Games are more than a diversion

Reading and practice are great ways to become better at investing. But they’re not the only ways. Consider adding some card and board games to the mix.

Even children can benefit. Playing games is a terrific way to painlessly teach kids all kinds of things, and it can help sharpen adult brains, too. You may not realize it, but there’s a wide world of great new games out there. You have many more options than just Monopoly or Yahtzee.

Good children’s games can help young ones learn to count, deduce, make tough resource allocation decisions, and explore interesting worlds and themes. With ZooSim, for example, they’ll try to build the most successful zoo. They’ll build amusement parks in Roller Coaster Tycoon, and in Mamma Mia! they’ll make pizzas to order.

Both adults and older kids can enjoy many business-oriented games. For example, in the best-selling Settlers of Catan, you’ll balance resources and trade as you build a settlement, while in Pizarro & Co., you’re kings investing in explorers. In the classic Acquire, players try to profit from stock mergers, while in Shark, players must balance risk-management with stock speculation. Power Grid has players building networks of power plants. BuyWord involves investing in letters and then building and selling words for profit. Then there’s the Motley Fool’s Buy Low, Sell High game, in which players trade retail, oil and tech stocks. Other excellent games with economic themes include Puerto Rico, Ticket to Ride, Age of Steam, Industrial Waste, San Juan and St. Petersburg. At www.funagain.com and www.boardgamegeek.com, you can read reviews and descriptions of a host of modern games.

While many games incorporate much luck, other games minimize it and encourage you to become a better tactician and strategist. It might seem like a stretch to suggest that games can help you become a better investor. But they can — by forcing you to think through a variety of tough decisions, letting you assess probabilities and take chances, and rewarding you for sensible and skillful maneuvers. Best of all, playing games is fun, so you may not even notice that you’re learning something.

Q: Can you explain “closed-end” funds? — M.J.B., Santa Rosa, Calif.

A: First off, don’t confuse them with regular mutual funds that have closed to new investors. According to the Securities and Exchange Commission (SEC), closed-end funds “generally do not continuously offer their shares for sale. Rather, they sell a fixed number of shares at one time (in the initial public offering), after which the shares typically trade on a secondary market, such as the New York Stock Exchange or the Nasdaq Stock Market. The price of closed-end fund shares that trade on a secondary market after their initial public offering is determined by the market and may be greater or less than the shares’ net asset value (NAV).” In other words, closed-end funds behave a lot like stocks in many ways.

Learn more at www.sec.gov/answers/mfclose.htm and www.closed-endfunds.com.

Q: What’s “the Dow”? — T.L., Vail, Colo.

A: It’s the Dow Jones industrial average, created in 1896 by Charles Dow, who also established The Wall Street Journal. Though many people think of the Dow as a representation of the entire stock market, it’s really just an index of 30 major American companies. These blue chips include Boeing, General Electric, DuPont, Citigroup, McDonald’s, Procter & Gamble, IBM, Caterpillar, Coca-Cola, Altria Group, Merck, American Express, Disney, Wal-Mart, ExxonMobil and more. The roster doesn’t change often, but in 1999 the Dow got a makeover when Sears, Union Carbide, Goodyear Tire and Chevron were removed so that Home Depot, Microsoft, Intel and SBC Communications could be added.

My smartest investment

Back in the 1980s, I bought shares of Teléfonos de México for 25 cents apiece. My wife went through the roof, arguing that many Mexicans were poor and couldn’t afford telephones, among other things. Well, years later, my little telephone company down in Mexico is known today as TelMex and is now listed on the New York Stock Exchange. It has split several times, and each share is now worth around $25. My wife lived to see it! — Bob Bullard, Orland Park, Ill.

The Fool Responds: You’ve rung up a huge profit on that investment. Congratulations. Investing in developing economies can be risky, but it can also pay off. It’s actually a good idea to include some international investments (not necessarily in developing economies) in your portfolio, for diversification. Learn more at www.fool.com/funds and www.morningstar.com. Get more specific suggestions at www.fool.com/news/commentary/

2005/commentary05092307.htm.