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“Risk is the most interesting, challenging, and essential aspect of investing” – Howard Marks.
“You’re unlikely to succeed for long if you haven’t dealt explicitly with risk” – Howard Marks.
“It’s the investor’s job to intelligently bear risk for profit. Doing it well is what separates the best from the rest” – Howard Marks.
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cacaroot/iStock via Getty Images I’ve talked a decent bit about my love of Hasbro’s Monopoly. That game made for a great pastime as a kid, helping to grow my love of real estate. My understanding of it too.
As I wrote on February 24 in ” Retire Rich With a Monopoly of REIT Dividends “: As a kid, I enjoyed playing Monopoly. While there were many reasons why – including because it was all about building a real estate empire – the fact that I was so good at it didn’t hurt. All that winning made me greedy for more. With that said, I even liked the boardgame back when I first started to play it with my dad… where I was constantly going bankrupt. Sometimes that was because I spent my money too quickly on ill-planned properties. Other times, it was because I kept landing on the wrong spaces. But what I learned through both the losing and the winning is that Monopoly isn’t just about chance. Yes, there are dice involved and you can’t control how they roll. But that does mean it’s not intensely more about strategy – how to amass a fortune in real estate and collect rent. As such, I learned the value of diversification. But, thanks to my father, I also learned the real value of a monopoly. The more properties I had, the less at risk I was.
Of course, as I admit in the article, Monopoly isn’t real life. It’s only a great game to build some basic skills.
But those basic skills can be invaluable. Playing With Risks and Rewards
That’s why I’m going to bring up another Hasbro game I loved as a kid: Risk.
And to simplify things for myself, I’m going to turn to Wikipedia to explain it, something I normally don’t do. But in this case, I know the game so well that I think we’re safe.
So here’s what other Risk enthusiasts have collectively written about it: Risk is a strategy board game of diplomacy, conflict, and conquest for two to six players. The standard version is played on a board depicting a political map of the world dividend into [42] territories, which are grouped into six continents. Turns rotate among players who control armies of playing pieces with which they attempt to capture territories from other players, with results determined by dice rolls. Players may form and dissolve alliances during the course of the game. The goal of the game is to occupy every territory on the board and, in doing so, eliminate the other players. Naturally then, like Monopoly, it can take a while to finish. Also like Monopoly, there’s a lot of strategy involved despite the dice players use.
For those of you who care to know, Wikipedia adds that European versions involve each player having a “a limited ‘secret mission’ objective that shortens the game.” Also, Risk has inspired “other popular games such as Axis & Allies and Settlers of Catan.
And considering how it was presumably inspired by so many “intrepid” individuals throughout history who wanted to expand their domains…
It’s pretty applicable to today. Investing Involves Risks, but They Aren’t Always as Surmountable as They Appear
For the record, that last line wasn’t a reference to political moves being made around the world right now. Though it probably could apply there as well.
But my goal isn’t to comment about politics here on Seeking Alpha. Not unless I think those politics could impact your portfolios.
In this case, I think I can safely navigate around such unpleasantries to go right for the real estate investment trust (‘REIT’) gold.
Obviously, while playing the game of Risk – or any other game. Or participating in any real-world activity period – there are pros and cons to any moves you make. Just because you can do something doesn’t mean you should.Yet, on the flipside, just because there’s risk involved doesn’t mean you shouldn’t go for it. You have to weigh the potential rewards with the potential […]
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