The Motley Fool: Winning profits with video games
Shares of video game developer Activision Blizzard (Nasdaq: ATVI) stock have averaged annual gains of nearly 21 percent over the past 20 years. The stock has been trading near its all-time high, but tailwinds in the video game industry and the publisher’s stellar catalog of properties point to opportunities for continued gains, making the stock worth consideration for long-term investors.
Activision now has by far the deepest bench of hit titles in its history, demonstrating how far it has come since 2013, with just three brands – “Call of Duty,” “World of Warcraft” and “Skylanders.” It has a strong track record of cranking out new high-value franchises, too.
Activision is striking a great balance between managing established franchises and introducing new properties. In the popular first-person-shooter genre, for example, it has three of the biggest titles in the category, with “Call of Duty,” “Destiny,” and its new hit, “Overwatch,” which reached 500 million hours played faster than any other game in company history and recorded more than 20 million players in the five months following its release. Gamers logged 10 billion hours of playtime across its titles last quarter.
Meanwhile, expanding its franchises into filmed entertainment opens up new revenue streams and also provides a way to strengthen its key franchises. (The Motley Fool owns shares of and has recommended Activision Blizzard.)
Ask the Fool
Q: How can I give certificates of single shares of stock as holiday gifts? - H.R., Jacksonville, North Carolina
A: Giving a stock certificate can be a great way to get young people interested in investing, but it’s problematic, too. For starters, many companies are phasing out paper certificates, preferring that investors hold shares electronically. Next, if you buy a share through a website that offers a gifting service, you may well pay more in fees than the single share costs. Owning just a share or two of stock offers little diversification, too - though it can be worth that in order to get someone’s foot in the door.
Instead of aiming for a paper certificate, you might simply transfer one or more shares of stock you own from your brokerage to an account belonging to the recipient. If it’s a child, he or she will need a custodial account, likely with a parent or guardian as custodian. You might alternatively help them set up a custodial account that you fund with some seed money.
Be sure to focus on companies of interest to youngsters, such as Disney, Hasbro or Starbucks – and discuss the companies’ progress over time, too.
Q: How many mutual funds exist? - G.T., Kalamazoo, Michigan
A: According to the Investment Company Institute, as of September, there were about 8,100 mutual funds, with about 4,800 of them focused on stocks. In recent years, the number of exchange-traded funds (ETFs) has exploded, rising from 80 in 2000 to 1,687 in September. ETFs are popular in part because you can buy and sell shares of them easily, like stocks, through your brokerage account, buying very few shares if you want. For help finding outstanding funds, visit fool.com/mutualfunds/ mutualfunds.htm or morningstar.com.
My Dumbest Investment
I wanted to give myself a break, since I manage all our family finances, so I let my husband take over our retirement investments. I figured, since he is very smart, that he would do well, so I didn’t pay attention to what he was doing.
Oh boy, what a mistake! He lost the majority of the money in both of our portfolios. I am 64 years old, and I will never recover what he has lost. Little did I know that he was day trading! He would buy a stock, hoping it would go up substantially that day. If it didn’t go up, he would hold on, even as it kept falling. He invested in initial public offerings (IPOs) and in penny stocks.
He lost more than $200,000, plus any gains we would have made with that money over the years. He sold solid stocks that I had invested in, such as Netflix, Apple, Amazon and The Home Depot, 10 years ago. Aughhh!! - N.M., online
The Fool responds: Your husband made lots of classic mistakes, such as trading frequently, while probably knowing relatively little about the stocks he was buying and selling. Money can be made in IPOs, but it’s generally best to give those stocks one or more years to settle down first. Penny stocks are volatile and dangerous. You were invested in some great companies that simply required patience.