Stock Market: Much Too Easy

[Awesomely Oscillating Ocelot]

So something really needs to be done with the stock market, imo.

The reason?

It just makes it too easy. It's like a cheat button, practically, and here's why: at the start of ANY game, new companies will have been spawned quite recently, one way or another.

One or two of them will have been spawned inside the last twelve months.

In many games, this means that one or both of the companies is guaranteed to release software within a few months of the start of the game - they may even have released it in December the preceding year.

But their stock hasn't risen yet.

This means that you can literally start a game, open up the newspaper after skipping one day, and then go "Oh, such-and-such got a great review." Get a 60k loan. Buy stock in such-and-such company. Wait a little while. Sell stocks for millions.

And this holds all the way through, too, not just at game start. I've frequently noticed that even after a few years, it was pretty easy to just look at who hadn't done any releases yet, or who had a couple of lacklustre releases but was clearly building a fanbase... and then just buy up cheap stock and wait. What this translates to is that the stock market is a perpetual get out of jail free card and, unfortunately, not very much else.

I can see the potential (takeovers are a really big and important thing in the future, I suspect, especially for making the AI companies challenging versus a human - I can already see that in playtesting my mod, where one company ended up worth several billion with software in every single category because it just ate its competitors) but...

Essentially at the moment this is difficulty-breaking. Even if I am glad that there's an easier way to make money "naturally" other than contracts in the early game!

[dasherk]

I also think that the real world reputation of the stock market being a roller coaster needs to be replicated here... Things like say, bad morale or poor finances being leaked the press killing stock... leaks about pre-releases or seceret projects getting traction being a boon, etc.

The bottom line for me though, is this is far to interesting a feature in the game over all to lose... and like Dryhtscipe said, it's an essential featuer for the late game just as we see real world companies using it. I'm sure some may need see just how intertwined and perhaps even interdependant the to industries are, especially as simulated in a game - but they really, really are and I'm thrilled at the possibilities in Software Inc.

[Hunter]

I would agree with these statements, and acknowledge that the developer is surely implemnting changes on this somewhere down the road. These are some awesome ideas, and given the time I'm sure the developer will look into this and turn it into more of a challenge and risk-based system than it presently is. Great work on everything so far.

[dasherk]

Yes. I'm ashamed I didnt state in my earlier post: great game so far, excellent work! I am very much looking forward to seeing what the future holds!

[Coredumping]

I'll make it so you can't purchase stocks for loaned money, otherwise I'm not sure how else to balance it. The only other way I can think of is putting it behind some kind of unlock, but that just seems lazy.

[Awesomely Oscillating Ocelot]

Maybe make it so that your company can't buy stocks without floatation?

Could even make floatation an actual, specific thing, with bonuses/maluses. Maybe even with specific stock markets. Hell, we could have, idk, some small number of world regions (in text) and have different costs/employee pools for each, and then different stock markets for each. UIwise it wouldn't need to be anything more than some flavour text on the start menu, maybe a map screen to select region if you want to be fancy. Of course the backend stuff would be heavier on your wrists!

But anyway, that would open up a certain risk of hostile takeovers and the like. Perhaps if your stock falls too fast and there's a company a certain percentage larger than you, there's a certain chance they buy all available stocks and takeover... this would add risk.

Not anything I'd expect to see soon, mind you. As it stands I think the stock market is OK because other areas probably need more complexity first (example: I am really loving the needs balancing required in office design in the test version, even if this game makes my shoulder ache fiercely because of all the clicks!).

[Coredumping]

Sounds like a nice idea, it would take a while to add as there is so much peripheral work, though. I don't know much about stocks, does it actually make sense that a company can't buy stocks unless they're on the stock market themselves?

[dasherk]

It's a good idea.. But just about anyone can go out and buy and sell stocks. As a game mechanic it might make sense just go with it. Also, if you trade stock today there's such a thing as a deposit minimum you must leave with the brokerage firm. It's usually only around $1000 though. I think too one should be able, to control how much of their shares are available on the market.

One way to stem the aforementioned issue is to just restrict the bank loans a little more. For example, the the bank won't give you a loan that's enough, or barely enough to meet the deposit minimum at first, so sure you could hop into the market but you won't make much.. Plus throw on an interest rate, and yes you'll make money but not loads. Heck, some banks just won't take you unless you make a certain yearly income, have a certain credit score, etc. Essentially, a good financial reputation. That's a of real life unlock right? But in game, As time progresses, you have a bigger reputation and begin to offer your own stock, etc, the bank is easier to deal with.

I think the real issue is that in real life there's much bigger element of uncertainty and risk. Sometimes it's in your favour, such as if you had stock in Facebook or Apple prior to their meteoric rise; but the opposite is also true... And quite often there's no explanation of why without the benefit time and hindsight. For example, Enron? On the outside to many it looked like a huge monolith if a corporation that would last forever and collapsed like a jenga tower. Now in game, arbitrary stock collapses could be frustrating, but it does happen in the real world every few years. Take the 2008 collapse as another frightening example.

Anyways, I hope this provides some ideas

[Awesomely Oscillating Ocelot]

Originally posted by Coredumping:

I don't know much about stocks, does it actually make sense that a company can't buy stocks unless they're on the stock market themselves?

I don't think it would be exactly realistic, no.

In reality, companies (like individuals) typically buy through brokers; the brokers are usually associated directly with specific markets. Companies do not even technically have to be listed with a stock exchange in order to issue shares on it, either. I suppose it would be vaguely representative of that system in a vastly simplified manner. Ish. ;)

(Trying to realistically model the stock exchanges would be a ridiculous undertaking though... also if you could do that, seriously give up this game and go make some millions and then come back with a huge gifted staff and make an even better version of this game. ;))

[Hunter]

The reality of stocks comes down to this... There has to be some level of unknown variable that cause stock prices to fluctuate beyond just how well a company does at producing and marketing its product. For example, Wal-Mart continues to provide decent quality products and even name-brand products, it provides them at very low costs around the world, and continues to grow... however, its stock price is very stable and doesn't grow rapidly or decrease rapidly based on these facts.

The reason being: "speculation". People buying or selling stocks are speculating on how they believe the stock will perform based on the history of the stock and the company. However, random things like negative publicity, or leaked information can cause stock prices to change dramatically or slightly... all of which is simply based on speculationa nd perception, when in reality, the company may be doing just fine.

A way to implement this would be to use some sort of coding that create a random or calculated varialbe chance of several negative/positive events to occur. They could be news worthy in the Business or Industry section of the in-game paper as well, creating more immersion. Such random or calculated events could be: stock market dive/crash, bull market (causing most stocks to rise in value), bear markets (causing stocks to devalue), economic recession/depression, economic growth, etc... all of these events could simply be behind the scenes calculations with a variable chance of happening that would impact the stock market; all are realistic and feasible as well, and really would only require a news story to be generated to give the player feedback on what happened.

To do it best, it would be good to create some product-based events, such as: "OS Market struggles", causing companies selling Operating Systems to see their stock value drecrease. Or, "Gaming Industry Growing Steadily" which would improve stock price/value for companies selling Game Engines and Games, etc...

Would take some coding, but it all just comes down to some math in terms of implementation and a news story being generated when the event occurs.

Just the thoughts from my accounting experience. Great game so far!!

[Awesomely Oscillating Ocelot]

@mhunter, all very good ideas. I think with events there's a lot that could be done, potentially. You could even have events based on user input.

For example, if you have a lead on a team that's produced hit after hit after hit and they retire, your shareholders are going to be potentially terrified...

[Hunter]

Originally posted by Dryhtscipe:

@mhunter, all very good ideas. I think with events there's a lot that could be done, potentially. You could even have events based on user input.

For example, if you have a lead on a team that's produced hit after hit after hit and they retire, your shareholders are going to be potentially terrified...

Great concept. Glad to give some ideas to spice things up even more. I continue to invest a lot of time into this game and I'm excited to see where it goes.

[dasherk]

Another considering might be mangaging stock splits, and negotiating buybacks and dividends. This also sort of illudes to the concept of being forced out of your company. If you only own a minor stake your company and your shareholders don't like the how things are performing, or don't like the dividends then you could lose out... Alternatively, if you a minor holder and things are going well, it might be wise to use the cash you have to start buying back stock to solidify your position.

Which brings up a related subject... Personal wealth. What if this had a concept similar to tropico where your trying to earn wealth for your founder... So along with managing the companies stock portfolio, you have a personal portfolio as well.

Now a question: what impact should moving money in and out of the insurance fund have on the stock value? I'd think the more money in the more stable the stock is from things that would normally make the stock value sink and conversely, taking money out should a) bring the stock down and b) exaggerate what punishment the stock is already taking?


Thoughts?

[Awesomely Oscillating Ocelot]

Originally posted by dasherk:

Now a question: what impact should moving money in and out of the insurance fund have on the stock value? I'd think the more money in the more stable the stock is from things that would normally make the stock value sink and conversely, taking money out should a) bring the stock down and b) exaggerate what punishment the stock is already taking?


Thoughts?

It seems to me that that would actually be an interesting background mechanism for stock stability.

IE stock stability could be based on stock+pension compared to bank balance in some fashion. Essentially, the more money invested in other companies compared to your own balance, the more unstable your own stock price is likely to be. And the more in your pension fund versus bank balance, the more stable your stock price.

This would lead to very big, very stable companies, with stock prices that neither rise nor fall... but if they lost enough money they'd have to start withdrawing from pensions and that would be a destabilising mechanism against the "security" of keeping a big war fund hidden away (= shareholders feel insecure).

Likewise, if they were forced to sell stocks, this would have the effect of stabilising the price, since they would have more bank balance versus stock (= shareholders feel more secure).

That could be quite a simple base, maybe?

[dasherk]

Originally posted by Dryhtscipe:

Originally posted by dasherk:

Now a question: what impact should moving money in and out of the insurance fund have on the stock value? I'd think the more money in the more stable the stock is from things that would normally make the stock value sink and conversely, taking money out should a) bring the stock down and b) exaggerate what punishment the stock is already taking?


Thoughts?

This would lead to very big, very stable companies, with stock prices that neither rise nor fall... but if they lost enough money they'd have to start withdrawing from pensions and that would be a destabilising mechanism against the "security" of keeping a big war fund hidden away (= shareholders feel insecure).

Likewise, if they were forced to sell stocks, this would have the effect of stabilising the price, since they would have more bank balance versus stock (= shareholders feel more secure).

That could be quite a simple base, maybe?

Exactly! And make for some exciting decisions: an opportunity arises to take down a valuable competitor, but to do it you have to dig deep into the pension fund and take on the risk of destabilizing the company: if there is a big enough pay off in the mid term than it's worth it... but if not, you've potentially just sunk yourself and either way, a rigerous world event system could boost or sink you anyway... just like the real world.

Which does bring up other questions... What risks should be involved in buying companies out? One poster mentioned taking property, people and as well as (what we already get, existing codebases). I would think we should get the value of our exisitng stock back too... it annoys me that we don't. But what about the companies existing cash - where does that go? Because what if there is no cash - but a lot of debt, perhaps more than we realized if we didn't do our home work before buying the company out? Also, maybe we inherited property, but if there is a lean or mortage on it? Finally, what if the dev teams we just bought don't want to join us?

I'm really just thinking outloud here, thoughts?

[Hunter]

Originally posted by dasherk:

Originally posted by Dryhtscipe:

This would lead to very big, very stable companies, with stock prices that neither rise nor fall... but if they lost enough money they'd have to start withdrawing from pensions and that would be a destabilising mechanism against the "security" of keeping a big war fund hidden away (= shareholders feel insecure).

Likewise, if they were forced to sell stocks, this would have the effect of stabilising the price, since they would have more bank balance versus stock (= shareholders feel more secure).

That could be quite a simple base, maybe?

Exactly! And make for some exciting decisions: an opportunity arises to take down a valuable competitor, but to do it you have to dig deep into the pension fund and take on the risk of destabilizing the company: if there is a big enough pay off in the mid term than it's worth it... but if not, you've potentially just sunk yourself and either way, a rigerous world event system could boost or sink you anyway... just like the real world.

Which does bring up other questions... What risks should be involved in buying companies out? One poster mentioned taking property, people and as well as (what we already get, existing codebases). I would think we should get the value of our exisitng stock back too... it annoys me that we don't. But what about the companies existing cash - where does that go? Because what if there is no cash - but a lot of debt, perhaps more than we realized if we didn't do our home work before buying the company out? Also, maybe we inherited property, but if there is a lean or mortage on it? Finally, what if the dev teams we just bought don't want to join us?

I'm really just thinking outloud here, thoughts?

You shouldn't get back your initial investment... because in reality, buying that stock sent the funds to whatever company you bought the stock from... either the company you're buying out or someone else who had the shares to begin with.

So if Company A (you) buys 45% of Company B, those funds go to Company B's balance as an initial public offering of those shares (an IPO). Then everytime you sell your shares of Company B, say to Company C, you get cash from Company C who in turn gets those shares... however, Company B makes no more money nor does it lose any, because it origianlly sold the shares to you.

So, if you buy back the Company B shares you sold to Company C, and then buyout Company B in whole, you would in essence earn their bank account balances, assets, staff, buildings etc... the original amount you put into the shares you bought at first are part of the cash balance of that company, since they offered them initially and you bought them.

Hope that makes sense