Capitalism 2 and Capitalism Lab Forum

I'm fairly new to the Stock Exchange mechanism and not very good at economics in general. From what I understand this is a zero-sum game. So is there a point to create a subsidiary, make it go IPO and sell all your owned stocks after price goes really high? I'm having hard time wrapping around my head around this thing. The money I earn by selling has to come out from subsidiary's pocket in the end, which is an indirect loss to my wealth.

The real question is, is it possible to earn additional money by playing with my parent and it's subsidiary company stocks?

mserhatbalik wrote: Sat Dec 14, 2019 10:16 am I'm fairly new to the Stock Exchange mechanism and not very good at economics in general. From what I understand this is a zero-sum game. So is there a point to create a subsidiary, make it go IPO and sell all your owned stocks after price goes really high? I'm having hard time wrapping around my head around this thing. The money I earn by selling has to come out from subsidiary's pocket in the end, which is an indirect loss to my wealth.

The real question is, is it possible to earn additional money by playing with my parent and it's subsidiary company stocks?

Hello.
That´s finance and not economics. Economics is politics

1- You do an IPO to raise cash for your corporation. Private investors supply that cash. In the game these are generic investors.
2- You sell shares when you know that their value will decrease, and vice-versa. Again, usually these will be bought by the same generic investors.

So, if the price of the sub goes very high, you sell it in two cases:
1- You need the cash for something else (I´d suggest after a better investment has been spotted) or
2- You think the price has reached a max and will fall.
It is possible to earn additional money if you know if your subsidiary will do well or not in the future, meaning if their profits will grow or shrink.

If your sub is doing very well and has cash available for expansion, do not do the IPO. If your sub needs cash and you can´t provide it, then do an IPO, as a rule of thumb.

Thank you, that was enlightening

Now I need to figure out a way to channel those investors' money into my pockets.

mserhatbalik wrote: Sat Dec 14, 2019 12:25 pm Thank you, that was enlightening

Now I need to figure out a way to channel those investors' money into my pockets.

No mercy!