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Dear Readers,

Today, I am going to attempt to explain the Stock Market and how we as citizens should use the new ERX Stock Market to make a profit.

|IntroductionIn troduction|Stock Trading|Dividends|Investing|Understanding the Risks|The Next Hottest Girl Ever|

Introduction:

The Stock Market is an entirely new way to make money in eRepublik. It is also a great way to increase capital, expand your business, become a part owner of a company, get more involved in economics, and many other benefits. For this article I am going to use the current and working stock exchange, the ERX. The risk of buying shares is almost minimal using the ERX, if just a little research is done on a company. This new stock exchange is backed by an eRep Ambassador/Admin who has been playing this game longer than anyone I can remember; his name is famous throughout the eWorld, Big Brother. Big Brother along with AidenAstrup of T’jelle Bank are two of the most reliable people in the game, and they are both backing up the new stock exchange and have put thousands of gold on the line to back this project. You can even invest in T’jelle bank, which currently is selling its stock for a whopping 3.11 gold/share (as of March 29th, 3:50 pm). I highly advise everyone to sign up using the API and start “trading”.



Right now I am in the process of buying and selling many different shares and already have made a profit of .86 gold. So, without further ado, let’s dive into this whole Stock Market thing and let me explain some of the basics.

Stock Trading:

The reason I say, “trading”, in quotations is because a person doesn’t actually trade stock. A person isn’t trading their stock for a couple of baseball cards. Most of the time, the two citizens involved in a transaction don’t even know each other. So what is stock? Stock is somewhat indefinable. The way I will put it is as the following: “Stock is a way for an average citizen to buy parts of the companies they would like to own or profit from in the future. People buy “shares” of a companies stock. So, what is a share of stock? A share of stock is the smallest unit of ownership in a company. If you own a share of a company’s stock, you are a part owner of the company. Now, this doesn’t mean that you can buy up all of the shares in a company and then “own” that company, at least not in eRepublik you can’t. However, you will be making a ton of money if that company/org is a successful one.

Here is how to sell your stock:

To sell stock,
Just click on your portfolio, and click sell with any stock you have purchased.

To sell stock from your Org that you have listed on ERX,
Just click on Manage Organization, choose to hand out stocks and scroll down the list until you find your citizen account, and then give however many stocks you want to sell to yourself. Then those stocks will appear in Your (citizen's) Portfolio and then you can click sell.

For example:
I chose to give 1000 stocks of PHC to Marcus Patterson. Then when I go to Your Portfolio, i click on sell next to PHC and you can list the price and everything. It's pretty simple, but yeah, their is no explanation of that on the ERX website and it took me a while to figure it out as well hehe.

There are two well-known types of stocks that relate to eRepublik:

1) Common stock

Common stock represents the majority of stock held by the public. It has voting rights, along with the right to share in dividends. When you hear or read about “stocks” being up or down, or about the stock market, it always refers to common stock. However, this stock is not yet used in the stock exchange because the company doesn’t have to offer voting rights to its shareholders. It is up to the org/company to decide how/if they will keep their shareholders vote, let alone keep them informed.

2) Preferred stock

Most of the stock held by individuals in ERX is preferred stock. Although it has a deceiving name, preferred stock actually has fewer rights than common stock, except in one important area – dividends. Companies that issue preferred stocks usually pay consistent dividends on a weekly, or monthly basis. We investors buy preferred stock for its current income from dividends, so look for companies that make big profits and are growing exponentially and buy preferred stock to return some of those profits via dividends. You will see on the ERX, that when you buy stock, you can then sell that stock whenever you want. However, you can’t just sell your stock to the market, another Citizen has to actually be requesting that stock for the price your selling your stock at or for a lower price.

Here is an example:

A) I recently bought 2 stocks in a Banking company for .20 gold. So now I have spent .40 gold for 2 stocks in this company. I wait 4 days until more people buy that stock and that company is making more of a profit so now that stock is worth .50 gold.

😎 So now, my 2 stocks that were worth .40 gold all together, are now worth 1.00 gold all together. I more than double my profit. So now I am looking to sell

C) I decide to put both of my stocks for “sale” at the price of .99 gold, expecting another citizen to notice the increasing value of the Banking Company’s stock, and requesting to “buy” stock in that company. That person then names a price for how much he wants to pay for that stock. Since I put the price of my stock that I am selling .01 gold less than what the stock is actually worth, I am more than likely sure that someone will buy my stock first.

D) That person decides to buy the stock I am selling for .99 gold, and I have just made a profit

If you think that any of the above information needs to be corrected a bit, or if I am missing something, please just let me know via PM or commenting and I will add it to this section. I just wanted to keep this example as simple as I could



Dividends:

Dividends are profits the company distributes to shareholders. The companies don’t do this out of the kindness of their hearts – this is what a company is all about; making money for the owners and stockholders. Companies usually give out or offer high dividends in order to attract investors.

Companies that hand out dividends every week usually have more stock holders or more “volume”, which means the interest or fluctuation in a company, than companies with less stock holders. Volume is really just a measurement of how “popular” a stock is, the higher the volume, the more people are trading that company’s stocks.

Dividends usually don’t represent all of a company’s profits. The company retains some portion for future use - in acquisitions or to retire debt, for example. With the ERX, most companies will pay dividends in the form of gold through the API, although you may hear of occasions when a company may just offer an eCitizen more stock in the company instead of gold. Many investors are attracted to stocks with a good history of paying dividends. These companies are usually well established and profitable, but may not offer much in the way of growth potential. For example, T’jelle Bank has proven to be the most reliable bank/organization ever in eRepublik, and it would be hard to argue. They already have created a dividend plan for paying out dividends to their stockholders.

The company’s board of directors or owner sets the dividend plan, which in this case, are the dates that the company is planning on paying out their dividends and how much they will give to their stockholders. If the company is hurting financially or the board is concerned about future prospects, it can forego the dividends and not pay any of their stockholders for a long time, maybe even never pay them at all. That goes back to why you should always research a company before purchasing stock.

Important Dates with Dividends:



There are four important dates to remember about dividends:

The Declaration Date:
This is the date the owner sets the dividend and announces when the stockholders will get their checks. The board also announces the Ex-Dividend Date, which is a very important date to know. Usually companies will list this information under the “news” updates tab or section of their company page.

Record Date:
This is the date when the company sets the list of shareholders to receive the dividend. You must own the stock before this date to get the dividend; however, it is the Ex-Dividend Date that is more important. *This doesn’t have that much application to the ERX, because, if I’m not mistaken, when a company pays dividends, they must pay dividends out to all of their stockholders*. Please correct me if I am mistaken once again. I wasn’t too sure on that.

Ex-Dividend Date:
This date usually falls 2 – 4 days before the Record Date. This date allows for the completion of all pending transactions, since it usually takes an hour up to 2 days to settle a regular stock sale or to complete the stock The Ex-Dividend Date is the most important date as far as owning the stock if you want to receive the dividend quickly. Some dividends may not be paid until 30 days later, maybe more.

Payment Date:
This is the date the company sends the checks, which in this case, clicks a button to pay the dividends.



Investing:

Investing is the proactive use of your money to profit, or to say it another way; it is a way to get your money working for you.

Investing is different from saving. Saving is a passive activity. Saving is a way to ensure that you will have money in the future to spend, but it is a long-term process. The process of ‘Saving’ is more focused on safety of principal (the amount you start out with) and less concerned with return. Your focus in investing is on return and can be a conservative investor or a very aggressive investor in terms of risk. One way to measure your results is by the expected return weighed against the anticipated risks. What..what..Whaiiii?!?!? Let I, Marcus Patterson, explain.

It is easy to slip into an unnecessary and complex discussion about whether a particular financial transaction was an investment or a savings technique. However, it is important to understand that investing has some distinctive characteristics, which separate it from pure savings. Since we are discussing stocks and the ERX, I’ll limit the characteristics to those that apply.
Each of these characteristics can help describe what Investing is all about:

Ownership

When you buy stock, you are buying a piece of a company – you become a part owner. This ownership gives you certain rights. This may include voting on important matters, like I explained before, or having a say in the company and their practices and/or just participating in the profits when the company distributes dividends (just trying to make a buck or two or a thousand).
Virtually no savings instruments give you ownership. You may deposit your money in a bank and look for interest to build up, but you don’t own part of the bank. You may own a U.S. Treasury bond, but you don’t own the government. Although you can buy treasury bonds on the ERX, which is a great way for our eGov of the eUS to make some more money for the Woar Machinez!

Upside Potential

When you own stock, you participate in the growth of the company. As the value of the company increases, so does you investment. If profits increase, you may receive bigger dividend checks. The stock price may continue to rise for a long period. Many of the early employees of Microsoft are millionaires because their stock has gone up dramatically. Or you can end up like my real life friend who worked for Lehman Brothers and part of his salary was in stock, and now…well, you know how much that stock is worth. I’ll give you a hint, nothing. Nearly 3 million dollars worth of stock turned into nothing. Although, the damage to a bad investment won’t be nearly as bad as it would in real life because the ERX doesn’t deal with the millions of dollars in RL, and this is a game, so damage is minimal….hopefully. The point I am trying to make is that you can make a lot of money and raise capital for your future investments.

Understanding the Risks

Along with the potential for extraordinary gain is the potential for great loss. These two go hand in hand. You can lose money investing in stocks.

If the thought of losing money makes your stomach knot up, stick to savings instruments. However, you should know that now with the stock market, and Big Brother/ERX agreeing to pay or at least “some” of the stock you bought in a company, if that company goes bankrupt, you won’t lost everything.

Like I said, there is always risk, but with proper analysis of a company before buying stock, and checking to see if that company is audited, it is relatively a trustworthy company and may be worth investing in (although there is a long list of companies waiting to be audited). Audited just means that the company has sent papers, “screenshots” or has been thoroughly checked by the people with the ERX to see if that company lied about any details and if they are a legitimate Organization.



Currently, my Organization, Patterson Holdings Company [enter link here] (PHC) is offering 1000 stocks for the price of .03 gold for the next 1 day 3 hours. So hurry up and buy up the stock before PHC raises their prices.

The Next Hottest Girl Ever:

So, this is going to be a new section of every article, well, serious article that I publish. I will unveil a new hot girl for all of you to feast your eyes upon. Let’s see if you pick up on the joke. This week, we have Bethany McUglyFace:



Please Subscribe, Vote, Comment, and/or Shout if you thought this article was good or if you enjoyed it. No matter the reason, help a brotha out! Also, sorry for the messed up Index. It took me 2 hours to figure it out.

Sincerely,
Marcus Patterson
eRep Deputy Ambassador
Data Collector for Treasury
BAMF Yoda