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Chasing the wrong pocket monster

Chasing the wrong pocket monster

Posted on: July 25, 2016
Author: Allan Leung, Compass and Wealth Lead, ATB Investor Services

Since its release in early July, Pokemon Go​ has taken the world by storm. Pokemon (short for pocket monster) Go is a massively popular mobile game that has topped the free games listing in both Apple’s and Google’s mobile marketplaces. Its roughly 21 million active users have overtaken the once massively popular Candy Crush. The most actively used mobile app, Pokemon Go’s average user time per day was 43 minutes, followed by Whatsapp, Instagram and Snapchat.

The droves of people out looking for Pokemon has encouraged game players to go outside and join in social groups to try and capture these fictional characters, which were first introduced back in 1995. A smart design combined with the addition of health and social aspects to gaming has certainly added to the popularity of this game. Nintendo, in collaboration with Google, has successfully created a surprise hit, but the euphoria that Pokemon Go players are experiencing is leading some to wild abandonment of common sense and mindful decision making. Cases have been reported of people getting lost, getting into car accidents, trespassing, theft and even being injured. This euphoria may also affect those seeking to invest in this overnight sensation.

What was once out of favour has again twinkled and sparkled in the eyes of investors as the fervor of Pokemon Go sets in. Since the launch of Pokemon Go, Nintendo’s share price has doubled1, which seems disproportionate to the amount of revenue Nintendo actually brings in as a whole. The gaming business, like the cell phone business, is also transitioning from hardware-centric to one that is more focussed on software. A decline in the gaming console business and Nintendo ceding market share to both Sony and Microsoft brings into question whether Nintendo is operating in the same augmented reality as Pokemon Go. Nintendo’s stock has risen, but like changing winds, fads and popularity can quickly fade, and speculation doesn’t make for good long-term investing.

Investing decisions should be done in a smart, disciplined and mindful manner. Let’s face it, a little common sense also goes a long way when it comes to investing. To avoid permanently impairing your bank account, manage your emotions and don’t speculate or chase the latest investment fad or what’s hot.

Think of a company that has multiple business lines, receiving sales from numerous proven products from a diverse clientele base. These businesses would naturally be more resilient than ones that sell only one or a few products. Now as an investor think of yourself as a business owner. Putting businesses together that can make money repeatedly reduces the chance that you will permanently lose money. You can then invest, stand to make money, and manage your risks. But nothing is more important than having a solid investment strategy—a plan that helps guide you to your end objective.

Regardless of whether you’re on Pokemon team blue, yellow or red, battling to defend your Pokemon gym; to successfully invest, rather than having your teams duke it out, your investments should work together and complement each other. By putting good businesses that complement each other into a well structured portfolio, you’ll be setting yourself up for success.

1Bloomberg – as at July 18, 2016

This information has been obtained from sources believed to be reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. This information is subject to change and ATB Investment Management Inc. reserves the right to change the information without prior notice, and does not undertake to provide updated information should a change occur. ATB Financial, ATB Investment Management Inc. and ATB Securities Inc. do not accept any liability whatsoever for any losses arising from the use of this document or its contents.

ATB Investment Management Inc. and ATB Securities Inc. are wholly owned subsidiaries of ATB Financial and operate under the registered trade name ATB Investor Services. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. This is not, and should not be construed as, an offer to sell or a solicitation of an offer to buy any investment. This document may not be reproduced in whole or in part; referred to in any manner whatsoever; nor may the information, opinions, and conclusions contained herein be referred to without the prior written consent of ATB Investor Services.

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