Capitalism 2 and Capitalism Lab Forum

David and team, just wanted to extend a huge thank you for all the work you have put in to the Capitalism series. I have been playing every single patch, the lab version, and all DLC content up to the City expansion.

Just thought I'd check-in and discuss some of things I think are perfect for the series, ask some questions about gameplay, and offer some suggestions.

I started off creating businesses that were retail based in capitalism lab because that was the easier route. Then expanded all the way up the supply chain in various different games/scenarios. Later on I slowed down with supply chain management and started to create businesses that revolved around the stock market. I personally have an interest in finance so this was very fun to me. I ran them like a hedge fund primarily trading stock based on their earnings, then later on p/b value. In the stock market is where I spend most time now.

I saw how you could have your company with billions in assets that does not make any annual profit via business transactions (retail, manu, real est, etc), rather gets dividend payments through it's stock holding. Growing $100 million into billions by holding stock or buying/selling. A problem would come up when your very small div payments would show up on the p/e ratio for your publicly listed holding company (Player corp for example), then the stock would go from 1.0x p/b ratio w/ 0.0 p/e (normal value) to a 0.10-0.20x p/b ratio after the p/e fell after being adjusted for the div earnings relative to the book value. The p/e goes from 0.0x to 50,000x for example, causing the stock to lose all it's value as it adjusts to an earnings multiple defined by the div payment. This could be exploited by through the subsidiary expansion by taking a huge cash position in your mother company, creating a subsidiary and publicly listing it. You then take the subsidiary with say $5 billion in cash, and buy like $100 million in stock that pays a 1% div. Then you keep the 75% position in the subsidiary after listing and wait for the Jan div earnings report to come out. Remember this company has $4.9 billion in cash, $100 million in stock paying 1-2% div. The p/e will go from 0.0 (no earnings - correct) to like 50,000x p/e, as the $100 million stock holding maybe paid you 1-2% div, so like $1-2 million in div.. The market then percieves this $1-2 million in div payment to be earnings for the $5 billion holding company and this huge disparity in p/e multiple causes the stock to shoot down to like 0.10-0.20 p/b and you can merge the company for like 1/5 of what it's worth on the outstanding 25% and "earn" $1-1.5 billion through the valuation mismatch. Think a company with $5 billion in assets, valued at 10-20% of what it's worth, because the earnings report says that is only makes $1-2 million in div payments per year. when in actuality it might make $250-500 million from the stock holdings appreciating. You know what I mean? So buying the company back for 10-20% of it's value was fun when you could literally make a business out of doing this over and over with subsidiaries until it crashed. Looks like this got fixed for the most part on the new DLC, but fun was to play with.

Another came from long sims where you played in the stock market. the issue is that companies once they get big enough to buy back all their stock, proceed to do so. This takes the fun out of the game because you end up in positions where you own 40% and the "founder" owns 60% of a busines worth like $100B, but you cannot sell because the company will buy back all outstanding shares and ask a ridiculous price to be bought out. Like literally 2-3 x value, meaning a $100B company needs to go to $200-300B for you to BREAK EVEN... My suggestion would be to limit how much stock companies can buy back so that you can still "trade" stocks as a way to make money later on in the game. Allowing you to compete and lever yourself if companies get very large and ahead of you (expecailly lever with debt). When they buy back all available stock then companies essentially become private from like 2030 onwards (later in city expansion DLC) because once you sell stock, you basically can only buy back from the founder for an insane price. would be best in my opinion to always have a good portion of the float (say 20-25%) always available to trade/purchase to keep the stock market engaging.

Stock shorting seems to me a natural expansion of the game. The true beauty of this game comes from the ability to run a business however you like. Create a conglomerate, a product specialty company, a retail firm, an R&D firm, a media firm, a land holding company, a real estate company, a hedge fund. It's incredible for this reason. The government expansion is very cool too. I think it would be perfect to add on more stock features. the ability to see more details charts would be amazing. perhaps volume for fun, but most importantly the ability to SHORT stocks would be game changing. In environments where the economy truly is performing bad and stocks are earning less it would be so cool to short stocks as a hedge to profit from changes in the economy. If you know that company will be drastically reducing projects for an R&D expense, or economic downturn you could sell out and initiate a short position to profit from it. I know the counter argument is to sell the stock and buy it back cheaper later, but the problem comes up later in game where as soon as you sell the stock is bought back by the company and you cannot get back into the stock at the market price. Rather buyout from founder or another investor for a price that you cannot profit from. I think the shorting could simply be done by allowing a short position to be taken by clicking the sell button after you aren't long anymore stock. Perhaps you could short 25-50% of a company or something realistic.

Also, I'm still learning the new DLC the city expansion. I've been playing it with retail business, haven't explored much beyond that. The stock market has improved a bit in the new DLC, looks like the p/e issue was fixed for the most part. But the economy in each game seems to always stay very poor, for example GDP is negative for like 50 years when I sim way ahead, what am I doing wrong? I've got mayors that I put on autopilot for most part, to automatically expand apartments and civic buildings. Any help here? what am I missing?

Thanks again for this game and it's DLC content

austinm wrote: Another came from long sims where you played in the stock market. the issue is that companies once they get big enough to buy back all their stock, proceed to do so. This takes the fun out of the game because you end up in positions where you own 40% and the "founder" owns 60% of a busines worth like $100B, but you cannot sell because the company will buy back all outstanding shares and ask a ridiculous price to be bought out. Like literally 2-3 x value, meaning a $100B company needs to go to $200-300B for you to BREAK EVEN... My suggestion would be to limit how much stock companies can buy back so that you can still "trade" stocks as a way to make money later on in the game. Allowing you to compete and lever yourself if companies get very large and ahead of you (expecailly lever with debt). When they buy back all available stock then companies essentially become private from like 2030 onwards (later in city expansion DLC) because once you sell stock, you basically can only buy back from the founder for an insane price. would be best in my opinion to always have a good portion of the float (say 20-25%) always available to trade/purchase to keep the stock market engaging.

I feel for the most part, profit still comes from the manufacturing sector. 100 billion market value in 2030 isn't that impressive to be honest (especially if it's with inflation ON). And if there's little competition in manufacturing sector (due to low number of AI corporations, or simply no human player competition) AI corporations tend to have monopoly in multiple markets and gain more market value every day. I usually can build up my manufacturing within the first 5 to 10 years to overshadow most AI corporations, and since I have a profit base to fall back to and expand, I can produce anything I want late game (like 20 years into the game), so even if an AI corporation have monopoly and high market value (due to I left them alone in early game), I can still use price war to seriously reduce its profit into negative, so its market value will drop like a rock, and easy to merge or simply let it goes bankrupt. Those mostly immune to this attack are real estate focused companies, but their value usually aren't that high, and the payoff isn't that great either, so I mostly leave them alone.

austinm wrote: Stock shorting seems to me a natural expansion of the game. The true beauty of this game comes from the ability to run a business however you like. Create a conglomerate, a product specialty company, a retail firm, an R&D firm, a media firm, a land holding company, a real estate company, a hedge fund. It's incredible for this reason. The government expansion is very cool too. I think it would be perfect to add on more stock features. the ability to see more details charts would be amazing. perhaps volume for fun, but most importantly the ability to SHORT stocks would be game changing. In environments where the economy truly is performing bad and stocks are earning less it would be so cool to short stocks as a hedge to profit from changes in the economy. If you know that company will be drastically reducing projects for an R&D expense, or economic downturn you could sell out and initiate a short position to profit from it. I know the counter argument is to sell the stock and buy it back cheaper later, but the problem comes up later in game where as soon as you sell the stock is bought back by the company and you cannot get back into the stock at the market price. Rather buyout from founder or another investor for a price that you cannot profit from. I think the shorting could simply be done by allowing a short position to be taken by clicking the sell button after you aren't long anymore stock. Perhaps you could short 25-50% of a company or something realistic.

The issue of constant shrinking white stock trading market, I feel is mostly due to the fact, AI persons and players are essentially immortal, and there's little to none expenditure to spend these accumulated cash and a financial system to recycle the capital, so they flock to the only "investment" area to spend these wealth - the stock market. And if most AI corporations are performed well and still growing, the total wealth of AI persons tend to grow faster and faster, where the invisible "white stockholders" magically produce cash with the coming and going economic cycle, shrinking by the day, till the growth stop or production market is full. I feel these anonymous stockholders shouldn't behave like thist, and the "true market price" of the stock really tend to be much lower than it should be.

austinm wrote: Also, I'm still learning the new DLC the city expansion. I've been playing it with retail business, haven't explored much beyond that. The stock market has improved a bit in the new DLC, looks like the p/e issue was fixed for the most part. But the economy in each game seems to always stay very poor, for example GDP is negative for like 50 years when I sim way ahead, what am I doing wrong? I've got mayors that I put on autopilot for most part, to automatically expand apartments and civic buildings. Any help here? what am I missing?

In CES (City Economic Simulation) DLC, I feel the GDP performance is very much linked with how well each city's mayor performed. Most of the time, they barely do adequate jobs to keep their cities with high quality of life, high rating, sometimes a lot of pollution issues, poor service coverage, low jobs, etc. And the total population of a city in CES DLC starts around 500k on average, instead of the usual 2 to 4 million in the core game. Most AI corporations won't be able to perform well under these conditions (think about the total population is probably less than a huge city of 4 million or 2 medium cities in the core game, you can try that in the core game, and most AIs suffer with just one or two cities to set up). The "goal" of the CES DLC I feel is for players not as a corporate leader, but like the hidden society leader behind the scene to push your "little nation" to greatness, through political parties, "election rigging" (yes, the election is a compition of wealth, instead of political view), and city planning, and "bribe" the citizens with great services so they keep spending more and more, in the meantime watch out for the government budget, and not to go bankrupt, try to lure more and more new immigrants to join. Most of the time you need to spend more, but reduce the tax income to make a city ever growing, in itself is a tough budget balancing act.

Never trust the AI politicians to do their jobs right (like real politicians I suppose). Most fun comes from growing a small town to a giant urban sprawl out of an empty desert. And it's almost a completely different game if playing with survival mode, a lot more focus on city management than corporate running.

Im with elazea. I have a world domination fantasy. I can live it out now with the CES dlc.

Anyway for ces my plan currently is to make a beverage corp > become mayor of cities > buy government apartments > buy public firms on stock market > make subsidiary and transfer corp over to sub > make subs that act as private
Competitors > buy up media firms through sub

So far its been interesting. I failed to secure the tech lead necessary to kick put competitors but my real estate empire controls 6 cities and makes around 20m a month. The media firm will do this eventually.

Once i get the public corps bought its just a matter of messing with the peovate
Corps ubtil theyre out.

Oh and expand the cities and make new ones. The monopoly of 30 years should give me a good boost.

Although to be honest, I'm not really very good at manipulating stock market in the game. A lot of time I made pretty poor judgement on when to buy out a competition's public share, and end up spending more than have to. Sometimes I just don't have the nerve to massively leverage my assets for huge loans, just to play the "capital game". It felt too much like gambling for me, and I would rather spend my capital on expanding my manufacturing kingdom. I think this is mostly due to I played the old Capitalism II much longer than Capitalism lab and are more familiar with the "traditional" expansion through production style. (Actually the stock market in II is extremely "profitable" to a point where I think it's breaking the game balance too much, and in multiplayers sort of having consensus not to use it to be fair)

The problem i found with stock market was that if you expand too quickly, you can buy out the competition and shut everything down. The only alternative was to merge but then youre left with a mess of asdets.

I suck at micromanagement so having 30-60 products isnt a good thing for me. So games would finish in 20-30 years. Now with subsidiary dlc i can go into new products and have the AI manage it, and with CES dlc i have tangible and meaningful information. Taking a step back and operating within a nation is a neat transition and i do not feel that ive lost the economic exploitation aspect of the game at all. Also with subsidiary i could merge a company. Or can set up some ponzi scheme esque stuff with the stock market a lot easier.

Opens up socmany more options aside from playing the market.

if you find that, use the Years of Advanced Start for AI=xx script as far as im aware that stops you doing anything including buying there stock (and them buying yours).