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Post by SIMCO CAPITAL PARTNERS on May 2, 2020 20:42:47 GMT
Hey,
Bonds are a great way to finance your company and other players aswell. But have you noticed how many bonds are just sitting there without anyone to buy them?
The issue with bonds is this....
When you go over 3million in purchased bonds, the accounting fees start eating away at your profits. Even if you have an executive CFO to lower the fees. It becomes very difficult to profitable grow a bond portfolio. I tried this before and I purchased 10million worth of bonds to finance other players and the accounting fees were eating me alive!
Not only the accounting fees, or the executive salaries, but also the training costs for the CFO, and when the CFO is training that means hes not working, and that means you get hit with more accounting fees. Not to mention that most people offer 0.50% on JUNK BONDS.
There is clearly a problem here. Just hear me out...
The real problem here is this:
The accounting fees are based on the TOTAL sum of all bonds your purchase from other players... Instead of just charging me fees on my daily bond profits.
Now i know this is done purposely to prevent exponential growth. So here are possible solutions...
Solution:
1. Completely remove the accounting fees for total bonds purchased 2. Reduce the fees significantly if you dont agree with the first option 3. Or Increase the minimum financing % based on the company Rating
I feel like right now the bond market is a missed opportunity. Nobody wants to buy bonds to lose money. And the whole point of the game is to grow and build and scale, and when you go past 3m in bonds purchased the returns just deminish slowly untill you go into the negatives.
Please fix this Patrik. Lots of players need financing, and some quit and never return. Some default and reset on the loan ( I understand thats a risk you take when buying them). But please give us more fair playing conditions
Please remove accounting fees for the total value of bonds purchased, and make it so we only pay fees on the total profits.
Why buy Junk Bonds at 0.50% when you can buy AAA rated bonds for the same 0.50%. It doesnt make any sense. And right now there are over 300+ players with no financing
Please consider the above...
Thanks,
Carbon Fiber World www.simcompanies.com/company/CARBON%20FIBER%20WORLD
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Post by crazyplace on May 3, 2020 13:43:43 GMT
I'm glad no one is buying bonds now, or at least it seems like it, maybe the market just gets filled at breakneck speed, I haven't checked. A few weeks ago, you couldn't get bonds because they were sold out fast, and junk bonds were offered at the same interest as investment bonds. I hope, people not buying them gives the market a chance to change to more realistic prices, so that the junk bonds get a much higher interest.
To answer your question, there's reason to buy junk bonds over investment bonds. Investment bonds are repaid very quickly, so you make little interest. On junk bonds, as long as companies keep paying, will give you interest far longer because the companies which sold them aren't able to buy them back as quickly.
I agree with you about the accounting costs though, they're too high.
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Post by SIMCO CAPITAL PARTNERS on May 3, 2020 23:54:01 GMT
Thanks for the reply I appreciate your comment
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Post by semperfi on May 4, 2020 0:54:14 GMT
Interesting. I used to be issuing and paying back bonds frequently. Recession is usually a good time to upgrade (lower opportunity cost) and max out on bonds then, paying back from boom time profits.
Something happened in the last 2 or 3 weeks - cannot sell any more bonds.
Just checked the market - there is a crap load of bonds sitting there! Wow.
If the whole market is screwed up, then I guess I'm going to keep my bonds indefinitely. Don't want to be in a spot where I want extra cash for upgrades and cannot get it.
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Post by crazyplace on May 4, 2020 19:52:38 GMT
The market is screwed up because the issuers don't get that the bond market works the same as a regular market; you need to compete. And no-one is making their product competitive, everyone is doing the same. So if doing the same as everyone else does, doesn't work, what do you need to do?
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Post by SIMCO CAPITAL PARTNERS on May 4, 2020 20:32:31 GMT
The market is screwed up because the issuers don't get that the bond market works the same as a regular market; you need to compete. And no-one is making their product competitive, everyone is doing the same. So if doing the same as everyone else does, doesn't work, what do you need to do? Thanks for your feedback. Thats why were here trying to get the developers attention about this issue
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Post by semperfi on May 4, 2020 20:58:18 GMT
"issuers don't get that the bond market works the same as a regular market; you need to compete"
So, what changed? Presumably that was true many months ago when I joined. Had no problem until only very recently.
Carbonfiberworld does a good job of outlining A problem, but it is not clear to me that this is a sudden problem that changed the balance in the market. Did the accounting fees only start to hit in recent weeks? If so, and this is the trigger, then I confess I missed it.
BTW, I don't disagree with having a more realistic, competitive market for bonds. That would be more fun.
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Post by Keefain on May 4, 2020 21:55:34 GMT
i think demand and supply balance should solve this problem, ,5% interest is not good enough to invest in a company that is medium / high risk.
also in recession it is normal to not buy bonds since there is no cash in economy, in boom bonds were selling at flash speed.
i think the current balance is good... if any player want faster sale, should increase benefit.
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Post by crazyplace on May 4, 2020 22:37:07 GMT
The market is screwed up because the issuers don't get that the bond market works the same as a regular market; you need to compete. And no-one is making their product competitive, everyone is doing the same. So if doing the same as everyone else does, doesn't work, what do you need to do? Thanks for your feedback. Thats why were here trying to get the developers attention about this issue My point is, the developers don't need to do anything. Or at least not by repairing it, because the bond market isn't broken.
The players need to understand how it works. And one look at the bond market should have a breakthrough in their thought process, but apparently it's not understood that selling bonds works the same as selling products on the exchange.
So if the devs need to do something, it's informing how it supposed to work. And that isn't necessarily the devs task.
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Post by semperfi on May 5, 2020 14:21:06 GMT
Keefain, thanks for the explanation - there is some logic to there being lower cash availability.
Still, I've been through several recessions and the old .5% was never a problem (there always was demand).
Crazyplace, it is not that I don't understand how a competitive market should work, and supply/demand normally means lower quality bonds should be offered with higher interest rates. That it hasn't has been the subject of frequent discussion.
Seems nobody can put a finger on "why now?". Really, that is all I am asking. What triggered this moment to be the one where the market becomes "competitive" after all these months?
Is it really the accounting fee problem? I don't think that is what is suggested, nor is it something new, though it is a problem itself.
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Post by SIMCO CAPITAL PARTNERS on May 5, 2020 21:46:15 GMT
Thanks for your feedback. Thats why were here trying to get the developers attention about this issue My point is, the developers don't need to do anything. Or at least not by repairing it, because the bond market isn't broken.
The players need to understand how it works. And one look at the bond market should have a breakthrough in their thought process, but apparently it's not understood that selling bonds works the same as selling products on the exchange.
So if the devs need to do something, it's informing how it supposed to work. And that isn't necessarily the devs task.
They could easily fix this issue by increasing the minimum % for financing for Junk bonds based on their company rating. THat way riskier compnaies would have a higher minimum than better rated companies. You cant deny that 0.50% just doesnt make sense for a C company. Also the Developers could lower the accounting fees or remove them completely for purchased bonds to incentivise players to buy them more.
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Post by The Center on May 5, 2020 22:52:14 GMT
Think the conversation here has lost track of what Carbonfiberworld is suggesting. Let is fix this before is goes further.
This isn't about the current state of the bonds. Maybe that is why many of you are talking about the amount of bonds and the % rates should be higher to sell (this is because of the recession -- by the way).
The issue Carbonfiberworld has with bonds is after a certain point you cannot make money owning other people's bonds because of accounting fees.
I think I figured it out one time with Executives would have a max lift on accounting fees of $27 million to $32 million (someone should check my math). This is in a perfect world. After this point is when you shouldn't buy bonds at all even if they are 2%. Because the accounting fees would start costing you more than the interest yield payments. In essence there are no "BANKS" in this game after a certain point.
This is what Carbonfiberworld's argument is about.
The only solutions to making "Banks" in this game is number 1 and 2 in my opinion. Three is not going to happen because this punishes new players and has been discussed at length in the past.
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Post by semperfi on May 6, 2020 14:03:40 GMT
Center, thanks the input.
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Post by crazyplace on May 6, 2020 19:46:59 GMT
The only solutions to making "Banks" in this game is number 1 and 2 in my opinion. Three is not going to happen because this punishes new players and has been discussed at length in the past. Accounting fees are basically tax, so we can look to what countries came up with, to see if any of it is usable to replace the current system.
If they're to prevent or slow exponential growth, such mechanics are still needed. And I guess a progressive tax system is a good example to look at. It can be the interest which is taxed. So you would pay 10% over the first 10000 or so, 25% over the next 25000, and 60% over everything above 35000 The numbers are just an example, could be totally different.
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Post by semperfi on May 6, 2020 23:25:27 GMT
Crazyplace, some good thoughts there. I like the analogy to a tax.
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