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Lesson Overview:
This Department of Education series will go over the basics of the stock market module. It will be split up into two articles, one going over the investing side and one going over the owning side. This article will cover investing.
An Introduction to "Shares"
For those of you who have never had any experience with a stock market the basic concept is that a public company is sells shares to the public. When someone buys a share they give the public company money in return for ownership in that company. The public company raises capital to make more money and the investor gets to own a portion of the company and gets to vote on company related matters and if the company pays dividends the investor is entitled to some of the income made by the company. Now that you hopefully see why you would want to invest lets talk about investing.
How to Make Money By Investing
Capital appreciation, sometimes referred to as"capital gains", is the amount of money you receive from the sale of stock. For example, if you bought a share of a corporation at 1g and you sold it at 2g, you would have a capital appreciation of 100%.
However, your trip in the stock market wont be a guaranteed profit. Capital depreciation is the amount you lose when selling a stock. For example, if you had bought that same share at 1g and you sold it for .50g, you would have a capital depreciation of 50%.
Dividends
Dividends are a share of the profits that are paid out by the corporations. Corporations will set a dividend rate which is a percentage of the profits that will be distributed by the corporation to the shareholders. For example, let us assume that you have a single share of a moderately successful corporation. The CEO of this corporation sets a dividend rate at 80% (which means he is redistributing 80% of the profits to the shareholders), and the corporation has a profit of 50g. 40g will be split among those with outstanding shares. For example, if there were fifty shares, each share would receive 0.80g -- while if there were 500 shares, each stock would receive .08g.
Dividend yield is calculated by finding the most recent dividend payout per share, then dividing it by the share price. For example, if the last dividend was .80g per share and the share costs 7.5g, your dividend yield would be 10.6%.
How To Research A Stock
So you have some gold that you want to use to invest in a company but do not know which company you want to invest in. If you look under the “statistics” tab you will see where it says stock market stats. This will take you to a list of all the public companies in the game. They will be listed from highest total value to lowest. You can also sort by which country the company is based in.
So lets look around at some companies to see if they are worth investing in. When you click on a stock companies name you will be brought to their page. Here you can find a good amount of information on the company including, the estimated value of the company, how many outstanding shares exist, what players are buying and selling stocks at, the players that manage the company, the players that invest in the company, the latest stock transaction prices, and what companies are owned by the stock company.
Share Price
So what is the information that we want to focus on? Lets start with the prices to at which stocks for the company are being bought and sold. Players can set prices that they want to buy shares at and when someone post an offer that meets or is lower than they buy offer it will be automatically bought. Since they can be set at any price people will set buy orders at ridiculously low prices that will probably never been sold to them because they are so low, the same goes for selling orders and people posting ridiculously high ones. Even though you can have these ridiculous numbers you should still be able to see what the stocks are being bought and sold for. There may also be no stocks being sold at the time.
Management
You can look at who is managing the company. If you know them to be respected players then you know they will most likely not try and scam you out of money. If you do not know the management a background check never hurts.
Assets
Finally what we really want to pay attention to are the companies owned. Take a look at how profitable the companies are since this will be the income for the stock company. You want to make sure the companies are being run to full efficiency and are going to make lots of profit for you. Now that you think you have found a company that looks to be making money and has the right price on shares lets look at how to buy the shares.
What can I do as a Stock Holder?
On the page of the stock company click the “buy shares” button input the amount of shares you want to buy and at what price you want to buy them, if you match the amount of an already existing sell order you will buy it immediately if not then you will have to wait until someone post a sell offer that meets your buy offer. Now that you bought your share congratulations you are now a part owner in a stock company! Now what? With your bought shares you will now be able to vote in matters of the company proposed by the CEO and you have the option to sack(fire) the CEO in a vote and to hire a new one. You will be given alerts for all votes in the company and for when you are paid dividends.
That is about it for the basics of investing. Remember all of your investments have the potential to lose you all your money, play the market smart but also go with your gut at times, success in investing comes to those who are patient and to those who are radical. There is no one standard way to be a great investor, you will have to find out what works for yourself, good luck!
Your friend,
Darkflight
Special Thanks to
Shylock
Previous article:
[DoE]Newspaper Guide (13 years ago)
Next article:
[DoE]Guide to the Stock Market Part two: Running a Stock Company (13 years ago)
About the game:
USA as a world power? In E-Sim it is possible!
In E-Sim we have a huge, living world, which is a mirror copy of the Earth. Well, maybe not completely mirrored, because the balance of power in this virtual world looks a bit different than in real life. In E-Sim, USA does not have to be a world superpower, It can be efficiently managed as a much smaller country that has entrepreneurial citizens that support it's foundation. Everything depends on the players themselves and how they decide to shape the political map of the game.
Work for the good of your country and see it rise to an empire.
Activities in this game are divided into several modules. First is the economy as a citizen in a country of your choice you must work to earn money, which you will get to spend for example, on food or purchase of weapons which are critical for your progress as a fighter. You will work in either private companies which are owned by players or government companies which are owned by the state. After progressing in the game you will finally get the opportunity to set up your own business and hire other players. If it prospers, we can even change it into a joint-stock company and enter the stock market and get even more money in this way.
In E-Sim, international wars are nothing out of the ordinary.
Become an influential politician.
The second module is a politics. Just like in real life politics in E-Sim are an extremely powerful tool that can be used for your own purposes. From time to time there are elections in the game in which you will not only vote, but also have the ability to run for the head of the party you're in. You can also apply for congress, where once elected you will be given the right to vote on laws proposed by your fellow congress members or your president and propose laws yourself. Voting on laws is important for your country as it can shape the lives of those around you. You can also try to become the head of a given party, and even take part in presidential elections and decide on the shape of the foreign policy of a given state (for example, who to declare war on). Career in politics is obviously not easy and in order to succeed in it, you have to have a good plan and compete for the votes of voters.
You can go bankrupt or become a rich man while playing the stock market.
The international war.
The last and probably the most important module is military. In E-Sim, countries are constantly fighting each other for control over territories which in return grant them access to more valuable raw materials. For this purpose, they form alliances, they fight international wars, but they also have to deal with, for example, uprisings in conquered countries or civil wars, which may explode on their territory. You can also take part in these clashes, although you are also given the opportunity to lead a life as a pacifist who focuses on other activities in the game (for example, running a successful newspaper or selling products).
At the auction you can sell or buy your dream inventory.
E-Sim is a unique browser game. It's creators ensured realistic representation of the mechanisms present in the real world and gave all power to the players who shape the image of the virtual Earth according to their own. So come and join them and help your country achieve its full potential.
Invest, produce and sell - be an entrepreneur in E-Sim.
Take part in numerous events for the E-Sim community.
