
The Best Part of Grand Theft Auto V is the Stock-Trading Platform - golfstrom
http://nymag.com/daily/intelligencer/2013/09/gta-vs-stock-trading-platform.html
======
nlh
_I...bought...twenty shares of Augury Insurance (which sells auto insurance —
a good bet, considering all the cars I 've been wrecking)_

I'd argue the opposite, no? The 100-year-storm of destruction that we, as
Player 1, unleash upon the poor Liberty City automotive world would probably
make any insurance company run screaming and crying in the opposite direction
of profitability.

"We had HOW MANY claims yesterday afternoon??"

:)

~~~
a-priori
It doesn't matter to an insurance company how likely car crashes are -- that
just determines what the company charges in premiums. All that matters is that
the likelihood is well understood and that the company has enough customers to
stay solvent.

Insurance companies essentially work by the Law of Large Numbers: that in a
large enough number of trials, the average value should approach the expected
value. In real world terms, if the chance of a house burning down in a fire is
1 per year per 1000 homes at an average cost of $200k each to repair (totally
bogus numbers), then an insurance company can break even by charging a
homeowner $200/year to insure the home against fire.

Over a large enough number of homes, that should be reasonably close to the
actual amount they have to pay out. Tack on a profit margin, and you have a
business model.

 __Edit: __Fixed numbers a bit. Thank goodness I 'm not an actuary.

~~~
brads84
Insurance makes money on float and usually loses money on insuring something
over the long term. I can't remember the exact numbers, but GEICO might payout
something like 103% (or 3% MORE than you paid them) over the term of your
policy with them.

How do they make money? [http://seekingalpha.com/article/419731-buffett-on-
insurance-...](http://seekingalpha.com/article/419731-buffett-on-insurance-
and-investing-its-about-the-float)

Basically they invest your premiums during the time you are paying them and
make money off of holding your money. Then the other insurance agencies might
lower their costs and end of paying out 104% (or whatever) of what you've paid
in. This competition pressures the market to close the gap between what you
can make on the float and what you can charge your customer, but there is
going to be some gap and that is the profit margin.

If the insurance company can make a high ROI on the float, they can charge
less in insurance rates and still make money.

~~~
tanzam75
Insurance companies usually lose money on underwriting.

However, GEICO is not a good example, because it is the exception to the rule.
GEICO usually makes an underwriting profit -- often a very large underwriting
profit.

In fact, all of Berkshire Hathaway's insurance operations make a long-term
underwriting profit. Unlike GEICO, the reinsurers do not make a profit every
year, because hurricanes and earthquakes are unpredictable. (Whereas car crash
statistics change very slowly from year to year.) But averaged out over a long
period of time, they make a profit.

This is the secret of Warren Buffett's success as an investor. He is
essentially buying stocks on margin, at a _negative interest rate_.

Data collected from Berkshire Hathaway annual reports:

    
    
      2012: $680 million profit on $11,578 million float
      2011: $576 million profit on $11,169 million float
      2010: $1,117 milion profit on $10,272 million float
      2009: $649 million profit on $9,613 million float
      2008: $916 million profit on $8,454 million float
      2007: $1,113 million profit on $7,768 million float
      2006: $1,314 million profit on $7,171 million float
      2005: $1,221 million profit on $6,692 million float
      2004: $970 million profit on $5,960 million float
      Not broken out separately prior to 2004
    

This profitability streak is truly exceptional. As Warren Buffett pointed out
in his 2012 letter, State Farm has made an underwriting loss in 8 of the
previous 11 years. The insurance industry as a whole has made an underwriting
loss in 37 of the previous 45 years.

------
nslocum
The BAWSAQ is by far the most interesting market. The BAWSAQ is an online
market driven by the buy and sell orders of all 15M+ players.

Early on, before people started to realize how the market worked, I did some
pump-and-dump schemes and made >$400M. That's a lot of money, even in GTA. Now
that I have that much money I can drive stocks up or down and milk the market
for all I want. GTA isn't just for blue color crime anymore.

I know that a few other players did equally well, I suspect they are doing
similar market manipulating schemes.

~~~
choult
"The BAWSAQ is by far the most interesting market. The BAWSAQ is an online
market driven by the buy and sell orders of all 15M+ players."

I'm surprised no Scots have popped up to point out how hilarious that market's
name is ;)

~~~
mey
Care to enlighten the non-Scots?

~~~
vinceguidry
Put on your best Scottish accent and say the name out loud. Think the Sean
Connery character on SNL Celebrity Jeopardy.

------
invalidOrTaken
One game that, like GTA, is not focused around making tons of virtual money,
but has some neat emergent lessons, is Escape Velocity Nova:
[http://www.ambrosiasw.com/games/evn/](http://www.ambrosiasw.com/games/evn/)

You have a small starfreighter, and one way to make money is by buying goods
where they're inexpensive, loading them up in your cargo hold, and flying
somewhere where they're expensive to sell them.

Eventually you realize that it makes sense to pay other freighters to help you
carry stuff so you can make more per trip---but since they charge a daily
rate, at what point is it worth it? And does it make sense to risk it all
('cause, you know, space pirates) putting your life savings into a load of
expensive opals which will make you a ton once you arrive, or should you play
it safe and stick to inexpensive but barely-profitable foodstuffs? If you've
got an appetite for risk, you can carry drugs or illegal biological weapons,
both of which will make you a ton of money, but will cause law enforcement to
attack if you're scanned.

It's a sort of mini-version of EVE this way, in that it's the only game I've
made a spreadsheet for.

~~~
martindale
Isn't Ambrosia the company behind the amazing turn-based RPG series, Exile;
with Exile I, II, III, and Blades of Exile being some of the most critically-
acclaimed independent RPGs of all-time?

 _edit:_ nope, that would be SpiderWeb, who has apparently renamed the series
to "Avernum" (???): [http://www.spidweb.com/](http://www.spidweb.com/)

~~~
mafro
Ah man that Exile series was awesome. Awful, but awesome.

------
cargo8
Pro tip: wait to do the assassination missions until after you've completed
the main storyline. That way you can invest the players' ~25 million in the
stocks you are directly affecting and make bank.

You supposedly can also game the market by investing in competing companies
(like Cluckin Bell and Burger Shot) and just destroying a bunch of the
opposite companies. Then after the drop, reinvest in the opposite as they
equalize and come back (or just keep going back and forth). Haven't tried this
yet, though.

------
sown
World of Warcraft's Auction House is similarly interesting. It can get really
complicated trying to corner the market on different goods, although it's less
integral to gameplay over all. It's more like an embedded minigame at times.

One thing I learned in that game is that while one _can_ make a lot of money
being the middle man, the real value is from labor (as far as WoW is
concerned) -- but grinding for materials can also be monotonous and not so
profitable if you don't go about it in the right way.

So, there are lots of addons (Auctioneer being the most popular) to help one
track data throughout the market.

~~~
cpprototypes
I remember a simple tactic that I used in the WoW AH to make some money:

1) Buy bulk of item X.

2) Divide item X into single units and post on AH with a markup in the price.

People would then buy it because they would need only 1 or 2 of X instead of
10. It only worked for some items and under the right market conditions, but
when it worked, it was a simple way to make money. From this I learned some
important lessons:

1) Convenience == profit. This is the basis of a lot of business and industry.
Why do people use and pay netflix instead of downloading shows? Convenience.
Why do supermarkets exist? Convenience. And this is just a specific form of a
more general rule, time == money. If you can save people time (convenience)
then they will pay you for that service.

2) It made me appreciate and respect more how difficult this must be in the
real world. In the WoW AH, I don't have to worry about things decaying or
transportation or other things. But the supermarket down the street with
shelves full of food? How do they know how much to buy in bulk and sell in
units before the food expires? What do they do if they're wrong? I realized
that just managing the inventory at a store could be an interesting computer
problem. Models, simulations, even some AI could be used to try to figure out
the best decisions. And companies already do this and those that do it well
have a massive competitive advantage.

~~~
sharkweek
Former buyer for Whole Foods Market in the dairy department; arguably the most
volatile of all -- Almost any decision I made to order was based on data of
last week / last year / seasonal data, etc --

It got pretty instinctual after a while -- Holiday? Better get the baking
materials ready! Martha Stewart mention something on her show? Better have 10x
available the next day! -- Those scanner guns you see clerks wandering around
with from time to time have all that data (well, not the Martha stuff) right
there at our finger tips. It even alerted you if something was well out of the
norm.

------
slg
I had a similar fascination with the stock trading component of the Railroad
Tycoon games. I am almost ashamed of the number of times I tried to make
myself a virtual fortune by destroying my own virtual railroad company.

~~~
yxhuvud
It was almost always more effective to gobble up debt and then invest the
money in productive capability if you were looking to earn a real fortune
though.

The balancing act was to not overdo it - depressions was not fun if you were
overly indebted.

Shorting the stcok of _competitors_ were always good fun though, but mostly
since they were so horribly bad at building which resulted in that it was
sometimes a good idea to shorten stock.

Sigh - how I wish for a spiritual successor to Railroad Tycoon 3.

------
Apocryphon
Emergent gameplay is always fun. For all of the huge space battles between
armadas and great train robberies of EVE Online, that MMO supports a
flourishing economy of many different roles that one wouldn't expect:

[http://massively.joystiq.com/2008/07/14/eve-evolved-
freeform...](http://massively.joystiq.com/2008/07/14/eve-evolved-freeform-
professions/)

Makes sense that in a open sandbox crime simulator, players would try to make
a killing in the stock market. Too bad you can do insider trading to get
involved in white collar crime.

------
atlbeer
What this article fails to mention is the most interesting aspect of the GTAV
stock market.

You can buy stock in a company and then accept missions to assassinate a
competitors keep employees!

~~~
LandoCalrissian
One thing you can do that I enjoy is invest in the AuguryInsurance (AUG) then
start destroying a ton of cars. It actually causes their stock price to rise.

~~~
jredwards
A few issues with this:

1\. My understanding is that this has been widely theorized and fairly well
researched, and most people have concluded that there's no relationship.

2\. I don't understand why a rampage would cause the stock price of an
insurance company to go up. You could argue that in the long-run, living in a
town with regular rampages might encourage people to buy more insurance, but
one would think that in the short term all of those payouts would be really
bad for the insurance company.

~~~
scarecrowbob
Not that I've played the game, just skimming comments but here's a
possibility:

although the game focuses on a single character and thus makes the actions of
that character carry supreme importance, in the larger context the actual
effect isn't that great compared to the average.

However, the media effect in the context of the game would probably be pretty
fantastic, in effect creating free marketing for the company.

At least, that's how news media plays into things like that where I am living.

------
jredwards
Incidentally, there are already a multitude of subreddits which have formed
for the express purpose of manipulating the public markets. This is a really
interesting interaction, though it's somewhat skewed by the fact that a player
can simply revert to a saved game if the stock they've purchased tanks.

~~~
ASUmusicMAN
Do you have a list of a few of the larger ones? I usually glance through
/r/grandtheftautov every day or so but this is the first i've heard of
subreddits organized for manipulation.

~~~
martinml
Try /r/gtavstocks

------
QuotedForTruth
The author needs to login to PSN or XBOX live, and create a Rockstar Social
account. That unlocks the BAWSAQ market which is based on other players
trades.

~~~
dxm
I don't have a Rockstar Social account and I've managed to use the BAWSAQ
market, it opens during some of Franklin's assassination side missions given
by Lester. It's not under maintenance throughout the entire game.

------
picomancer
If anyone here wants to play a game about building a business, that includes a
better stock market simulation, Capitalism Plus [1] and its sequel [2] are
really good.

[1]
[http://www.gog.com/game/capitalism_plus](http://www.gog.com/game/capitalism_plus)

[2]
[http://www.gog.com/game/capitalism_2](http://www.gog.com/game/capitalism_2)

~~~
adwf
They've also released a new standalone expansion for Capitalism 2 called
Capitalism Lab [1].

It's a combination of updates to make the game work on modern
systems/resolutions and a bevy of new features/usability improvements.

[1]
[http://www.capitalismlab.com/index.html](http://www.capitalismlab.com/index.html)

------
jonnathanson
Calls to mind "Wall Street Kid," a stock-trading game released on the good ol'
NES back in 1990.

[http://en.wikipedia.org/wiki/Wall_Street_Kid](http://en.wikipedia.org/wiki/Wall_Street_Kid)

The premise of the game was fairly ludicrous: if you could earn a decent
return on a $500,000 loan, you stood to inherit a $600 billion (!) family
fortune. But the stock market in the game, while randomized, was pretty
innovative for its time. (It's been awhile since I've played it, of course,
but I vaguely remember that there was _some_ sort of internally consistent
logic behind the stock pricing movements that seemed to be randomly seeded at
the start of each game).

As far as I can tell, the entire game revolved around getting rich off of
stocks, wining and dining an increasingly high-maintenance trophy wife, and
making a series of very conspicuous consumptions (a yacht, a penthouse, and
even a castle). But the mini game in GTA V seems very similar.

~~~
moneyrich4
Oh I hated this game! I was so bad at it and made no profit in the week I had
it rented.

Turns out I did about as well in the real stock market. gg.

The game was really fun though

~~~
jonnathanson
I sucked at it for the longest time, but every now and then, I'd have an
incredible run of luck. A 10-year-old Gordon Gekko, I crushed it on Wall
Street, bought the boat, the houses, and even the family castle (why I bought
the castle from my own family trust, I'm not really sure; in retrospect, I
assume it was some sort of complex inheritance-tax-evasion mechanism).

Lots of fun! Unfortunately, I grew up to be considerably less successful and,
at least for now, castleless. :)

------
electic
Ha, one thing I love about GTA is the witty puns they have in there. Krapea,
Life Invader, nice.

------
mathattack
Interesting. I could see this as the intellectual genesis of an entirely
different game. Imagine tying the virtual market to Bitcoins!

One comment on being able to short... Based on how the game is described (I
may be the only one the planet not to be an active player) it should be
possible to short a stock. Every time you get new money, split the purchases
evenly between all stock. (Can do a weighted average if you want) Then when
you have information (like you're going to kill the CEO) then you have shares
to sell on the bad information. It's not a concentrated bet, but you still can
effectively short it.

~~~
jaynos
That's not a short, though. You don't profit on the difference between prices,
you only get the chance to buy again at a lower price, but not sure if the
stock will go back up.

~~~
mathattack
Let's oversimplify for the sake of showing the calculation...

There are 4 stocks in the world, A, B, and C, and D, all trading at $25. I
invest $100, buying $25 in each.

Now lets say that I know for sure that stock D will go down because I'm going
to whack the CEO. So I sell my $25 of D, and put it in A, B and C (A stake of
$33.33 in each - let's assume fractional shares are ok.) If Stock D goes to 0,
while the others all double. I have a net gain of $100 - $75 from the stocks I
already held, but $25 from the new investment, and I've avoided $25 as well.

Let's say you lived in a world where shorting was ok. If instead you invested
$25 in A, B and C, and shorted $25 on D, you would gain $75 in A, B and C, and
$25 on your short of D. In essence it's the same $100 profit.

Now this only works if A, B and C are also going up.

Let's say that D does move on the event, but A, B and C don't. If you do buy
back D after the event, you ultimately are in the same position in both cases.
In the shorting case, you have $100 in securities ($75 original, plus $25 of D
bought near 0) and in the "sell now buy later" you sell back $25 of A, B and C
to buy at the bottom.

Net - you create the effect of shorting.

This falls apart if you want a very concentrated bet, but it's a way that
long-only professional money managers who compete against indexes find a way
to effectively short.

~~~
minimax
All of your profit in this scenario comes from the market going up, not D
going down. That's not a short (or synthetic short) position.

~~~
mathattack
The math still holds if you assume buying back after the drop.

Think of it this way - in both cases you're selling today, and buying later.
The only difference is the "hold the whole market first" strategy requires
more capital. (There are market technical differences too, but for short time
periods these aren't as significant)

~~~
minimax
_The only difference is the "hold the whole market first" strategy requires
more capital._

That's not the only difference. It's not even the biggest difference. The
_major_ difference is that in your scenario you have a big unhedged exposure
to the market (your p&l depends on the performance of A,B,C) and in the case
of just shorting D you don't (doesn't matter what happens to A,B,C). That's a
pretty big difference.

~~~
mathattack
Fair enough, though perhaps we're going too deep down the rabbit hole for a
video game. :-)

------
utefan001
Bill Cosby calls Grand Theft Auto Entrance Exam for Prison
[http://nativenotes.net/bill-cosby-calls-grand-theft-auto-
ent...](http://nativenotes.net/bill-cosby-calls-grand-theft-auto-entrance-
exam-for-prison/)

~~~
Karunamon
An out of touch older individual slagging on video games? How totally unique
and unsurprising. /s

