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Open World Financial Life Planning - Investing
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Ian takes a moment to compare Animal Crossing's infamous Stalk Market, the buying and selling of turnips, to real-world investing. One more note: There's no diversification in the Stalk Market! Only turnips.
What's up Internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd.
Today, we are continuing our second video in the Animal Crossing series. And this one is on the Stalk Market, one of the ways to make money in Animal Crossing. I think it's kind of interesting to point out some similarities between investing in Animal Crossing and investing in real-life, as well as a couple of differences, so that's what we're going to dive into today.
You see, the way you play the Stalk Market in Animal Crossing is on Sunday mornings a woman by the name of Daisy Mae will show up on your island. She has turnips that you can buy, and her turnip prices are different for you to buy every week. They might be 50 bells or they might be 115 bells, and that is the price at which you buy. Throughout the week, Timmy and Tommy, the shop owners in town, will have different prices that you can sell these turnips at. They might go as high as 800 or they might be as low as 35 bells. And you have to somewhat time your buying and your selling in order to make a profit.
Now, there are different patterns that play out in this market, but without doing a ton of research and using online calculators you can effectively assume that the turnip prices are random. And that is kind of similar to the way that we invest in the real world. See, prices, within days, change rapidly and quickly. You have to, if you're going to make trades on the same day, be very, very aware of what's going on. And also, the entire time that your money is invested in turnips, much like in real-life when you're investing in the stock market, your money is tied up. It can't be used for anything else. So if you wanted to build that bridge in Animal Crossing, you're going to have to fund it with bells that you get from a different way.
Now, let's touch on some of the differences, because I think these are very, very important differences. The first big difference is that in Animal Crossing your turnips expire, as in they are no longer usable and valueless on the same Sunday one week from when you bought them. And that is a problem from an investing perspective. That means that you have a crunch of time that you have to worry about in Animal Crossing, which very rarely do you have to worry about in the real world.
You see, you can invest in the real world from times starting at one day all the way up to 30, 35, 40 years, and that is where we get our edge in traditional investing. You can hold onto investments for a very, very long time, and thankfully in the modern economy, historically it shows us an upward trend. So even if you have a down period in the market you're likely to see up time later.
Another difference between real-world investing and investing in Animal Crossing is patterns. You see, in Animal Crossing, once you understand them, there are very specific patterns that you can use online calculators for to determine what your yield will be for that week, based on the first three or four prices that you get from Timmy and Tommy on Monday and Tuesday. And that is a benefit that we don't really have in the real world.
The stock market is a largely emotional entity and can be impacted by any number of factors. Take the coronavirus for instance. We have seen big drops in the stock market that even though we were, what some would say, due for the next downturn or recession, we never knew what would be the cause of it or why. And so, these sorts of things are much less predictable, so to speak, than what is going on within the Animal Crossing world, at least mathematically.
Now, that does not mean that historical data does not suggest a pattern of upswings and downswings in the market. We can look at that and draw conclusions about when investing is a good or bad idea as a result of that. But that all being said, there are some differences.
So to wrap up some of the similarities between the Stalk Market and the stock market are that prices change very quickly, and that your money is tied up within the system while you're investing. On the other hand, some of the differences are that our investments don't expire in the same way, unless you're investing in options contracts, and there is less of a pattern to the way that the stock market performs than maybe the very predictable calculator math style pattern that's in Animal Crossing. But it's still really cool to think about the idea of investing X and getting Y. And so, I think that the Animal Crossing Stalk Market is a really interesting addendum to an otherwise kind of less rigid game.
I hope that you enjoyed this video and that you learned something from it. Have a wonderful day, and thanks for watching.
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