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Friday, July 30, 1999

A Fool's Game

by Ray Espiritu (RomeoEcho)

Played any computer games recently? No, not those DOOM bang bang, kill 'em all games that have everyone on Capitol Hill all hot and bothered. I'm talking about real-time strategy computer games. If you haven't seen one, here's how they usually work:

You are in charge of a group of beings (creatures, robots, men, whatever) and a base. You order some of these beings (harvesters, gatherers, farmers) to gather resources (cash, gold, crystals, etc.) in order to build your base and increase the number of beings you have, as well as increase their potential to defend your base and attack the enemy's base.

The ideal strategy for most of these games is to increase the rate of resource gathering while at the same time producing just enough beings to defend the base. Thus, the resource hoard increases until the point where your resources are increasing at such a rate as to allow you to expand the base, build more units, increase their potential, and vanquish the enemy.

Sound familiar? It should. It sounds just like a model for building a successful company and for building a financial investment.

A company starts out with a group of people and a base (or, if you prefer, office). It gathers resources (money) through the offering of a product or service in order to expand the base to a building, then several buildings, then an office campus. Meanwhile, it increases the number of beings (I mean people) working for it, and attracts more people, which allows it to create more products and services, which then generate more resources (increases cash flow). Eventually the cash flow is such that the company is expanding its area of operations, offering new product lines, and capturing market share from other companies all at the same time.

So imagine yourself playing out your favorite computer strategy game. You, the commander, are responsible for your sector (or personal finances). You must seek to increase your base (net worth) through the acquisition of resources (stocks). You must hire more beings (sock more money away) in order to increase your resource gathering rate (compound the interest on your investment) to eventually take over the world (or retire early, whichever you prefer).

If you haven't played these types of games, check one out! Call it Foolish research.

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