1. Abandon Splits Altogether

[Being]

Introductory Ramble
Been a while since I’ve blathered on – somehow, retirement is busier than I thought it would be. But, my favourite topic has come up again – splits!
Anyway, rather than bore everyone with a long diatribe, I’ve decided to use multiple threads for my diatribes.

1. Abandon Splits Altogether
Mentioned by Rich, I agree 100%.
I’d be curious to hear what “good” is brought to this stock market simulation by splits. The only thing that I can think of is that it is a method to stop stock prices from going through the stratosphere. Perhaps there are other methods which could be explored. I would agree that this would require a solution before splits are abandoned.
On the other hand, there are many disadvantages to splits. They take IPO’s out of circulation, reducing investment options. They provide a disincentive to active investors who cannot gain (and sometimes lose ground) on inactive players. They are a level of complexity (or at least record keeping). They provide no end of investor friction.
So, the trick is how to eliminate them. Rich suggests a 30 or 45 day warning. I can see how that would be a cause for concern for Orren, as very casual players or ones who return after hiatus would be torqued.
Question O, how do you go about selling off shares from 1 mil to 100K? Programmed or manual? My thinking would be rather than sell to 100K, make it to 1 share. So, if that’s doable, then you’d have 1 share @ $1,000 in each port. If you then reset the price to $20, the most anyone can lose is $980.

[StockTrader]

Who are you?

No, just kidding. Welcome back to the boards!

Anyway, there is one issue with what you suggest. Splits allow a new player to be able to afford to purchase stocks. If the price were to get to $100,000, that'd be an issue. The only sub-market they're left trading is the IPO market.

One note. If we reset the split market would actually want to 1) disable split players, 2) sell off ALL shares, 3) reset their max shares tradeable value and 4) reactivate them on the market. That would be the way I would suggest we do it.

And to answer you question, we manually sell as of right now.

Nick

[SiteWolf]

Without going into other discussion, since I'm closing up at work and need to hit the road for now....but in answer to your question of how shares over 100k have been sold thus far...programmed or manual...the answer is.........somewhere inbetween?

I utilize Excel, making a list of holding over 100k shares, putting in a price for each playerid in the list, and figuring out the amount of cash that would be generated by selling holdings over 100k for each member.

I then make backup tables in our database in case something goes wrong (or someone has a question) and add the appropriate amount of cash for each member involved while also reducing their holdings of the stocks involved to 100,000 shares.

So in answer to your question of whether it'd be doable to reduce holdings to other share levels, it could be done with the same process....or could also be programmed without being a huge project..

Not having thought about it much yet, I haven't thought thru what the process COULD be if we did something like this.

[SayOw]

A possible solution to give everyone "fair warning" if splits are indeed going to be eliminated all together, would maybe to do it at the end of the season for each particular sport...

Announce (at the beginning of the season) that for the next NFL, NHL, NBA, PGA, NASCAR and MLB season will be the last season for splitters. Once each of the respective sports has concluded, a date in the offseason could be set and all splits sold...

It would give everyone more than ample time to do what they want with those ipos, not effect any competitions during a particular season and, who knows, might be easier to do in stages as the sports conclude rather than in one massive swipe...letting everyone "ease" into the reality of no more splits...

[SiteWolf]

I've been reminded that, try as we might, we will always have at least some connection to the old WSS...and splits are part of that.

What they were referring to is that earning the cash to buy a split, then holding that split ongoing (with no amnesties at WSS) allowed those playing early and often the ongoing advantage.

Two problems with that mindset IMO. I don't know that people playing early and often should continue to enjoy the ongoing advantage given they've already had the advantage of otherwise building their ports large enough to stay in front of people starting well after them. Case in point being the number of people who remain in our top 100 who've not played in a long time, despite not having purchased IPOs and the lessened advantage since amnesties.

The other thing with comparisons to WSS is....they only had to deal with the whole split situation for about 3 years...we're in year 10.

BUT...we can't completely eliminate splits...not really. At some point, as Nick mentions, the price is prohibitive for other competitions. A stock at $100,000/share means a new monthly port can only buy one share and may not even get large enough to buy 2 shares later in the month...and even if they can, it could be a huge advantage to be just large enough for that 2nd share when someone just below them in the standings is not. In other words, I don't believe we really want to allow share prices much above $10,000. I suppose, if new comps started at $10mil it could be considered, but many feel that's too large a starting point for the bulk of the market.

Or otherwise said, the larger the allowable price per share, the more it can impact the short term competitions. What happens if I can buy 3 shares of a stock due an all time large dividend at a time your port size can't quite buy that 3rd share?

Regardless of the dollars allowed for share prices and port starting sizes, about the only way to eliminate splits completely is to somehow reset prices when they reach a certain level (i.e. when a stock reaches $10,000/share it doesn't split, shares are sold off and the price reset).

If I were starting a new market, a new total value port (something I've thought about) I've thought about giving people, say, 14 days once a season ends. On Day 14, all that sport's stock prices are reset. Stocks would get sold as their seasons end and the ones not selling would lose their entire season's earnings...and there'd be no issue with splits whatsoever.

[Being]

Originally Posted by SiteWolf

BUT...we can't completely eliminate splits...not really.

Hey O, I was right there with you until this statement. You already have a process which allows you to reduce say, Ryan Palmer, from 1,000,000 shares held to 100,000 per port while keeping the price unchanged and giving cash to all investors who have the 1 mil, right?

What would be so different if you sold off all 1,000,000 (or any other number) shares in all ports that hold him? In fact, to me, it actually sounds like that might be easier. (OK, I can see that there will be more ports which hold any number of shares below 100,000, but still...)

Then, since no one is holding Ryan Palmer, what stops you from changing Ryan's price to $20? No one loses a nickel - not active investors, not casual, not abandoned ports.

If it's a case of brute work, I could help wherever you'd let me. Pretty good with a ss.

[StockTrader]

I figured you were thinking more along the lines of a price ceiling, but I didn't want to put 'words' into your 'mouth.'

So, stock hits $10,450.22 and we auto-sell ALL ports holding that stock and reset the player value to $20.00. Right?

Nick

[Being]

Originally Posted by StockTrader

I figured you were thinking more along the lines of a price ceiling, but I didn't want to put 'words' into your 'mouth.'

So, stock hits $10,450.22 and we auto-sell ALL ports holding that stock and reset the player value to $20.00. Right?

Nick

Right

[SiteWolf]

Originally Posted by Being

Hey O, I was right there with you until this statement. You already have a process which allows you to reduce say, Ryan Palmer, from 1,000,000 shares held to 100,000 per port while keeping the price unchanged and giving cash to all investors who have the 1 mil, right?

What would be so different if you sold off all 1,000,000 (or any other number) shares in all ports that hold him? In fact, to me, it actually sounds like that might be easier. (OK, I can see that there will be more ports which hold any number of shares below 100,000, but still...)

Then, since no one is holding Ryan Palmer, what stops you from changing Ryan's price to $20? No one loses a nickel - not active investors, not casual, not abandoned ports.

If it's a case of brute work, I could help wherever you'd let me. Pretty good with a ss.

No no, when I said we can't really eliminate splits I wasn't meaning current ones...we could sell those off quite easily if need be (well not easily, but...easy enough)

I was referring to the ongoing issue of having a maximum price somewhere....which Nick just hit on. I was just meaning we couldn't just let prices continue to build..we'd have to deal with stocks somehow at some point.

[Being]

Originally Posted by Being

is that it is a method to stop stock prices from going through the stratosphere. Perhaps there are other methods which could be explored. I would agree that this would require a solution before splits are abandoned.

Perhaps I didn't speak plain in my first post.. I know prices can't go unchecked.

[SiteWolf]

and perhaps I didn't read what you said thoroughly, either

What many don't realize, is that this market was deliberately set up for stocks to by and large rise over time...after all, the percentage of stocks <$20/share is pretty small. Deliberately because it's a game intended to be enjoyed by all levels of players.

If all stock prices increase over time, there has to be a check system somewhere.....up to this point that has been splitting stocks to keep prices within a set range.

10 years into the game, it's either 1.) continue as we have where too large a percentage of stocks have split 2.) find a way to eliminate them either temporarily (as in sell 'em all off but otherwise keep the same setup going) 3.) Reset the entire market or 4.) Some combination of all those things

....since I seriously doubt (read as I know it wouldn't be) the vote would be to reset the entire GAME

[rrock33]

Ok, so I've been here for 10 years (WOW) and you want to make all the splits I've earned go away. I get it for the good of the game and new players and growth of the site. TV will not change much other than those who trade 50K splits (rich, relic and others) who have made gains. Selling them off will only add more cash that cannot be used to day trade. So why can't we max splits at 50k, allowing day trading of those who can afford and eliminating the need for amnesty?

The other comps are still viable by new and seasoned players.

[SiteWolf]

allowing stock splits to be daytraded at a certain level is fine to a point...one of the reasons for the 50k daytrade vs 100k held idea was basically to temper the gains an active daytrader would make vs the more casual player....they could still gain on 50k while avoiding negadivis while the 100k holder made twice the gain, but took the full brunt of negadivis

Some have said we should just increase the max shares on ALL stocks (i.e. WSS went from 5k to 20k for non-splits)....but port growth simply increased exponentially and the inevitable was only delayed. One thing that DID happen is dormant ports got left in the dust.

but regardless of how that is set up, at some point those same stocks have risen to split level a 2nd time...so we do what then? Thus far, we've sold off shares over 100k and kept going

The discussion here is.....is there another solution

And yes, people have tons and tons of cash, I realize....and would have potentially tons more if there were no splits. But reality is, it is impossible to create enough stocks so even the biggest ports can't just buy them all if they want to....because even if we had 300billion in stocks to buy now, port sizes would still grow at a faster rate than we could add stocks.

Bottom line being....after 10 years of building portfolios, there's only so much we can do...and that means accepting the fact you'll always have excess cash..............the question being how much.

[rich76]

Personally, I'm not worried about excess cash anymore. It is inevitable, for the reasons Orren said above.

[rrock33]

Yeah I know excessive cash is part of the game as it's evolved. But why not use 50k max and do the same auto sell to keep the price down? Keep the current 10k max and then up to 50k on the "splits".