk on your investment. Volatility creates the risk associated with the degree of dispersion of returns.
Trying to Get the Most from the Market performance.
The market performance also affects the volatility and returns. As the stock market rises, the volatility tends to decline, which in turns creates favourable returns. If the market falls, the volatility is increased, thus reducing the returns.
What does research say?
Gaming companies need to invest on strong research to get the best returns out of the stock market. Crestmont Research, for instance, examined the relationship between stock market and performance in 2011. They used an average range for per day to measure the volatility of S&P 500 index. Their research showed the higher the volatility higher will be the probability of market decline. With lower volatility, higher is the probability that the market will improve.
Impact on investors and what Gaming Companies can do.
The level of volatility has a direct impact on returns. For investors, they will have to watch the value of their portfolios for favorable returns and take necessary steps when the market is declining. As an investor, all you have to do is to keep analyzing the trend to anticipate the volatility and manage your capital accordingly.
You need to be active in the stock market to understand the trend. You cannot jump on to the bandwagon one fine day, make a significant investment and expect to gain high returns. You need to invest wisely, and understand the trends first.