Stocks 3.0: 10% expected gain per year

Changes to stocks 3.0 have been great overall, but this line is interesting:

- Stock prices are expected to increase by an average of 10% per year; however, there are no guarantees. Some stocks can be incredibly volatile, doubling within a month or crashing significantly.

I think that there are some consequences to this that people haven't realized yet.

Firstly, and most obviously, is that the expected yield of every single stock is bumped up by 10%. Current ROI calculations are all off by 10%, so the net gain from SYM is currently 72.08%, not 62.08% (Though for the purposes of calculating the yield from the second block, the latter number is more intuitive to use).

This helps when comparing ROI with non stock things, so if the ROI from renting PIs is 20% (not sure about exact number), getting the third GRN block (44%/4 + 10% = 21% > 20%) is better in expectation.

The less obvious consequence is that Stock ROIs will decrease over time. As the price of a stock goes up, the cost of the BB increases, and the ROI decreases proportionally. This means that in 5 years, SYM being a 62% ROI stock will drop to become a 62%/1.10^5 = 40% ROI (from BB) stock. As time goes on, BB benefits will only decrease, and the 10% expected gains will dominate.

What this means is that NOW is the best time to be holding BBs. BB gains will very very slowly peter out.

R+
It will be interesting to see the long term impact that this has
Im imagining this a bit like inflation, because you cant exactly reinvest the 10% into other passive investments as most of them will have gone up 10% too, but what it also means is that items with fixed maximum prices will become relatively cheaper (e.g. SEs which players can buy for 450mil so will probably not ever go above 450mil in price)

Yep, also means that eventually (thinking very long term) any new players will have to pay more and more to get less ROI.

where u getting 10% from, ov average the stock market goes up about 7%, I know this because if You follow the rule of 72, take this and divide by the % number it rises (7) then you get the number of years in which you are expected to double your money which is 10 years. Torn will obviously be different as you dont factor in the dividend/item money u will be receiving

My expectation is that the PAYOUTS will also adjust over time.....

If Ched is following the market as per his post, dividends on companies RISE as earnings and profits rise

It is one of the best features of owning a company such as SYY (Sysco) in the real market

I assume that he will also adjust payouts on these stocks as the prices increase (based on earnings again as an assumption)

If not, the ROI on every stock will just keep going down year after year....and that just isnt an appealing thought

From here: https://www.torn.com/forums.php#/p=threads&f=1&t=16220039&b=0&a=0

- Stock prices are expected to increase by an average of 10% per year;

Payouts are now static. Dividend paying stocks are fixed payouts, no longer percentage of BB price.

maybe worth of item payouts will go up with stocks

as stocks go up my self worth goes down

That 10% is figure is a general statement based on real life market trends over the past 100 years.

I don't believe there is a fixed in percentage increase in Torn, rather it's a reflection of real world markets.

we should be told what companies the shares are based on tho so we can analyze the real world companies. They do follow some pretty intricate laws about not giving out unfair advantages to anyone re information everyone isnt getting.

Like if motor is TESLA.. well.. either go all in cause you are a believer, dump it asap as you remember 2000 and its promises beyond the clouds story which is what tesla is doing tbh. Or be a wiseguy and ride for a while... then DUMP.

And hell, just use torn player tendencies to see real world good opportunities. Esp the better real world traders. (me i suck at trading but a pretty good picker & hodler)

100% Can't.

Torn prices are updated every minute.

If you knew the 10? companies that make up the stock, you could just use a tool to add their prices RL, and buy/sell before the torn update.

There is item price inflation. But what inflation will benefit dividends?
Those same the companies pay out?

I do wonder how it's implemented. S&P over the past 16 years went from ~1181 to ~4077, which is about 8% per year. It's possible that this is the 10% referred to in the news post, or the 10% might be scaled (Taking expected gains of 8%, and scaling all actual minute to minute percentage changes by 10%/8% = 1.125).

If you knew the 10? companies that make up the stock, you could just use a tool to add their prices RL, and buy/sell before the torn update.

Their implementation might affect volatility too, obviously if they picked some kind of ETF or some collection of stocks, then volatility is going to be much lower. If volatility is low enough, it might actually end up being quite unlikely for a stock to change by more than the .1% required to make the tax worth it. S&P for example, one of the least volatile stocks has traded in a .2% wide margin for the entire day. It basically is never true that within a 10 minute interval, the stock price changes by more than .1% for you to execute the arbitrage.

Less volatile stocks are less fun though. One possible implementation that fixes both problems (wanting both that it is not abusable in the 10 minute gap, which requires low variance, and wanting fun which probably requires more variance), would be to like pick a basket of stocks to represent the torn stock, and at every 10 minute mark, randomly pick one of the stocks to execute the price change with.

I believe this preserves both properties. Interval by interval, the variance is maintained to be large, since it is the variance of a single stock, but it isn't abusable, even if you know the collection of stocks. To abuse it, you need that the entire basket of stocks has moved enough for you to profit, but this variance is the variance of the entire basket, which is much smaller.