Friday, December 18, 2020

Merry Christmas, Gaming The Market

No, not getting ahead of today's action in TSLA, $148 billion worth traded, up 6%, but rather, last minute presents

From the quantniks at Winton, 2017:

Why not give your nearest and dearest the gift of a classic financial market boardgame?
Here we present 10 ideas from the Winton archive.

Winton's historical archive contains 114 financial market games that require a mix of skill and luck reminiscent of real-world investment. Some are almost 100 years old, and all say something about the intellectual fashions of the era in which they were launched.

Monopoly, probably the most famous board game, is itself such a game, focusing as it does on real estate investment. While Winton owns several versions, including the Berkshire Hathaway Diamond Edition, we have chosen instead to focus on lesser known games.

From the selection below, there are games released at the height of stock market booms, in both 1929 (Ticker) and 2000 (Contango). Others, like 1975's The Beat Inflation Strategy Game, reflect contemporary changes in global economic conditions. Hostile Takeover (1987), meanwhile, epitomises the mergers and acquisition boom of the 1980s. More recently, Bailout (2009) provides a blackly humorous take on the global financial crisis.

Some of the salient features shared by several of the games include the ability to trade on inside information, the prospect of regular market disruption and the importance of knowing when the odds are stacked in your favour.

Hostile Takeover (1987)

Hostile Takeover S

A game of luck and skill that might have been designed by Gordon Gekko himself. Hostile Takeover was launched in the middle of the 1980s, the decade when big-ticket corporate mergers became all the rage, as depicted in Barbarians at the Gate, the breathless account of the leveraged takeover of RJR Nabisco. Channel your inner Carl Icahn or Jimmy Goldsmith, and build an industrial conglomerate that makes a mockery of antitrust provisions.

  • Catchphrases: “The Game of Wealth, Power and Insider Trading”, “The Wall Street takeover movement has come home”, “Learn firsthand what those Wall Street contenders have known for a long time. Greed is fun.”
  • Goal: To be the most valuable conglomerate: either at the point at which all players bar one have run out of cash; or when no more conglomerate groups can be formed.
  • Starting money: $14.5 billion

Age: 12+; 2-4 players

One player acts as the auditor and must keep tally of the market values of the various companies. Stock prices change according to the various cards drawn.

Players can attempt to buy companies using either cash or bank loans, but may face resistance from other opponents who own the stock. By way of example, targets are able to thwart predators’ advances by playing a “random walk card”.

Hostile Takeover includes a lively potted history of corporate mergers and acquisition from its beginnings in 1974, when Canadian nickel producer INCO bought US battery maker ESB, up until 1987.

It is also replete with the evocative jargon of M&A. All of the following – and more - are in evidence: shark repellent, poison pills, the scorched earth defence, the crowned jewel defence.

Bailout (2009) 

In this - the 10th anniversary of the global financial crisis - why not re-live the drama of the era by playing Bailout, a game in which the usual rules of finance are turned upside down – much as they were as the US subprime mortgage market started to sour in the summer of 2007.

  • Catchphrase: “When You Lose, You Win!”
  • Goal: To be the player (bank) that acquires the most amount of debt.
  • Starting money: $2.5 billion

Age: 14+; 2-6 players. Each player is the Chief Financial Officer of a US bank. The aim is to preside over the institution with the largest debt pile when all players have reached the BAILOUT square, thus securing the right to be bailed out by the government.

Choose to be one of the following six US banks:

Washed Up Mutual; Bankruptcy O’America; Worth Farless; Greedy Investors of America; Liquidation Brothers; No Cashvia

When players land on the BANK STRESS TEST space, they must disclose to every other player the details of their banks’ balance sheet.

Stopping on the Bank Holiday square forces players to transfer all of their banks’ debt to the BAILOUT banker (i.e. the government).

When players land on the Frantic May and Frivolous Mac spaces, they draw a card that adds a specified amount of losses to their overall exposures from mortgage-backed securities and collateralised debt obligations.

“Important strategy advice: pay attention to all of the other players’ assets and debts during the game.”

Ticker: The Wall St Game (1929) 
Ticker S

Published as the market seemed to be reaching a “permanently high plateau”, in the words of an eminent economist of the time, Ticker let players “trade in stocks just as in a Broker’s Office in Wall Street or elsewhere”, encouraging them to develop their own trading systems and familiarise themselves with the finer points of short selling and margin calls. However, the game did not exaggerate potential windfalls, explaining that “chance plus judgment determine the results”.

  • Catchphrase: “A Distinctly Unique and Modern Form of Entertainment.”
  • Goal: To try to maximise the value of one’s holdings, buying and selling stocks as their prices fluctuate during a trading session.
  • Starting money: $15,000

3-8 players

During a trading session, “customers” each select one stock from a generic list including “American Railroad” and “National Equipment Corp”. They take turns rolling dice to determine their stock’s fluctuations and trade it with the “broker” accordingly.

If the price of a player’s stock falls below a certain level, she or he receives a margin call and must pay the broker $10.00 per share. Players can protect their stock from declines by purchasing a stop-loss order, and force its price down by paying for a bear raid.

The game stressed the diversity of strategies available to players: “They may be conservative or ‘plunge’.” Little did its authors foresee, or so it seems, the actual US stock market plunge that was imminent.