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An analysis of 200 days of share ownership



AuthorAn analysis of 200 days of share ownership
Facility shares have been in the game for a little over 6 months now. In my view this was one of the most significant fundamental changes to the game for some time but on .com these went under the radar and were forgotten about quite quickly.

Before these were introduced or announced I raised concerns about investable assets in general and the potential to create a 2 tier game with the very rich and everybody else. The impacts of this have not really been felt yet but I still believe there is potential for future market manipulation of 'player produced' items such as elements, hunter arts, TGI etc.

I received 1 free share when they were released and have been slowly buying more by enrolling and saving. No diamonds, nothing extreme, just a bit of slow grinding and typing captchas. Today I have 15 shares and receive about 10,000 gold per week. This puts me quite some way out of the top 100 shareholders, I probably sit somewhere around 150-250.

I did a simple analysis by exporting my transfer log to excel and wanted to share the results. Many will not be aware of how profitable these shares are. This is not designed to brag but is more for interest and to look at the underlying implications.

Last week marked 200 days since the first dividend payment in this time I have:

Increased shareholdings from 1 share to 15 by:
Selling 1 share for.............350,299
Purchasing 15 shares for........3,501,355
Receiving 237 dividends.........249,602

The lowest dividend received was 80 gold, highest was 4,076 with an average of 1,053

Capital growth

My average purchase for shares was 3,501,355/15 = 233,424
However with dividends and proceeds considered the total outlay falls to 2,901,454 = 193,430 per share

At inception the price of shares peaked sharply and crashed, it is now slowly but noticeably climbing. All shares are listed at about 350,000+ with the better ones listing for around 500,000. Supply has fallen but so has demand. Resellers have been pushing the prices up.

The total profit I have made in the following scenarios is:

Average price 350,000 = 2,348,546
Average price 400,000 = 3,098,546
Average price 500,000 = 4,598,546

The key points:

- I have made approximately 3 million gold from shares in the last 6 months from grinding and enrolling, no special strategy. For comparison enrolling 8 hours per day in the same time would have made me 8 * 500 * 200 = 800,000 or less than one third of the amount

- There are at least 150 players that have made more than this

- Some players have made considerably more than this. Chaifist and shark are the top shareholders and receive approximately 20 times my weekly dividend income. With capital growth considered it seems reasonable they have made 15-20x what I have in the same time i.e.
.........
The top shareholders have made 45-80 million in the last 6 months. 100x the amount they would have earned enrolling 8 hours per day
.........

I can do the analysis for chaifist if there is appetite but this is a bit of effort so will only do on request.

- These amounts will continue to experience compound growth

The implications:

I think this is a very significant but mostly ignored mechanism in the game. When a cabal of top shareholders put the pieces together there is potential for market manipulation and in game inflation.

These were predictions I made around 1 year ago which I still believe to be true after a lag phase. I think without admin intervention this could be a very significant game mechanism in around 2 years time. Share prices will continue to rise and yield will be squeezed down.

I don't really have any grand conclusions to announce here it was just some quick maths and I thought some people might be interested/surprised in the numbers. Happy to discuss.
Thanks for working it out.
You capital gains have been huge!

One analysis that I don't: Capital gains for Shark/Chaifist.
If they wanted to liquidate their shares, I don't think there exists a market to buy them from up them. That's how much ahead they are from the rest. THey'll take a significant loss while liquidating.

But for sure, would have been a great decision for an average guy to buy shares to take advantage of the capital gains. Well done there. Now I feel like I missed out.
You make two predictions I agree with
1] Share price will go up -- People who own them are showing no signs of wanting to stop buying them
2] Dividends will go up -- As market manipulation increases with time due to increased concentration of shares.

What that means to me is that the opportunity cost of owning a share is never going to reduce as long as share prices go up just as fast as dividends. It will always be more profitable to sell the share in a 7-8 year time horizon.
I get that number by assuming the 1k diamond you have been receiving, and share price for 350k which is the lowest one you offer.

So let them buy more.
Atleast for next 7-8 years, the effect of their actions will be more money transferred from rich people hands to common ones.
Game's probably not gonna be here then anyway.
I'm curious what Elrond's thoughts are on this matter.
Unlike you, he has bought shares of a single facility. And trades that art exclusively in the market. Maybe he has done a similar analysis?
Yes chaifist and shark are well ahead of the game. I think they could sell their shares but they would have to do it very slowly (over the course of months) and it wouldn't go unnoticed.

20,000 shares were issued initially and chaifist now owns 224 or 1.12%.

It doesn't sound a lot but a significant portion of shares are locked up because people sit on them. There are only around 60 on the market these days and only a fraction of these actually sell. I haven't been tracking how many sell each day but at a guess maybe a dozen?

2] Dividends will go up -- As market manipulation increases with time due to increased concentration of shares.

I'm interested to see this and also think it is ultimately inevitable. At the moment prices have been a bit of a race to the bottom cutting out profit in normal times. I have noticed the votes getting more responsive and the price gouging has gotten more and more severe with passing events. I think the shareholder population as a whole will get a bit wiser and it will come at the expense of those playing events. I am surprised there isn't a proper shareholders manipulation clan like OPEC or similar, I thought that would happen straight away.

Agree would be interesting to hear from elrond, I think he is the .commer with the most.
There is no way to create additional shares? The supply is completely restricted?

Never heard of them till now.
Yes it's a locked supply controlled by admins. I think there will another share issue when supply dries up a little, there are plenty of facilities that don't have player shares yet. I think some of the announcements alluded to more shares being released in time.
They could be rare campaign rewards... shares and completed estates are somewhat similar.
I'm curious what Elrond's thoughts are on this matter.

This is very wide subject for discussion.
I can add my perspective to it but please take into account that this is subjective.

We can clearly see that buying shares for most players have been very profitable mainly because of raise of share prices and secondly because of dividends. Comparing to situation from months ago, I believe that dividends have declined in many top locations or top artifact facilities while they have risen in many worse facilities or with worse initial production but later became well managed. First week of trading brought insanely high prices which in many cases did not happen again until now and therefore those buyers are left with dividend only as their profit. Taking into account that tax on selling shares is 5%, it makes that they did not make too much on their investment if they wanted to sell now.

I think that among largest investors, investor with the highest % profit is AcademHero. He waited until the moment when shares have been cheapest and bought the very cheapest with worst production and worst location, lowest dividends. I was very dubious about this strategy but it worked out the best as those worst shares have risen by the biggest % of price. The weak point of Academhero strategy was that he stopped buying when shares started to climb and he was left with quite high capital not invested. Also his strategy is not perfect for very long term as his dividends are quite weak.

Shark was buying smaller area and cheaper facilities but also put some attention to location, therefore I assume he has made large % gain on climbing share price while also keeping very nice dividend % paychecks.

Chaifist was focused on largest facilities with area 10 which have been in fashion during initial weeks, later he continued to buy them trying to make some concentration in most interesting for him locations. From those 3 players, he likely made lowest % gain on share price rise but kept best dividends per share. His shares are often impressive, well managed area 10 in big event can even give 4-5k gold dividend from one week.

When it comes to me, I did not have that much capital to invest comparing to players above. I did not try to diversify. I selected 2 facilities and wanted to be main shareholder. For a person interested with economy-related gaming, it was most interesting way to go. In dispersed shareholding structure, your vote almost does not count, too much is accidental and that can be frustrating sometimes when factory is not well managed.

Regarding conclusions,
- I think that shares gave this game more depth and some players like it a lot
- admins are getting fat donations from many players who tend to donate 500-1000 diamonds almost every month to buy shares, that is pure profit for admins and those donations can support game development if admins want to
- impact on future inflation in the game - there should be very minor impact if any, general price level of artifacts is most of the time below Emipire price, large donations have made donation shop-euivalent artifacts and increased durability artifacts to fall in price significantly, even if all factories sell at highest price allowed, it makes only about 4% increase from Empire standard prices
- do not forget that introducing shares brought to us higher wages in many production facilities which have been previously at level between 200 and 215 and now are all unified at 215 gold.
- fate of shares and their profitability is in hands of admins depending how many and how popular events they make and how many players game attracts, if game continue to decline in popularity the shares can start losing in value due to very low dividends and supply from inactive players exceeding demand, once trend severses, it has a lot of air to go down.
Some good points raised, interesting that you tracked the top guys strategies also. I would be very interested to see the diamond statistics around when the shares were first released and how many additional diamonds were bought by shareholders.

I am pleased that this was a money maker for the admins but I think they will eventually have to nerf them. The problem is I don't really see an easy way they can do that without upsetting all these diamond whales.

If they issue more shares prices will drop sharply and yield will go up. Imo the yield is more dangerous/consequential than the cap growth. This is the option that makes the admins happy (and a good portion of shareholders would be happy with this) however it kicks the can down the road and stores up a problem.

If they cap the dividend people will just get annoyed.

I think the safest option all round is to let the prices rises and drive the yield down. This will leave the early buyers with huge cap gains so is quite unfair but makes the shares less consequential. They might become like estates where the yield is low and they have no impact on the game. 5-10% yield is great when talking investments but in lwm the payback period is too long. Game's probably not gonna be here then anyway.

I think the admins let the cat out the bag a bit with shares. Stock exchanges (if you can call it that) don't work too well when you simplify them. The lack of a market maker and lack of risk make it very bizarre indeed.
If they cap the dividend people will just get annoyed.

Admins have already capped dividends, you cannot raise product price above certain price from the dropdown menu. That is just few % above Empire standard price and it overall sets cap on the dividend.

They might become like estates where the yield is low and they have no impact on the game. 5-10% yield is great when talking investments but in lwm the payback period is too long.
Many estates give no profit at all while they cost 4-5M and benefit from owning them is not anymore that important when you can cheaply rent or use ABC to increase storage space. So over long term I think that for usual player shares will have no bigger impact on the game than estates do. They will be a "want-to-have" item and not "need-to-have" one, something to put excess of the gold from game also attracting more donations.

Stock exchanges (if you can call it that) don't work too well when you simplify them.
Admins already made changes in shares market without prior notice that affected the value of shares. Introducing rule that 33% yes vote can approve vote after 3 days voting, have increased copetitiveness of factories with least active shareholders at the cost of factories with most active shareholders. And I think admins can make more such changes if something feels inappropriate for them.
You can set prices for facilities if you have majority ownership of the shares?
LG10 with good LeG monsters and winning 3k gold almost every day is also a plus, I notice you both have some LeG to start leveling up =P
You can set prices for facilities if you have majority ownership of the shares?

You can propose a vote if you have at least 2 shares. Price is accepted when 51% vote yes or if at the end of 3-day voting process Yes is at least 33% and is more than No.
Two, eh? I hope our new corporate overlords have mercy, game needs players if those shares are going to mean anything in the long run o.O
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