How ‘Animal Crossing’ Is Preparing Players to Trade StocksOctober 7, 2020
“Animal Crossing: New Horizons” became a hit game during the pandemic by providing an enjoyable escape: a virtual paradise where home-bound players across the globe could begin life anew, building up idyllic islands alongside fellow villagers, who appear in the form of birds, dogs, or even ostriches.
For Angie Fung, 24, Nintendo’s hottest game of the season led to something unexpected: It turned her into a stock investor.
The Seattle resident’s journey started when she was trying to make a quick buck to develop her island. There are plenty of ways to build up virtual cash in the game — you can break open rocks, literally shake trees or even catch and sell fish. But the most sophisticated way is through trading turnips on the “stalk” market.
She became obsessed, joining hundreds of thousands of players who put many hours of research into finding the best prices for their virtual root vegetables.
Marketplaces have sprung up on websites such as Turnip.Exchange and Reddit, where a forum with 319,000 “turnip farmers” discuss prices and offer their goods for sale. A project calledTurnip Prophet attempts to predict turnip prices using information gleaned from the game’s software code.
Fung’s boyfriend noted that she was spending so much time and effort on these fake commodities, that she might as well try her hand at real stocks.
“That was the aha! moment,” Fung said. “They’re kind of the same thing, concept-wise.”
That’s when Fung, who works in commercial property management by day, joined a wave of new stock-market investors who are buying and selling for free through online brokerages. In the spring, she invested about $1,000 in tech stocks: cybersecurity firm Palo Alto Networks Inc., semiconductor firm Nvidia Corp. and payments processor Square Inc. She also dabbled in Covid-related penny stocks, she said.
Animal Crossing is the latest of many successful games to experiment with a virtual economy. World of Warcraft and Second Life have in-game economies that replicate real-world economic phenomena, such as resource scarcity and taxation. One professor has even made a career out of applying basic economic principles to study the world of gaming.
There are some emotional similarities between racking up wealth through turnips and building a real-life portfolio, said John Poelking, a senior gaming analyst at Mintel.
“The stakes are a lot different because it’s in-game currency versus real-world currency, but it’s still an investment,” he said. “You feel hurt when you lose out on in-game currency. Even though it’s not real, it feels real to you.”
Investopedia and robo-advisory firm Betterment have used Animal Crossing as a way to explain market concepts basic and more advanced, such as supply and demand, arbitrage, and how to conduct fundamental and technical analyses for real stocks. Betterment said the game illustrates that short-term investments are risky, monitoring portfolios are stressful, and diversification is important.
The virtual market doesn’t exactly mirror real-life equity trading. In the game, every Sunday, players are able to buy turnips from a fictional character named Daisy Mae. Turnip prices are different on each person’s island and only change twice a day. The real fun comes in side transactions, when sellers invite other players to their islands and try to offer deals.
Jessica Amado, a rising senior at Rutgers University, said that playing the turnip market taught her the importance of taking profits — before prices fall. The 22-year-old frequently lost money by not selling her turnips when prices rose — holding on and hoping they’d continue to climb.
When her father found out she was trading turnips, he gave her $120 to invest in real stocks, and she put her turnip lessons into practice. She bought 20 shares of Plug Power Inc. earlier this summer at $5.60. She said she chose the company because it was listed in the Robinhood app as one of the top 100 most popular stocks, and it was mentioned in an article her father sent about the best stocks under $10.
She unloaded her investment once shares crossed $10 for a roughly $100 profit. But it has since continued to rise.
“I do wish I held on to it longer, but I don’t regret it really because a profit is a profit after all,” she said. “It was a good decision at the time when money was hard to come by during quarantine.”
Kurt Boyer, 50, a Florida-based software engineer for Yocom and McKee Inc., developed an algorithm to predict turnip prices for a previous version of the game. He tried to do the same thing a few years ago for real stocks — but it wasn’t quite so easy.
“In ‘Animal Crossing,’ there are patterns you will see and they indicate 100% of the time what will happen the next time the price changes,” he said. “In the real stock market there are hundreds if not thousands of patterns that traders study and with each pattern, there is a chance that it will indicate a future price movement. However, it isn’t a guarantee.”
Fung says she moved onto stocks because she found it too easy to make money on turnips. And while she knows she needs to be more careful with real stocks, her turnip successes are making her a more daring investor.
“Now I’m like, ‘I’m going to drop a thousand dollars on this random stock,’” she said. “It doesn’t feel like it’s real money. I’m not emotionally attached to my money because I started off from a video game.”
Her old Animal Crossing group chat, first a way to keep track of turnip prices on different islands, is now used to exchange information on the hottest stocks of the day. The chat title: “Buy, Buy, Buy.”
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