How to Buy the Entire Gaming Industry?

Dec 05, 2022

What are ETFs?

Indices often serve as the basis for index funds (ETFs). Theoretically, an index fund is an instrument for obtaining returns close to those of a certain group of assets, most commonly — stocks, but sometimes commodities such as gold or oil. In fact, the essence of an index fund comes down to investing assets in strict accordance with the chosen structure, i.e. the so-called “index” itself. The goal is to obtain a return comparable to that of said index.

A stock index is an aggregate change in securities value included in the calculation of a given index. For example: the aggregate amount of shares of a certain country or industry.

Funds are, by their very nature, ready-made sets of securities. This is why an investor does not need to choose assets for their portfolio and spend time surveying every company’s business in detail. The creators of the fund have already done all this for them.

What are ETFs

In most cases, the purchase and sale of securities included in the index by the management company is fully or almost entirely automated. That is to say, a computer buys and sells the necessary securities independently, without the help of human dealers. As a result, index fund management comes relatively cheap to a professional securities market participant. Such funds typically have comparatively small markups and investor discounts as well.

As a rule, a management company collects its fund assets, united by a common idea, which will be attractive and interesting to investors. Funds may invest in securities of selected industries, sectors, or countries. For example, “Mobile Game” funds may include stocks of gaming companies and publishers, while “IT Industry” funds may include digital companies and computer hardware manufacturers.

Unlike individual stocks, fund investments are more reliable as they represent investments in dozens or hundreds of securities at the same time. If one or two securities included in the same fund go down in value, but the majority of stocks in the fund go up, the price of a unit can go up too. This is the difference between a fund and a private portfolio with several securities, where a fall in two of them will more heavily affect total returns.

There are also funds whose holdings match a particular country or sector index, in which case the unit price changes alongside the corresponding index, for example: the stock exchange index or the S&P 500 index. The indices are calculated by quotations of major corporations reflecting the state of a country’s economy, or by companies in specific industries.

So, how to buy an entire industry?

It is theoretically possible to buy all the gaming industry stocks on any given day. In reality, reaching such a point is almost impossible, since the moment the market senses a buyer of that scale, the stock simply disappears. No one is interested in selling, so the price just goes higher. Why buy 100% of game industry for example stock anyway? 51% is more than enough to control a legal entity.

Buying stock requires one to open an account with a stockbroker who has access to the stock exchange where the company you want to buy trades. You then fill out a warrant ticket and choose how many shares you want to buy. The broker then places the warrant and executes it. Purchasing 100% of any company this way means that you now own it in every sense of the word.

If you want to fully acquire a company and become its sole owner, you will need to overcome a number of barriers. In some cases this may be either unprofitable or completely impossible. The latter is especially true for larger entities that need to comply with certain regulatory laws concerning fair competition and ownership.

Companies like S&P 500 perform in-depth research. They have the right experience to forecast and make conclusions that form a company’s stock group. One of the bigger mistakes is to look at the value of the stock at the moment, judge it by the here and now. One has to look at the prospects and keep overall statistics in mind. The stock market is not limited to the present, but extends way into the future.

Some important insights when investing in stocks are:

  • Study the ups and downs;
  • Analyze before you invest;
  • Investing into funds less risky than individual stocks;
  • Manage your risk tolerance.

One of the advantages of investing in index funds is broader diversification, meaning that your investment portfolio will be instantly diversified, minimizing the likelihood that you will lose your money.

For example, an index fund that tracks S&P 500 has 500 different investments. The performance of these different stocks will vary and fluctuate over time, but when your money is spread out among numerous assets, the ups and downs become less significant.

Putting all the money into a few stocks, followed by them falling in value, could lose your original investment. At the same time, if you have made 500 different investments, one stock that loses value will not ruin your portfolio because the 499 others will make up for its failure.