The Predictions Market - Win the Game within the Game!

[wevets]

I liked the idea of the betting odds Kang provided last game, so here's a similar idea. You may have heard of predictions markets, where investors make money based on whether their predictions pay off.


Here's how it works:

Everyone who participates in this thread gets 100 wevetsbux (W$100) to invest. At the end of the game, whoever's investment portfolio is worth the most, wins, *DELETED STUPID IDEA* - sorry about that, folks.

I will act as the bank, and you may purchase any initial investments from me - I will update the bank's prices from time to time depending on events in the game.

Once you own investments you have bought from the bank, you may buy and sell them from each other, the requirement is that all sales must be posted openly with the following information:

Who bought shares

How many shares

Which nation you bought shares of

At what price

Who sold the shares

Since I'm keeping track of the portfolios, any post with insufficient information will not actually change your portfolio.

[wevets]

Initial Prices in the Predictions Market Offered by the Bank of Wevets

Austrian victory
1 share = W$10
Share price influenced by Zeke's powerful showing as England in Dip II.

English victory
1 share = W$8

French victory
1 share = W$8

German victory
1 share = W$7
Share price influenced by Germany's position and the relative newness of steve (G) to the game.

Italian victory
1 share = W$10
Share price influenced by weather wizard's victory as France in Dip II, as well as Italy's position.

Russian victory
1 share = W$16
Share price influenced by David's victories as Germany and Austria in Dip I and III and Russia's power.

Turkish victory
1 share = W$11
Share price influenced by Kodi's strong showing as Russia in Dip III and Turkish position.

[David Yun]

Good gravy, I'm overvalued. I'll take ten shares of Italy spending my entire sum of W$100.

[David Yun]

Hrm, can we also sell short Steve? At W$16 a pop, I'd gladly sell short my own stock this turn and reap the inevitable decline if that's an option.

[Kodi]

I'm going to diversify my portfolio. I'll take one of each for 70 W$ and then I'll take two more on me for 22, which should leave me with 8 dollars in change.... I think.

[wevets]

Re: Selling short:

Sure - you can borrow Russian shares, sell them for cash, and return the shares at an agreed-upon date.

I'll have to think a little about borrowing - how much one can borrow and whether the Bank should agree to all such transactions or only when it believes that the share price will increase. Tomorrow or Sunday I'll figure that out. For the moment, hold on to your Italian shares and we'll trade them in once I think about how borrowing will work.


Re: Kodi

Done! You now have a diversified portfolio of 3 shares of Turkey, 1 share of everyone else, and W$8 in cash.

[wevets]

This Friday's a slow day at work, so I was able to give it some thought.


How to sell short:

The Bank is willing to loan you shares for one week (no more, no less.) You can have a loan of up to half your portfolio's value (W$50 at the beginning) in shares from the bank at any given time.

At the end of the week, you will have to return the shares to the bank.

The bank's not in it for the money, but if it's pretty obvious (e.g. a power that is reduced to one unit or has lost many home centers) that a share's value is going to go down, the bank will not loan you those shares. Just as you might have trouble finding a lender in a real market for companies headed into bankruptcy.

All loans will be due before the market closes, and the market will close shortly before the end of the game, so your loans will have to be paid back before we calculate the final value of your portfolio.


So to give an example (I know many of you already know how this works, so be patient with me) - Groo comes to me on the 14th and asks to borrow 3 shares of Austria. His portfolio has a value of W$64, so the bank agrees. Groo immediately sells those shares for W$30 and invests in something else. On the 21st, Austrian shares have sunk in value to W$6 each. Groo buys 3 shares for W$18 and gives them back to the bank, pocketing the difference of W$12. Now his portfolio is worth W$76...

If Austrian prices had climbed, say to W$12, Groo would have had to pay W$36 for the Austrian shares and his new portfolio value would be W$58.



So, David - if you want to sell Russian shares short, you can borrow 3 Russian shares (W$48) based on the current value of your portfolio. This does not change your Italian shares - you still own 10 of those. You owe the Bank 3 Russian shares due one week from the day you post your message of acceptance of this deal.

[Yino]

Cool.
I'll have a diversified portafolio as well. I'm going with 4 actions from Kodi, 4 from Zeke and 2 of Mike.
No loan for me yet

[Dan]

I think I'd like to spend ₩30 Italy(3 shares),₩48 on Russia (3 shares) , and ₩20 on Austria(2 shares), leaving me with ₩2.

[Mike]

All in on Stevie! Hoping for the beginner's luck!