inKLine Media

The Capital Exchange. (Photo by Bill Kaye).

By Sechelt

SLBR introduced the virtual stock exchange in CAPEX 101 and introduced to the man who runs it.  Now it’s time to figure out some strategies for choosing stock.

Most of the information referenced below can be found by navigating the CapEx website. The “Trading” header will take you to a table that lists the different companies on CapEx. Clicking “info” for each corresponding company reveals that particular company’s information.

Below is a list of some points you may want to consider when choosing your stocks:

1. The company’s type of business, the industry to which it belongs, and the overall economic climate of that aspect of Second Life (R).

Is the company in a type of business in which you would like to invest? Is it non-profit or a for-profit enterprise? What factors influence the success of this type of business in Second Life (R)? For instance, has Linden Lab (R) made any significant changes that could affect the overall profitability of this type of business?

2. The length of time the company has been in business, trading activity, its cash on hand, assets, revenue and expenses.

How long has the company been around in Second Life (R)? How long ago has it gone public? Does it have substantial assets relative to its expenses? Research online and in-world: what are its revenue streams (e.g., in-world and marketplace sales, advertising on its blog, etc.)? Are the revenue streams diverse and/or effective? What is the trading activity on CapEx like: busy, few investors with bulks of shares or many investors with just a handful of shares each?

3. Price history, dividends, and dividends-to-share ratios

How much has the company paid out in dividends historically? Would you rather invest in a non-profit, knowing that you are supporting a cause, but one that may or may not have as high a return of investment as a for-profit company?

4. The movers and shakers in the company.

Who owns the company, who are on its board of directors? Would you want to invest in their venture given their individual backgrounds and/or profiles?

5. Dividend Policy

When does the company pay out dividends? Could you afford to hold on to your shares until the next time the company pays out dividends and make possible profit that way, or would you prefer to invest in another company that could possibly yield a profit by selling your shares instead?

Of course, these are just some questions to consider when picking from the five dozen listed companies listed on CapEx.  As we report on what’s going in the market, you can start trying to answer some of them.