Concerning Stocks.

[Erik Mortis]

Andreas and I seem to be hitting heads on this one.

I wanna create a stock system into the bank that uses SCUE money to buy and sell stocks. Straight and simple. Companies make stock and set prices. People buy the stock and can resell it for a price they set. People can then buy said stock for the price, or not.

He wants to use an "alternate currency" to buy and sell stocks. I'll leave it to him to explain what that means.

[Andreas the Wise]

Essentially, I want to simulate a stock exchange. I don't believe many companies will pay dividends (nor make enough money regularly enough for it to be worth it) and I don't believe people are going to fork out 500 a stock for something that essentially does nothing, and they're unlikely to find a buyer for.

But I do believe people would enjoy the experience of a stock exchange - initially populated with NPC companies based off the resources available in major SCUE nations; but later with the option of including practically any company (like JASO, ISI etc). The stock exchange will use its own currency because that means people can buy and sell stocks with the exchange and currency can be 'appear' and 'disappear' at will without messing up the SCUE economy. You gain initial credits by buying them for SCUE currency at a rate of 5:1 (ie 1 buys 5 credits). If, like me, you have fond memories of the old pokemon games, its a bit like the casino they always had - you paid your money to get their money, and when you got rich, could trade it out for prizes. I'm in the process of writing up the notes so I can program it all fully - here's my intro:

The SCX simulates a working stock exchange; and allows users the experience of buying and selling stock, developing companies* and taking others over. The motivation beyond this is a 10 000 SCUE prize for the first person to reach 100 000 credits (may adjust, we'll see). Other things may be possible to trade out for in the future.
The simulation is acheived by two main means:
First - users can buy and sell stocks with the exchange. This allows them to trade at any hour of the day or night, not having to worry about other users.
The bulk of trading (and all initial trading) will be via this mechanism. Prices are adjusted a small amount based on the amount traded.
Second - prices are adjusted each week based on several factors - some within user control (developing the company), some within user knowledge (MITO prices) and some entirely random. This simulates the effect of the millions of other users of the stock exchange.

*A subforum will be set up with all the companies in it. You can adopt one and start developing it, or add your existing company (the Ashkenatzan companies, for example, are beautifully developed but don't seem to sell much.). Developing your company gives bonuses to its price - so you could buy into an Ashkenatzan company knowing that its price will rise quite rapidly and you can later sell out at a huge profit.

More details will come out in the coming weeks - I just want to finish this last bit of ATTILA before I start on the SCX (Small Commonwealth Exchange).

[Erik Mortis]

Andreas and I have decided instead of working together or competing. We'll just both do our own thing. So we'll end up with two different kinds of Stock markets. More variety.

[Andreas the Wise]

We're essentially selling different products, so we'll let the market decide which one it likes. A real economy ... or ULTIMATE WEALTH

[Scott of Hyperborea]

That works.

Andreas' seems kind of like a stock market game...rec-economy, if you will. I'm more interested in Erik's because it involves real SC companies and the stocks are related to how well the companies do - so it's actually a part of the real unified economy. However, Andreas is right that there are a lot of technical and motivational problems to be overcome, and I look forward to seeing how Erik overcomes them.

[Björn Ironfist]

That works.

Andreas' seems kind of like a stock market game...rec-economy, if you will. I'm more interested in Erik's because it involves real SC companies and the stocks are related to how well the companies do - so it's actually a part of the real unified economy. However, Andreas is right that there are a lot of technical and motivational problems to be overcome, and I look forward to seeing how Erik overcomes them.

I agree with what you've said here 100%. I love the ideas that Erik has, but am worried that the whole scheme wont work. Be great to see how it all works out.

[Harvey Steffke]

Historically stock markets were serious business in the Apollo Sector circa 2000/2001. Every one of them generated immense activity as people frantically bought sold, but eventually the paperwork and constant upkeep required to keep the system running became lax, and this would usually coincide with the point when people began to lose interest. As a result, a massive, complicated system that had been built up so far that it could only sustain itself with frenzied action became ignored and collapsed almost overnight. I saw it happen in multiple nations over and over again.

This is NOT a discouragement for either of you; merely a word of warning. Erik probably knows what I'm talking about.

I feel Andreas's system is simply too complicated for all but a few diehards to care about, but the diehards would eventually completely overpower everyone else and end up with immense money that would sort of throw off the system. Much like how Andreas aquired most of the rest of his wealth

On the other hand, if Andreas's system is convoluted, Erik's feels pointless. So you can buy stock and resell it. Okay, so what? Why would I want to buy a stock? For the hope of selling it to someone at a higher price later? So the only actual use of the stock is to overprice it and hope that you can sucker someone into buying a useless item for more than you bought it for?

I really don't understand the appeal of micronational economies period so maybe I'm missing something you all see and these ideas are grand and awesome. I'm just calling it how I see it here.

[Andreas the Wise]

I remember hearing about the failures of Apolyton stock exchanges - so I'm hoping that a fully automated one, with non-broken, hidden equations (bit like QUARREL in that) will avoid the problems it had.

[Harvey Steffke]

Hah! As usual Andreas, you are almost alarming on top of things.

[Erik Mortis]

I remember those days well.

It would be up to companies to create incentives to buying their stock, just like in the real world. Dividends, control of the company.. etc.

[Scott of Hyperborea]

On the other hand, if Andreas's system is convoluted, Erik's feels pointless. So you can buy stock and resell it. Okay, so what? Why would I want to buy a stock? For the hope of selling it to someone at a higher price later? So the only actual use of the stock is to overprice it and hope that you can sucker someone into buying a useless item for more than you bought it for?

It seems to work ok for a lot of extremely serious-looking people in suits in New York.

[Harvey Steffke]

Because the macronational stock market is such a huge beast with so many variables that tracking and understanding it all is a full-time job. In micronatoins, with a dozen or less participants, it's extremely easy to get into all the math and figure out if you'll come out ahead or behind.

[Scott of Hyperborea]

There shouldn't be any math.

JASO says "We want money; we will sell ten shares in our business. People with shares can vote on decisions like what countries to sell our planes to, and each share will give 10% of the profits." JASO offers the shares for E100 each, but no one wants them at that price because they don't think JASO is too interesting. So I offer E50, and JASO officials grumble and give me a share.

Two months later, JASO comes up with a really interesting design. Lots of people are giving them money, and there's a huge political storm over whether or not to sell it to Ashkenatza. Max offers me E50 for my share so he can vote in favor. I say I want more. Max grudgingly offers me E200, and I say yes and laugh all the way to the bank.

Two months later, JASO has gone completely inactive and is making neither planes nor money. Max wants to sell his shares, but the only person who will pay is Andreas, who wants one as a historical relic. He offers E10, and since it's better than nothing, Max grudgingly takes it.

I made money by correctly predicting that JASO was going to become a more valuable company. Max lost money by not realizing JASO would become less valuable. There was no math or formulae involved.

The difficulty will be defining what, exactly, you get from a share. A percentage of profits and ability to vote on stuff seems like a pretty good idea. That's the way we're running QUARREL now, I think.

[Harvey Steffke]

Oh, see, your example is a bit different and actually could be a bit of fun. In your method, the stocks have inherent worth other than their asking price: a share of the profits generated by the company. Without that, or something similar, I maintain it's all pointless.

[Erik Mortis]

Like I said, it's up to companies to make stock worth while.