Stock Broker Fail-Cascade Story

[Colinde]

So.. I was playing on the first(?) British campaign map, where the goal is to gain as much Net Worth as possible.

Everything was going fantastic.
I had 10x the economic throughput and 20x the stations as my competitors. Including like 90% of the tracks.
My economy was extremely stable, earning minimum of 2-3m a year.
I owned over 50% of the shares in all my competitors companies as well as my own.
My Purchasing Power (P.P.) was extremely high.
So, I went for it, trying to secure 80% of the shares in my own company.

I only realised too late that i had done it at peak economy.
When the economy returnes to normal my P.P. went from 1.4 million to -140k.
The stock-broker immediately screamed at me to raise my P.P. into positive.
"Fine" I thought, "I have so many shares anywho". But when I sold any share, my P.P. deficit rose!
"Oh f***.."
"I am completely sure my stock-broker is entirely too stupid to check if selling stock even helps the situation..."

Sure enough: My P.P. went from -140k to -1.2 million when my Stock Broker sold EVERYTHING.

So I telegraphed my stock broker: "Amateur [STOP] Pure amateur [STOP] You are fired [STOP] You are the sole responsible person for me loosing Britain [STOP] I'm leaving for the mainland [STOP] Good day sir [STOP]"


-----
So.. Yeah.. I kinda undeerstand that I overreached a bit. I thought I was relatively safe with 1.4m P.P. .. But that casade should not be possible. 2 things:
1: Purchase power should at the very least stay the same when selling off stock (maybe not in fringe cases, when the player owns at least 60% of shares in all the companies).
2: The stock-broker should know better than to ruin the player even more than neccesary. Some sort of check should have been in place. Then give the player a year to correct it, or something.

Or am I missing something here?

Anywho. I hoped you enjoyed my story. I did not enjoy the experience itself, but i wante to share it.

[mrraleigh98]

Yeah, one should always be careful about overextending in the stock market. One thing that may have cost you was that the AI can sometimes try and hurt your purchasing power by selling their stock in bulk if they see you are vulnerable. I've even seen an AI sell up to 30% of his stock, which leads to the price of his stock fall to a pittance. So, you should be especially careful of buying on margin with AI stocks. Not saying you can't do it, but you are gambling.

[Colinde]

True, But i was still confident with the magins I did have. I was making so much money, i would make the latest 2m investment back in less than 4 years with the divident I had set.. But thanks. Come to think of it, the AI did sell off some stock just before it happened, but it wasn't much.. Must be the combination of rescession and that nudge..
At least I know better now. Still.. I still wanna kill that stock-broker xD

[benwduffy]

I'll chime in here and mention that purchasing power is something* like half of your stock's current worth plus your cash on hand (if you have a negative amount of cash, it will be reduced by that amount). Remember that when you buy stocks, the price of that company immediately goes up; selling them has the price go down.

When you get a margin call, selling a little bit of stock could trigger bigger paper losses than you'd make from the sale. Think of it this way: My hypothetical RR has 100,000 shares at $50 each. Every time I buy or sell, the price changes by $1.

If I own 10,000 shares (10%), I'd have $500,000 in stock. Buying another 1,000 would raise the share price to $51, cost me $51,000 and the new net worth is $561k

If I own 80,000 shares (80%), I'd have $4,000,000 in stock. Selling 1,000 would lower the price to $49/share. I'd get $49,000 but my 79,000 remaining shares would now be worth $3,871,000, a decrease of $129,000. If PP is the same formula I used above, my net change would be -($49,000)-($129,000/2) = -$15,500.

Essentially, you own too much of the market to sell your shares in order to make a margin call. Similar things have happened to real people/firms in the past (although usually from owning too much of an industry/sector rather than one company). One thing that RRT2 could have done to alleviate this is to allow you to auction off a block of your shares and see if anyone bites, although you would seriously risk a hostile (to you) takeover of your railroad.

*I can't remember the actual formula off the top of my head.

[Hello, world!]

If you already own 80%+ of your company, you shall increase the divendend to 200k+/year at least.

[Colinde]

Well. I was in the process of doing that already.. The Bloom just whent off the Boom at the most inopportune time.

[Emelio Lizardo]

I suspect that the program keys on your overextension to crash the market.

[Devilhunter]

Well...it's been a long time since the original message...
But I had the same problem. Later I found out how to solve it. When you sell your shares, their price go down. Thus you have to rise the price.

I guess your company was quite successful and had money on the account. In these cases I do the following.
1. Buy shares from the market (if any). If this move wasn't effective enough, go to the step 2.
2. Sell a portion of shares, then buy them back by the company to increase shares value. If PP is still < 0, I do another round.

Usually it helps.

P.S. Just make sure to pause the game, because 1 month is very short.

[tundragopher]

I have similarly tripped and fallen a few times. now i do power saves, especially right before i do any sort of real market play. its almost like the ai is baiting you waiting for the fall.

[BigSilverHotdog]

RRT2 may have cost me 20 dollars but the fear of leverage it instilled within me has saved me so much money over the years it may just have been the best investment I ever made.