Glotmorf on 8 Aug 2002 17:24:04 -0000

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Re: [spoon-discuss] Stock Market v2.1.1

On 8/7/02 at 12:37 PM Jeremy \ Cook wrote:

>I don't think the dividends should be taken from the player-that seems
>like too harsh a penalty. It means public players' scores & bank balances
>increase 33% slower than private players'.

Yeah, I know.  It was supposed to be an approximate reflection of real-world stock trading.  For those who are interested, here's Stock Trading 101:

-	An owner of a commercial enterprise decides he needs/wants money.  As opposed to loans, he decides to sell some percentage of his company to private investors.  He does this by making an Initial Public Offering (IPO) of shares of stock in the company.

-	The investors need a reason to buy this stock.  It may be as little as the prospect of selling said stock later for a higher price, but most companies structure some form of dividend payment into the terms of stock ownership, so that owners of stock in the company receive some percentage of profits, if there are any, on a periodic basis.

-	The original owner of the company typically maintains a controlling interest in his company by retaining at least half of the stock issued.  It is not necessary to do so in order to continue to run the company, but if he doesn't he is essentially selling the company to any person or collection of people that own more stock than he has.  As, literally, owners of the company, stockholders can make decisions regarding the company that are totally contrary to the founder's wishes.  They can even fire him from whatever salary position he'd held for himself.

-	If/when the company goes belly-up, the assets of the company belong to those who own the company, namely the stockholders.  I'm not sure if the majority shareholders have any say at this point about how assets are distributed; such things are built into the terms of ownership for an individual stock, and are probably also subject to SEC regulation.

-	After the IPO, the stock is bought and sold amongst individuals and institutions.  There is no "Bank", but there is a sufficiently large pool of investors that it can seem like some faceless entity owns whatever stock a given individual doesn't.  The market, the perceived face of said entity, has a collection of willing-to-buy-at prices (bid prices) and willing-to-sell-at prices (ask prices) for each stock, depending on the orders people have posted in a queue sorted by price and time.  When the highest bid price meets the lowest ask price, a transaction occurs, and the next-highest bid price and next-lowest ask price move up to the front.  Someone coming in saying "Buy XXX stock" is agreeing to pay the current ask price; someone coming in saying "Sell XXX stock" is agreeing to accept the highest bid price.  The NASDAQ more clearly shows bid and ask prices than does the NYSE; the NYSE usually just displays the last price a stock was traded at, for whatever reason.

That's the basics.  My player stock thang tries to reflect all this, but a reflection of the real world might not necessarily be suitable here.  Issuer bennies vs. stockholder bennies have to be balanced -- a player needs a good reason to issue, and other players need good reasons to buy, and each needs to at least perceive they're getting as much out of the deal as the other.

So...fresh round of comments?


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