Stock and M&A pov

[Nazka231]

I wanted to have your point of view on Stocks and M&A which are kind of linked.

First about Stock. I never buy any AI stock because I think it requires so much time to do a real investment. You have to learn at least every company in one sector meaning playing the CEO on X companies. You have to know what they did, where they invested, what can be their future... Just to do this is really enough for me when I manage my own company so doing that for like 3 other companies will mean to play the game 3 times slower because it's 3 times more complex.
On top of that another problem is to not know what AI are doing. They won't say "hey investor I plan to invest here and there, and with X profit in Y product". So you have to scan and check everything almost every time and be sure to not miss something.
And finally the management team. You can never be sure that Mr X will perform well or not. For 5 years he can act like a Mr Job and then all his/her skills disappear. They do bad investment/decisions etc...

Secondly M&A. It's almost the same thing because to do a great investment you have to understand the company to be able after that evaluate it at the right price. That means to have to scan several companies about all and everything meaning being like a CEO on X companies. And then do some math for the evaluation.

What do you think? How trading is working for you? What about M&A? Don't you have a big headache the next months you bought a company twice your size?

[counting]

That's why there are financial reports, rankings data in Corporate details, and all sort of indexes shown in stock market interface. Real life investors face almost the same kind of dilemma as you described, and it's even harder for people to understand real corporations' day-to-day operations. Also AIs in game is actually a lot easier to predict, unlike real life businesses, who are much more difficult to predict. Only in real life, you are watching things unfold in "slow motion" compare to the game. Look back in history you'll see plenty of successful companies fall apart without warning in just a couple of years.

And there are differences for pure investment and for M&A in decision making. For investment, it's return rate you need to concern about, and rarely need to worry its size relative to yours. But for M&A, it's how many public shares left and its capital structure you need to worry about not return rate, and just like real life, you rarely heard a small corporation merger a large corporation, it's simply not realistic. Unless you have enough patient to slowly purchase its stock with premium price for decades to hundreds of years. But by the time you can merger, you are already as big as your target (remember stock is part of assets, so your corporation's market value will be at least 75% strong compare to your target, normally you need to be much larger for merger to be practical)

[Nazka231]

Thank you for your answer. Yes it's true. For me, the biggest problem is to be sure that a good CEO will perform well and will stay consistent over time. Because it's an AI and I don't know the code behind, I don't know if it behaves. I tried several times to invest in stock where the companies were doing tremendously well, but they just crashed even with the same CEO. As if CEOs don't have real skills behind, just random behaviors one time they are great then they perform really bad. So I kind of gave up for that and bet only on me.

Yes I agree that there is limit to buy another company. I had different opportunity to buy other companies twice my size with loans. I would have had a successful opportunity with at the end of the day a return bigger than the loan rate plus my size increasing even more. It's just the amount of time to check every company with all their buildings etc... Plus sometimes start to understand a market what is happening in a market they are involved and I am not.

[counting]

AI's behavior is very rigid, so it only performs well when certain conditions are provided for them (with different focused AI it's different). However, IMO perfect merger target is mostly pipe dream, and need to be more practical. Most of time in early to mid-game, expanding into a reasonable dominance force is far more important and much more efficient than dabble with capital merger games. Also, during the expansion phase, you already knew what kind of competitors there are out there on the market, and who rarely come across your path. When you encounter resistance on one market, it's best to find another unclaimed territory, until you couldn't find one anymore, and it's time to play the capital game.

Those stock-focused AIs will be prime target from the beginning, since they never dabble with manufacturing and they have mass capital to dabble others business and their price rise up quickly, however they will fall hard when a prolong period of recession hit; those real estate AIs most of time stay as retailers since their capital sink into low return rate real estate; Media focused AIs are very rarely and generally suck at performance. Those tech-AIs are the star if their expertise are unique where no one compete with them, and their tech target are star products. But most customer AIs will behave depend on what kind of competitions they face. Diversify strategy AIs tend to be less sensitive to competitions, but has lower profit margin, although left uncontrolled some would grow into giants. Specialized consumers retailers generally performed well in the early game, and quickly met a ceiling. Specialized product strategy AIs are most unpredictable, however generally only perform good early to mid-game and slowly going downhill after diversified AIs take over. One thing is important though, some AIs might change their orientation mid-game, like tech-focused will join as diversified strategy or specialized strategy.

Finally there's a difference between finding a target to merger, and becomes a holding company "master". Usually my first few targets will be those who's product market is very solid and came across my path rarely for merger, after I control half of the product market and form a solid revenue base, the rest AIs only matter to me as extra capital holders where they can do whatever they like, since I can snowball into total domination using their borrowed capital as a holding company and their parent company, and buy out the rest.

[Nazka231]

Hmm ya ok. Thanks to share your thoughts. I guess I should try to see more closely how the AIs work.