Insider Trading

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Insider Trading

Postby Zerico on Tue Jan 19, 2010 2:02 am

So with the stock market, being able to buy your own stock, and paying out dividends, is there any regulation on Insider trading.

For example, things are going well, you've got your play tab enabled and you're thinking about starting to offer a dividend. Can you buy a large number of your own stocks, offer a high dividend and recoup a portion of your money?

More over, can you make your company as sweet looking as possible, issue new stock, and then tank the stock after you collect the money, then buy your own stock with the profits at the lower price?
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Re: Insider Trading

Postby Morpheus on Tue Jan 19, 2010 3:05 pm

hm,

1) you can buy stocks of every company in the game until you get to 70%, or the rest of the shares is owned by the CEO of the company. if you do your sell button of this company gets deactivated for six hours/months. if you sell shares of a company its the buy button that gets deactivated.



2) during every turn, after everything (except the dividend) is calculated and updated, the game checks your company-wallet. if the balance is lower than the costs of the dividend, said thing gets set to zero. (due to some people paying four or five digit dividends and crashing their company^^).



3) the max dividend is set at 1$/share/month



4) you can only issue stock if

a) you own more than 50% of the shares

or

b) all shares are owned by players (so not "the public" or "private investors")



5) the max. market cap. is set to five times the net assets (book value)





so in between these rules you can play.


I)buying shares of ones own company and then raising the dividend is possible, even in the same turn

II)selling shares and then cutting the dividend is also possible

III) doing I or II causes you to be prevented from rebuying/selling the shares for six hours

IV) buying shares to raise the price and then issue new stock is possible

V) since this automated dividend Vs. wallet completly crashing a company just through the dividends should be impossible, but pumping all your companys money to the shareholders is possible, i think one or two people do that everytime after a boom.



overall

the first of your questions has to be answered with yes

the second with somewhat nes (yep a cross between no and yes). it depends what you think is tanking a company, the economy etc.



if i issue new stock and use the money to upgrade those trice damned computer lines, then my companys worth WILL go down. (each of those lines gets me at lvl 4 15 mill a month plus the profit at the shop and the different lines supplying it), but thats not really tanking the company, is it?
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Re: Insider Trading

Postby Zerico on Tue Jan 19, 2010 7:42 pm

Ah, I had not noticed those rules. (Sorry, I was a player early on, but went away for a while and just now exploring the new features of the game).

Alright, so how's this for an example, I can buy shares this turn. raise the divedend next turn just to the limit of the auto calculator. A few turns later after my stock price has gone up, I sell my shares, and zero out the dividends. I then idle all my lines and close my stores. No money coming in and upkeep costs going out lead to a lower stock price. A handful of turns, after my stock has dropped several dolars per share, I buy my stock again, restart my stores and factories and put up a small dividend. All in all this could take as long as a day.

Granted, you wouldn't want to do this over just a few dollars. To make this profitable, you'd need a big bank account.
Granted, the market would need to actually buy your shares.

And the dividend as a money maker isn't the biggie, it's just something to inflate the stock price prior to your selling.
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Re: Insider Trading

Postby Morpheus on Wed Jan 20, 2010 8:39 am

Zerico wrote:Ah, I had not noticed those rules. (Sorry, I was a player early on, but went away for a while and just now exploring the new features of the game).

Alright, so how's this for an example, I can buy shares this turn. raise the divedend next turn just to the limit of the auto calculator. A few turns later after my stock price has gone up, I sell my shares, and zero out the dividends. I then idle all my lines and close my stores. No money coming in and upkeep costs going out lead to a lower stock price. A handful of turns, after my stock has dropped several dolars per share, I buy my stock again, restart my stores and factories and put up a small dividend. All in all this could take as long as a day.

Granted, you wouldn't want to do this over just a few dollars. To make this profitable, you'd need a big bank account.
Granted, the market would need to actually buy your shares.

And the dividend as a money maker isn't the biggie, it's just something to inflate the stock price prior to your selling.



but, due to the limited company lifespan it would cripple your max. end market cap, thus losing you more than you gained through this stunt^^

also youd better be online the whole time, since causing your company wallet to go deeply red through base-costs is still possible, and then you got a prob, since the negative wallet costs i think 13% penalty of the negative value.
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Re: Insider Trading

Postby Raymond on Tue Nov 23, 2010 4:03 am

Zerico wrote:So with the stock market, being able to buy your own stock, and paying out dividends, is there any regulation on Insider trading.

For example, things are going well, you've got your play tab enabled and you're thinking about starting to offer a dividend. Can you buy a large number of your own stocks, offer a high dividend and recoup a portion of your money?

More over, can you make your company as sweet looking as possible, issue new stock, and then tank the stock after you collect the money, then buy your own stock with the profits at the lower price?


Early on, there was no regulation beyond the six month waiting period between buying and selling.

Someone got carried away with dividends and gave themselves an obscene amount of money while trashing their company, and so Kit implemented the one dollar a share limit, and a bank balance check that dropped dividends if your company didnt have the cash to pay. (Not sure who, its been a long time, and it was done by a lot of players in a limited fashion for several months beforehand).

Not a few million dollars carried away, more like several thousand dollars a share dividend carried away, making all of the shareholders of that company overnight trillionaires. It took Kit the better part of a day or two to clean the mess up.

Buying a large number of shares of your own company to drive up the cost before a stock offering is a tactic several players use, myself included. Since the book value of the company actually drops a little after the new shares are issued, due to the costs to issue shares, I dont see where this would be a problem. Its a common tactic to raise cash for a company by issuing new shares, and as the CEO you want to raise as much cash to improve your company as you can, no?

If you have confidence in yourself as a player, buying as many of your own shares is just a good idea, because you dont have to worry about forced sales. Offering a dividend helps drive up the price, and yes, it does help you as a shareholder recoup some of your investment. That is how the game is played, though. You can't run your company into the red with dividends, so you have to make a profit for the company and other shareholders for you to make a profit as well.

The last question makes some false assumptions, so I am not sure just how to answer it, but here goes:

For a start, yes, you want to make your stock as attractive as possible, especially right before a stock offering so as to get as much cash to build your company as you can. However, the most common way to do this is to buy the stock yourself. Your stock price will often drop some after a stock offering, because you are investing that money in new production lines, upgrading lines, or other things that will cause productivity and profit to drop off for a while. BUT that cash is held by your company, not you the player, so buying the stock back with the profits isnt workable.
At this time there is no method for a company to buy back stocks from the public so as to reduce the number of stock traded.

If you are talking about taking a buy low, sell high approach to stocks, well that is what you are supposed to do.

If you are asking if you can intentionally drive your companies stock price down, then buy the stock, yes you can. But the time it takes to do that is rather high, so it isn't worth the effort. You can generally make more money with less effort just running your company well and offering a nice dividend.

Besides, when you sell your stock, you drive the price down, just like it goes up when you buy it. So if you are not careful, the stock price after you sell off all your shares may be low enough that it will start climbing again instead of dropping.

As far as the dividend as a money maker, yes, it is one of the ways you as the player make money. Sometimes quite a lot, in fact.
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Re: Insider Trading

Postby Morpheus on Sat Nov 27, 2010 5:02 pm

hey ray u still alive and kicking ? :-P couple of months since i saw u lurking here (during my own lurking^^)

wanna start a new run for the crown?


As Ray and I said theres a limit to the gain through purposely crash your stockmarket worth, and its a high risk move.


I still remember the exasperated tone of kits PM after i too profited from one of the guys.

from 100 mill to 1.5 bill net worth overnight.... (and yes everyone who profited of this one was reduced that amount again^^)
Some people cause happiness WHEREVER they go; others WHENEVER they go

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Re: Insider Trading

Postby Raymond on Mon Nov 29, 2010 11:10 pm

I took the summer off, but am back, at least for this run through and the next one.

I see that Toastmachine came back, and there are a few new players who are closing in on my high score:)

With the market going up and down with the economy, some players will sell their shares during a boom and buy em back after things crash.
This is actually a good tactic, in that you are selling shares while the price is high, and waiting for the price to get low again.
The down side is that you will drive the price down by selling shares, so if you are nearing a reset, it ends up costing you instead of making you more money.

Also, if the boom is a long one, the company could keep making piles of money, but you want it to be dropping in value after your sales so you can make a profit buying the stocks at a lower price. So your personal earnings are lower than they could be, and you arent pushing to make all the profit with your company you can.

Basically, it can be done, and some of the players do it, but it takes a lot of time, and if you dont time it right, you end up losing money on the deal, so it is one of the advanced money making methods.

A much easier way to increase personal earnings is to offer a dividend, so few players offer them for some reason.


Buy low, Sell high,
although around here its log back in and find forced sales of a pile of your stocks, hopefully at a profit :)

Ray
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