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Caution, Cunning and Competition: Three Investing Lessons from Game of Thrones

Set against the backdrop of epic conquests, bloodthirsty barbarians and Machiavellian-style manipulation, Game of Thrones is capturing imaginations across the globe.

At times the investing world seems a lot like the savage and cruel arenas characters from the story find themselves in.  Even though the story takes place in a mythical land, it focuses on a very familiar theme for those in the real world: power.  As in their world, wherever there is power to be had, money is not far behind.

The tactics and strategies about how best to come out on top in the Game of Thrones are probably just as appropriate in the stock market as they are in the mythical forests and deserts (minus the broadswords and beheading).

Here are three lessons every player in the markets and the Game of Thrones needs to know in order to avoid having their heads handed to them:

#1: Watch your back

Risk management is a tidy euphemism for making sure you’re in control of your exposure to loss.  While you may not be toppled from a fiefdom anytime soon, taking outsized risks with your portfolio can leave you feeling stripped of title and wealth.

#2: Use your size to your advantage

In the stock market, performance is all relative. Large pools of capital have a much tougher time outperforming the index than do smaller investors.  The advantages of being small are that you can be nimble with your entries and exits as well as having more flexibility in terms of the size and type of companies you can consider.

#3: Play to win

The most important investing lesson in the Game of Thrones is to be tactical. Everyone else in the market is vying for victory so knowing your competition is as crucial as knowing whom to support.  In the investing world, your capital is your strength. Every dollar you capture can work for you and every dollar you lose weakens you so as the commander of your capital, choose your battles and your alliances (investments) thoughtfully.

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