Investing in video game companies?

Question

Let's say there is a video game coming out and it's obvious that it's gonna sell a lot. If I buy stocks in the company that made the game will I make money?

Answer 1

Not necessarily because the stock will be priced high when everyone else figures the same, then when you buy it at this high price, there is little improvement in the value by the time it is realized or successful.

Answer 2

One of the biggest question every trader must face is what type of stocks do I invest in.  The professionals develop a list of routines and trading strategies to help remove the emotions of trading and focus on the systematic technical analysis to make educated trade decisions.  We as traders also have to determine what level of risk we each are willing to take.

News is certainly a factor that can propel a stock and help gain momentum.  What we cannot guarantee is how the market will interpet that News.  Your strategy of purchasing a stock just because a game is going to be released does have some risk tied in.  As the previous poster mentioned, it's possible that the expectation of that game may already be priced into the stock.

There's a famous stock market saying - Sell the News.  You want to be in a stock as the momentum is building as the hype is building.  By the time the news hit, ride the immediate bump and move on.

So, will your strategy work.  It could.  I would highly suggest you take many other factors into consideration like what does the chart/price graph tell you about the potential for that stock to move.  What other market moving news does that company have on the horizon like earnings that can move the stock one way or the other.  Are there any technical indicators that work well with the stock that can help confirm your strategy.

All of that is a part of developing your trade plan.  Each question helps you fine tune your trading strategy and to put your trade plan into action.  Good Luck and Happy Trading!