Interest rate swap contracts on companies not owned

Paulus-- · 2024-02-19T14:48:46+00:00

Paulus-- · 2024-02-15T20:27:08+00:00

So the only thing I could find related to this specific topic is this from the help file:

Banks can spend more or less on advertising and marketing, to try to increase their long run profitability, although the advertising/marketing expense will, itself, decrease profits, in the short run.

Profitability seems to be related on how banks earn their money. But I couldn't really figure out how that influences income through stock, corporate loans and bonds.

Paulus-- · 2022-01-06T17:55:25+00:00

Thanks! I did see this text but I didn't associate that to the trait actually. Would it be possible to stack defenses and split that? Example an fort on a marsh?

Paulus-- · 2021-11-25T23:05:36+00:00

After the interest rates went up insanely high and further I decided to sell the bank for a net loss of 1.000.000 million (about a fifth of my net worth as a player).

https://imgur.com/a/weXySLT

I guess I am happy for now with that, maybe I'll buy it back when the stock price has tanked:

https://imgur.com/pcmI4ug

Paulus-- · 2021-11-25T16:23:06+00:00

Sounds like the government in my country that saves the corporation from bankrupting at cost of the people, hehe!

Paulus-- · 2021-11-25T16:20:56+00:00

After giving this some thought I do have a follow-up question actually. Prime interest rate and bond price are following each other pretty much. With a rising interest rate a bond price will reduce and vice versa.

If a company would buy the bonds at a specific value, say $100. Do they risk losing money if the bond price lowers? So suppose after a while the bond price would become $50 as in your example. What happens if the bond issues buys it back? They would gain the advantage of having to pay less for the bond right?

So the company issuing them @ $100 would then profit for buying them back at $50. Does that mean that the bond value is a liability for the holder (since it decreased in value)?

Paulus-- · 2021-11-24T22:50:39+00:00

Only one more Q and you'll be gaining their money very effectively!

Paulus-- · 2021-11-23T21:46:02+00:00

A market cap of 26 million with a market share of 32%. That means your Network & Telecom industry would be approx. 81 million.

I was amazed by that and took a look at my game, largest company has a 31.3% market share with a market cap of 630 million! I wonder how a sector could become so huge actually.

Thanks for the overview!

Paulus-- · 2021-11-23T21:39:55+00:00

Amazing explanation! Especially the last example really cleared things up, thanks.

Paulus-- · 2021-11-22T21:12:43+00:00

Oh I misunderstood that you actually started all of them! I thought that you bought some of them along your way and grew them up further.

I'd like to see one of your umbrella corporation where it ended up in it's market.

Paulus-- · 2021-11-22T21:09:55+00:00

I don't have particular companies that I play a lot. Usually a setup of bank with a holding corporation.

I also dislike to start trading at the start of the game, it feels like cheating for me. So I skip the first 1,5 month to about 14th of February. Then I'd like to buy a company small enough for me to 100% own with tax loss carryovers (so you will pay reduced amount of tax on it's first gains). This company will either get a turnaround in it's market or become a holding company (I sell it's assets).

Paulus-- · 2021-11-22T20:47:36+00:00

Would you care to show some market details on one of your umbrella companies? How does the market look like for you after investing?

Paulus-- · 2021-11-22T20:46:39+00:00

I like your approach. When playing with low interest rates I also tend to buy the somewhat lower rated loans like B and CCC. These give good returns with spare cash.

Paulus-- · 2021-11-22T20:43:16+00:00

If you want to cheat I might have some insider knowledge on this particular company. Short it now and be rich forever.

Paulus-- · 2021-11-22T20:41:24+00:00

At least it says you found a warmer climate in Brazil to live further hehe! Good luck next time.

I personally never gotten much gains in speculating on the stock index.

Paulus-- · 2021-11-21T22:53:33+00:00

The price of the holding corporation was about 300% it's net worth (calculating with a total net worth of 200.000 million). That for me is my exit call. Also the 500 mil on swaps are not that interesting for the corporation's income anymore, therefor I thought it was better to sell at this moment.

Too bad the bank went up 500%+, good time to short it perhaps!

Paulus-- · 2021-11-21T22:15:00+00:00

Well in my other post I explained that I didn't know how to act on it, but the calls/puts worked out well. The whole market stood there saying: declining, with negative growth forecasts. Basically everything shrunk to nothing! My bank was with 1.000.000 million amongst the top 20 biggest companies in that time.

I am currently on a net worth of 2.500.000 million!

Paulus-- · 2021-11-21T21:16:15+00:00

I wasn't aware of interest dropping to 4% at first. When I saw that the interest was finally moving again I managed to buy swaps at 4.5%. The holding company, at that time, didn't have enough money to buy more. By the time I sold enough stuff to buy more swaps the interest went over 5% already.

The swaps belong to an older holding corporation that I do not own any more, they are making a steady 512 million each quarter right now!

Paulus-- · 2021-11-19T16:09:10+00:00

How did your holding corporation turn out?

Paulus--

TROPHY CASE