Dividends, Roughly how much Options

[raggedhalo]

Hi folks,

Some players in my group have started buying shares in various AAA corps; Renraku and NeoNET, to be precise. Rather than a number of shares, I've been asking them how much they want to spend on shares, and then charging a 10% brokerage fee on top of that.

Now, I figure that AAA shares are all pretty stable, pretty-high priced and generally a good, if risk-averse, investment. But my two questions are:

1. How much variance, over what period of time, in the share price is likely/reasonable/realistic?
2. How much will be dividends likely be? Is it (as a rule of thumb) 1% of the value of the shares?

Basically, what sort of rate of return should I be offering in order to stick with the setting?

[Cthulhudreams]

I feel the corps are probably best considered like general electric - huge conglomerates. With that in mind. GE has a dividend yield of 4.13% (IMG:style_emoticons/default/smile.gif)

[PBTHHHHT]

Depends on the type of stock you want to get, there's also preferred stock without voting rights, and the common stock having voting rights, and then there's several more but if you really want to get into the specifics, go take a corporations class like I did. (IMG:style_emoticons/default/nyahnyah.gif)
If your runners buy a large enough block of stocks, who knows, there might be run potential for an upcoming vote. Also what's interesting would be if you can get the players into some intrigue especially concerning corporate takeovers, mergers and acquisitions, etc.

[Zak]

As a runner, dealing with Options is awesome and preferrable to just holding stock.
Especially if you know that the run you are just about to do will affect the price.

But make sure you won't annoy your GM with it (IMG:style_emoticons/default/wink.gif)

[JoelHalpern]

This depends heavily on your GM.

Firstly, you have to assume that whomever is hiring you is probably better positioned to speculate secretly than you are.
Secondly, someone is probably fronting for you on the speculation. While you don't have much money, they probably have access to a lot of money. If they follow your bet, this may tip your sponsor's hand. They won't like that.
Third, many adventures and many GMs have outcomes other than the obvious / expected. Betting on the results of a run may well cost you more than the fees.
Fourth, the Johnson may want the actual results secret. You probably don't know when or if the trouble for the target will become public.

So, for most campaigns I have heard about, trying to bet gamble, purchase stocks, or even mare heavily speculative, purchase options) is probably not the best bet for the runners.

Depending upon the GM, the financial trail may also call attention to your investment front, as the corporation tries to figure out who is making money on their problems (that is one of the things companies dislike.)

Joel

[Blade]

And don't expect a megacorp's stock value to be affected by your shadowrunning, a megacorp is far too big for that.

It can start to get interesting when you merge all the data known by a lot of Shadowrunners, which is the aim of an organization described in Loose Alliance.

[CanRay]

A Megacorp, no. But don't forget that runs just aren't against the Megas!

If you have Options on "CallCentreCo" and pull 'Runs on/for it, then that will show things.

In addition, sure, it won't affect the Mega, but the smaller Subsidiaries WILL be affected by Shadowruns as well!

[Synner]

That would be Brokerage X - what the Exchange does for shadowrunning, Brokerage X does for the stock market with shadowrunner's insider knowledge and investment funds.

[Zen Shooter01]

Do away with the 10% fee. The real life online brokerage Etrade.com offers investment advice and data on companies and investments, and only charges a flat fee of $13 per trade. If you're moving money in blocks of five thousand or more, that fee is inconsequential. Improved automation through virtual reality and advanced computer technology in the 6th World would make it even easier.

Integrate investing into the rules. Create an academic knowledge skill called Investing. Every three game months, let the player roll that skill, modified by good or bad markets, modified by insider knowledge possibly gained through shadowrunning, modified as the GM sees fit. The number of hits is the percentage of return on the money invested. If ten thousand nuyen are invested and the player scores three hits, they increase their 10,000 by 10,000 x .03. Presume that's net - the Investing skill includes strategies for minimizing brokerage fees and taxes.

A glitch means you lose 5%. A critical glitch means you lose 10%.

With the approach you're trying, you are going to have to decide what one share of each of the ten megas - if not each of the ten megas and a dozen or so smaller corporations - is worth today, and then you are going to have to decide which way they will move tomorrow, and then you are going to have to argue with your players about it. You're going to have to assign each one a dividends percentage, and you're going to have to vary those rates from time to time. Then there're bonds, savings accounts, mutual funds...your game is going to transform into "6th World Stock Market", and you're going to drown in bookkeeping.

[Apathy]

Alternately, just pick 10 conglomerates today to link the future megas to. If GE goes down 1% this week, then Fuchi went down 1%. When Microsoft goes up 2%, then Saeder Krup went up a similar amount.

[Cheops]

Let them have a piece of gear called "Investments." It has a value = X + Income, where X = earned money invested, and Income = reinvested earnings from the investments.

I'd say that most megacorporate bonds or else bonds in Z-OG would be a good proxy for a Risk Free Asset. You as GM choose what this rate is at the end of each quarter. It should be between 3-5% based on how crazy things are in the game world. If you don't want to come up with it yourself, when it is the end of the quarter look up the yield on a US Gov Treasury Bills for the day of your game.

At the end of each quarter the runner makes a Logic + Intuition test with a threshold of 1 (for SINners) or 2 (for Criminal/SINless). 0 Net successes = US T-bill yield. Each success beyond threshold adds 2%. A glitch results in no gain. A critical glitch is no gain plus the attention of the SEC/IRS/whatever you want to send at them.

If they don't want to manage their own money then charge them 1% of income per die that the manager has in his dice pool. Ie. a manager with 12 dice takes a 12% fee so the character only earns 88% of what he should have.

[Fortune]

Why the higher threshold for criminals and SINless?

[Cheops]

Oh oh oh...just came up with some more complex rules if you want them:

the rules above apply to a balanced portfolio. The runners can decide to weight their portfolio more towards stocks, bonds, or derivatives/alternatives.

More Stocks: Threshold increases by +1 but they get a basic rate of 2x risk free asset.
More Bonds: Glitch is the same as 0 net successes.
More Derivs/Alts: Threshold increases by +1 but if you get a Critical Success then earn 4x risk free asset.

Runner influence provides a modifier to the dice pool equal to severity (determined by GM) of effects on targeted corp but the runners must weight portfolio towards Stocks or Derivs/Alts.

[Cheops]

Why the higher threshold for criminals and SINless?

To reflect the greater difficulty for them to acquire financial instruments. Basically it reflects the fact that they have to go through shadow brokerages and what not regardless of whether they want help with managing their portfolio. I'm also assuming that a Fake SIN would come into enough continuous contact with background checks that they would be discovered as fakes if you tried to use them to purchase instruments.

[Jaid]

it is worth noting that you can buy a lifestyle permanently for 100 times the monthly cost.

so if they have investing skill, it should probably at least get a better return than that. (1% per month, which is pretty darn good if i'm not mistaken).

[IQ Zero]

1% per month? Isn't that rather high? Most low-risk investments also tend to be low-yield. An average of 5% per annum can be considered baseline normal.

That said, you don't have to invest in the main mega. As an example, instead of investing in Ares Macrotech, the same amount will provide a higher shares in, say, Knight Errant.

[Fortune]

To reflect the greater difficulty for them to acquire financial instruments.

Then I would think it would be harder to set up at the beginning. Maybe jump through more hoops or make a higher initial investment fee, or something along those lines. Once dividends are being paid though, it doesn't make sense to me that the same stock doesn't pay out in a similar manner to all investors.

[Apathy]

Let them have a piece of gear called "Investments." It has a value = X + Income, where X = earned money invested, and Income = reinvested earnings from the investments.

I'd say that most megacorporate bonds or else bonds in Z-OG would be a good proxy for a Risk Free Asset. You as GM choose what this rate is at the end of each quarter. It should be between 3-5% based on how crazy things are in the game world. If you don't want to come up with it yourself, when it is the end of the quarter look up the yield on a US Gov Treasury Bills for the day of your game.

At the end of each quarter the runner makes a Logic + Intuition test with a threshold of 1 (for SINners) or 2 (for Criminal/SINless). 0 Net successes = US T-bill yield. Each success beyond threshold adds 2%. A glitch results in no gain. A critical glitch is no gain plus the attention of the SEC/IRS/whatever you want to send at them.

If they don't want to manage their own money then charge them 1% of income per die that the manager has in his dice pool. Ie. a manager with 12 dice takes a 12% fee so the character only earns 88% of what he should have.

This doesn't take into account that lots of people who invest (especially those who are only investing over the short term) lose money. As written, I could never lose money investing using these rules.

[Sir_Psycho]

There was a book (SR2 or SR3) that talked a lot about stocks and shadowrunners. Corporate Shadowfiles, maybe?

[Pendaric]

I have had to face this in my game. Via Brockerage X my decker has invested in stock. I had to revisit the payouts to make sense in SR terms. As Jaid said, if buying a lifestyle represents/can represent stock investments then the best you can get is 1% per month. Thats still a very good percentage compared to most low risk investments.
Of course if your not doing it through something shadowy link Brockerage X then your fake SIN better be good or your profit could disappear in a puff of logic bits.

[Cheops]

Then I would think it would be harder to set up at the beginning. Maybe jump through more hoops or make a higher initial investment fee, or something along those lines. Once dividends are being paid though, it doesn't make sense to me that the same stock doesn't pay out in a similar manner to all investors.

anything that's actively managed would require periodic rebalancing to stay within your strategic targets and to gain above average returns you can't just track the index -- you have to actively trade. If you let them just stick all their money in mutual funds then sure that doesn't matter -- the fund manager does it for them (and takes his fee). If they just let it sit passively then they should be making a 5% or less on their money (since they can't gain any capital gains without selling the position and the large returns on stock markets are due to price increases not dividends which have stayed fairly consistent in America).

If it really bothers you then you can get rid of the increased threshold and instead charge 1/5-2% fee for money managers. That way they still earn less than a legal person.

@Apathy

There's a few reasons why the characters shouldn't lose money. First of all, it is a game and it wouldn't be fun to put a bunch of money into the market and lose it all because you failed a roll. SR is already gritty enough with all the flying lead, electrons, and mana. Secondly, these rules don't really simulate real investing. If you want to do that just enroll in the CFA program and don't bother playing SR anymore. Most of the big losses come on risky bets: leveraged investing (borrowing money to invest), short positions (selling an investment you don't have in hopes of rebuying it later at a lower price), or crazy bets on derivatives/options (like that recent fiasco in France). Someone who just plays it safe (and note that my baseline return is for the least risky investment in the world) doesn't usually lose money in the long run.

Although now that you point it out I should have added to my rules that: ALL MY QUOTED %AGES ARE IN ANNUALIZED RATES. Divide by 4 to determine what the PC earns that quarter. Hmmm...really should have caught that the first time.

[masterofm]

If your stock is basically an extension of your lifestyle then what is the fun in that? I find that stock should be dependent on the shadow world as much as real world influences. I think the better usage of buying stock is when you are investing on a run that you know will help one company and destroy another. I just think it would be more fun to make something interesting out of the stock market then just use it as a lifestyle buy in. Although I like the option of just having cash that you can throw around for doing a job, once you are set for life, but I think most Shadowrunners would retire instead of working crazy jobs for the rest of their lives.

[Sir_Psycho]

There's a few reasons why the characters shouldn't lose money. First of all, it is a game and it wouldn't be fun to put a bunch of money into the market and lose it all because you failed a roll.

So if your shadowrunner bets ten thousand nuyen on Red 28 he shouldn't lose money? The odds are better on the stock market, but it's still gambling. What's the point in having rules for dividends if there's no risk?

[raggedhalo]

This doesn't take into account that lots of people who invest (especially those who are only investing over the short term) lose money. As written, I could never lose money investing using these rules.

I think a straightforward fix is to make it Threshold 2 or 3, so that if you get 0, 1 or 2 successes you lose 1%, 2% or 3% (still 5% on a glitch, 10% on a critical).

Make sense?

[raggedhalo]

There's a few reasons why the characters shouldn't lose money. First of all, it is a game and it wouldn't be fun to put a bunch of money into the market and lose it all because you failed a roll. SR is already gritty enough with all the flying lead, electrons, and mana.

I totally disagree. There has to be a chance of losing in order to make the game fun, otherwise it's just resource-tracking. Hell, I could extend your argument to say that it wouldn't be fun for a character to die just because they failed a roll (well, maybe three rolls is more likely, but you get the picture)!

Loss of earnings, just like death or severe injury, is an essential part of what makes Shadowrun gritty and fun, at least at my table.