Monopoly's Investing Lessons

Go Directly to Success: Monopoly's Lessons - In real life, as in the game: Stay diversified, acquire railroads and don't fall for pricey prestige properties

Excerpts:

1. Diversification : Monopoly makes a time-honored point about the importance of spreading your investments across several classes of property and not slavishly following the "smart money." The game's best investments are the orange properties
2. Cash Management: The game drills home this lesson: You can't win if you sit on cash, just as you can't hope to rapidly grow real-world assets if you settle for the rates of return that the banks offer.
3. Return on Investment: Every property in Monopoly has a different likelihood of earning a return (based on how frequently players land on it, its initial cost and cost of development, and its return per level of development). ... The railroads, because there are four of them, are the most visited set in the game, but they can't be developed, so they aren't enough alone for a win. They can provide you with cash, however, and that's what you need to develop a killer color group—just as high-earning investments like utility funds can give you money to augment your growth-oriented holdings.
4. Complacency: Beware of it. ... Just as once-spurned asset classes can suddenly enter the limelight in real life, so too can every group of Monopoly properties.
5. Negotiations: Knowledge of the game's financial numbers is only half the story in Monopoly success; being a master of negotiations is the other part. ... Competence in human relations affects your career, your personal life, your options and thus your net worth—yet another great lesson taught by Monopoly.

Comment: Interesting article from the Wall Street Journal.