Workings of the stock market

[Gwizz]

This is a simple example of how the stock market works:

Generally, Stock prices very according to the arrival of a train with profitable cargo.

A long period if time with no profitable trains arriving causes the stock price to go down.

If you see many trains about to arrive at a station

then buy that company's stock as the price will go up.

If no trains are close to arriving then sell some stock, but not too much. 

You are selling at a higher price then buy it back at the lower price

just before the trains arrive.

It is seldom a good idea to go too deep into margin,

Unless you have big profits that are coming in fast and heavy.

I seldom sell short.  If I see no AI trains arriving for a while, it would be a good time to

sell two or three shares short of the AIs stock, since

the price will drop over time until a profit is made. 

Buy these shorted shares back at the lower price

when profitable trains are about to arrive.

When it works correctly, you bought back at a lower price

than you had sold them for.  You keep the difference as profit.

When stock is bought, its price goes up.  When sold the price goes down. 

If you use a stock manager, remember you only get his discount when you buy stock. 

I will normally move my chairmanship temporally to another company where there is

no stock manager, when I sell stock.

There is a bit more to the stock market, but the above is generally how it works.

[steve39]

The question of moving Chairmanship around intrigues me.  I've never done it myself.  You can only do it where you have a controlling majority of the shares, where I have always gone for a merger.   

Am I missing something here - what's the advantage of not merging (apart from saving the cost!)?  ???

[Gwizz]

I normally like to control a number of AI companies.

True I need to own 51% of an AI's stock to merge and control it. sometime less by random choice.

I will normally wait on merging. Their locomotives don't require that I supply fuel, water or sand.

When possible I set AI's up to haul a low profit cargo to one of my stations that has a demand industry.  Their loco returns w/no caboose.

If I don't schedule any of their locos to serve their cities or industry stations, they will buy locos.  I take control and reroute these locos. When I leave, the AI will buy more locos to meet the supply, even going deep in debt to do so.  I also gain dollars by running their locos on my track. 

Doing all of the above causes their stock to lose value making them cheaper to merge later

and I gain while waiting for the merge or not.

I do this a bit different on the "Chicago Railroads" map, Since I can't expand my railroad very fast.

Here I want to keep the AIs alive and profitable.

On this map I want to use AI track cells to build and later expand supply

routes from their stations to my big more profitable industries. 

Or, a least I have them drop ship to one of my stations, so I can haul to the required industry.

On this map it is rare for one of the 10 + startup AI companies to build a railroad if it own with fewer than 30 track cells.  When an AI reaches 30 cells I buy 51% of the AI's stock and build its' railroad somewhere to benefit me.  It is a builders map.  I keep the AI's route simple, named the AI after its location, since I could end up with more than 20 AI RRs running.

I buy none to 4 locos and use the remaining AI money to buy back its' stock.  I even float a bond to buy back more stock.  This causes the AI stock value to go up.  I then sell my extra stock at the higher price.  I normally keep 51% of the stock so I can return to manage trains, get or use a manager or expand the track.  By the way the stock manager works for you and works best if kept with an AI RR that you control. Also, If I want to leave a good manager in the care of an AI, then I leave money in the AI's account so it doesn't go red on me.  AIs that deliver directly to a demand industry do the best at staying alive. If they have money I take control and have them hire the manager on the top of the list.  So when I return to my railroad where I can hire him from the bottom of the list.

I have never figured out the best way to get a manager who is out of sight to move onto the list.

SteveL I believed mastered this operation. Maybe he will pop in and tell us how he does this.

[Marsden]

One advantage could be to devalue the railroad to make a future merger less expensive.  If the railroad that you want has a lot of cash, you can assume ownership and have it buy back it's own stock to use up it's funds, then let it go for a little bit and when the artificially high stock price drops in a few months you can buy it up much cheaper.  If you really want to get the value down, you can retire all of their trains.  Just make sure you keep it on pause while you do this or your own railroad will go to heck while you are away.  You can safely switch back and forth on pause.

[JSS]

Just to confuse things a bit more. ;)

I seldom merge for the

[RTPlayer]

I've learned a lot from reading this; I tend to go relatively easy on the AI companies that do not pose any real threat of major expansion.  I have a question:  How much of this applies to RT3?  And are there any strategies not listed here which apply to the RT3 stock market?  I've started a topic in the General RT3 area which is intended for anyone wishing to answer these two questions.

[Gwizz]

About the same. 

Later I'll add some strategies that apply to controling many AI railroads.