Neopets/Stock market

The Neopets stock market can be found here. Stock information is updated every 30 minutes. Keep in mind that there is a 20 np transaction fee associated with every sale of stock you make.

Making an informed decision
Neopets does not publish long-term information about their stocks, so it can be difficult to know when one is "low" such that you should keep investing in it. For this sake, there are sites like NeoDaq.com that can show you the price history of certain stocks.

The most valuable advice you can get is: Don't invest all your money at once. If you keep a couple of promising leads on your "My Portfolio" page, then you can invest more in them when they drop down -- and you get a better deal for your money.

Try to buy from many companies in the same price bracket. This spreads your risk out around more companies, so that mistakes you make are less important.

Investment timeframes
One can elect to invest in the Neopian stock market on an order of years (long-term), months (mid-term), or days (short-term). This is a strategic analysis of those different methods.

Long-term investment
Unlike the shorter-term investment strategies, which need to be judged by experience, long-term investment can be judged in terms of cold, hard, numbers.

The first data for the NeoDAQ is given on NeoDAQ.com as April 16, 2002. It averaged ~900 np. Around April 16, 2006, four years later, it was roughly averaging ~1,700 np. Between those two came two major recessions; the "Thanksgiving recession" in the last week of November 2003, and the "Black Sunday" crash of November 14, 2004. In spite of those two recessions, the NeoDAQ has, so far, averaged roughly a 16% yearly interest rate, compounded daily:

$$r=\left(\sqrt[\left(365\times4\right)]{\frac{1700}{900}}-1\right)\times365=.15903$$

Should this hold up, it would mean that long-term investment in the stock market is far, far better than investment in even the best bank accounts, making the Neopian stock market on par with real-world stock markets.

Mid-term investment
Professional Neopian investors, like those at NeoDAQ.com, tend to prefer this timescale; they buy stocks at ~15-20 np apiece and then wait several months to sell any that have experienced a long-term increase to ~40np or higher. In the NeoDAQ.com "stocks scoresheet," the time interval given for this is on the order of 3-6 months of waiting, for the best stocks. In theory, this means a 100%-200% return every half of a year. In practice, that number is a little overinflated, because not all of your invested money will necessarily pay off in six months time; but even as a 100% return per year, the profit is still sizeable.

Short-term investment
Short-term investment offers even better potential profits than mid-term investment, but requires more daily work, more data analysis, and it is more risky. Unfortunately, the vast majority of first-time investors are investing for the short-term and yet, at the same time, are not doing the requisite analysis; they tend to lose a lot from the experience.

Good investors, working daily, can make thousands of neopoints a day every day with a good short-term investment strategy.

What should you buy?
This section is geared towards short-term investment because that is the most popular variety used on Neopets.com, and also has the potential to be the most profitable.

Low-level investment
If you are investing less than 15,000 neopoints, then the best strategy is to buy as many 15 np stocks as you are willing, and then wait to sell them until they hit 17-18 neopoints.

The reason is clearly illustrated by looking at a 1np stock case versus 1000 np stock case. If you invest 10,000 np in 1 np stocks; you get 10,000 shares. Suppose the stock price goes up by 1 np, and then you sell your shares. You would get 20,000 np from selling, so you would make a clean 10,000 np profit. This is why Neopets.com says that you can't buy stocks priced at less than 15np.

On the other hand, suppose you invest 10,000 np in 1000 np stocks. That gives you 10 shares. Suppose that the stock price, again, goes up by 1 np, and then you sell. That lets you sell for 10010 np, so you would only make 10 np.

The situation can be slightly more complex, but in general, a stock like POWR costs ~600 np and varies daily within 10np, meaning roughly a 1.7% return; whereas a 15np stock varying +2 np immediately gets you a 13.3% return on investment.

Mid-level investment
As you get to the 15,000 np border, you begin to run into a limit that the Neopets Team has placed for you: You cannot buy more than 1000 shares per day. Why is this a limit? Because if you only place 15,000 np in the stock market, and you have 100,000 np, you're not using all of your money to get a maximum return! Essentially, 85,000 np sits by the side, earning 0% interest, while you send your 15,000 np in to earn a high-percentage return.

To some extent, this can be combated by spending several days to invest all your money into a diverse profile of 15np stocks and then, every day thereafter, rearranging your stock money about the market by selling exactly 1000 shares from your highest-price companies, and buying 1000 shares of 15np stocks.

If executed properly, this strategy results in a constant, no-frills 2000-3000 np/day. Yes, most of your stocks will be in the red most of the time, but when they jump above 15 np (which will happen eventually), you'll sell them off properly.

To make this strategy more robust, check the history on NeoDaq.com; figure out if 15 np is a low-price for the stock (that is, the stock's history is in the 17-22 range) or a high-price for the stock (that is, a history in the 8-13 range) and only buy from the low-priced stocks. You may have to invest your money in the 15-20 np range, but the idea is roughly the same.

High-level investment
The 1000-stock limit, in fact, forces you to invest in the higher-priced stocks if you want to make the real big bucks. The issue is this: If you are limited to buying 1000 stocks from the get-go, you want to buy stocks that will raise by 10 np, not by 2np. Then you will get 10,000 np, and not 2,000 np.

Where are these high-variability stocks? They are at the high price ranges. So when you get to the hundreds of thousands of np, you will want to invest them in the 100-500 np stocks, so that you can get high absolute returns -- even if they are low percent returns.

Theoretically, if the percent return gets below a certain value, the bank is a better place to put your money. In practice, however, playing the high-risk game on the stock market works better. This is because the absolute maximum daily rate that the bank will give you is:

$$\frac{12.5\%}{365}=0.0342\%$$

So, if a stock varies between ± N np each day, then it would have to cost:

$$\frac{1}{0.0342\%}\times N\mbox{, or }2,920\times N$$

np before you'd say "Hmm, I don't want to buy that." The bank's interest is really relatively crummy compared to the rest of the site. Even if you have 10 million np in the Ultimate Riches bracket, you only get 3,425 np per day. 3 games of Deckball and 2 of Pterattack and you've already got that much; to say nothing of games like Cellblock that you can play for 5000np/day, or Eliv Thade for 3000 np/day.

Differences from the real stock market
Although modeled after the actual stock market, the Neopets stock market is different in some respects.


 * Neopian corporations never seem to pay dividends.
 * Neopian companies never give you voting rights. If you prefer it put this way, the Neopets stock market is so incredibly huge that no matter how many shares you buy, your vote will never be sizeable enough to matter. It's sad, but it's completely understandable why they did it that way.
 * You cannot take a short position in the Neopets stock market. This means you can't sell borrowed shares and buy them back later.
 * There is no derivatives market associated with the Neopets securities.
 * Stock price is not set by open market operations, but rather by a computer program.