"Just grin and bear it."
- 1817 rules
This is a follow on to the previous articles: starting strategies and money movement in 1817, an economic engine board-game set in the eastern United States. In this article we will look at some advanced strategies that I have seen successfully employed out in the wild.
In 1817, it is very important to keep an eye on the interest rate. Anything below $20 is a boon as companies can usually survive full payouts with even a couple of shares in the treasury. However, once the interest rate starts hitting $30 and above, the math starts taking over. Triggering a higher interest rate by shorting someone, starting a new company and taking loans with it in the SR is a great way to take someone out of the game. By the time the shorted company gets to pay out, you should have been able to cover the short payments by selling 1 of those expensive company shares. If the shorted company is not buried by this point, further loans taken in the OR will definitely bury it in the next OR. Moreover, if the company just surives in acquisition, it can easily be taken over for $10.
While this tactic is often effective later in the game, it can be used in the first SR as well: if people have overbid on privates and have funded their companies expecting to take loans with a $5 interest rate, kicking up the interest rate to $10 by taking 6 loans in the SR is another great way to take the wind out of the sails of the fat cats. Keep in mind that having companies funded with pure cash when everyone else is loaded up with loans is a great situation to be in! 1817 like other 18xx is all about relative performance.
In general, it is not advisable to invest in an opponent's company if it is running before some of their other companies. Sometimes it might seem that a well funded 5-share company that just grew up is a good deal, the cash that you pump into that company via a single share might just make the president decide to withhold and buy another train to donate it to the player's second company, netting you nothing out of the purchase. In extreme cases, it might even be that this company is involved in buying out another one and lands into Acquisition resulting in an illiquid share.
Buying into a company for more than $55/share (especially at the start of the game) has high chances of shenanigans taking place. Conversely, upgrading a company under $60/share does not make financial sense due to the fact that tokens cost $50 each. Thus, you want to convert a 2-share to a 5-share around $80/share and above, a 5-share to a 10-share around $120 and above. While this makes financial sense, note that there are perfectly valid reasons to convert from 2-share to a 5-share, especially early on in order to get a token into a preferential location like Pittsburgh and/or Baltimore. A very interesting tactic is to start 2 companies in Cleveland and merge them, thereby popping a token and ensuring that you go before the pack and can get a token in Pittsburgh. Another powerful starting strategy that I have seen employed is converting from 2-share to 5-share in the first MA round, taking a lot of loans to ensure that you go last and then try to grab the first 3T and let one of your companies enjoy the green phase on their first run and allow them to plonk a token in a preferential location! Kicking up the interest rate is also weaponizing the loans here which makes it a lot harder for the others to put a 3T into a 2-share company. There are a few caveats to this strategy however, namely that your Stock value ends up being really low which attracts a lot of leechers in the following Stock round. Conversely, there is always the danger that you attract desperate short sellers who then try to pull out the 4T before your 2Ts run. In any case, this is an incredibly strong start and works well with Pittsburgh + lots of coal.
If you are on the receiving end of this situation, i.e. you find players buying into your company which you worked really hard to build up, you have a couple of options open to you.
If your company is close to the acquisition space and you have another company running after it with a spare/rusting train, then you can withhold, grab some loans and buy out that train for a lot of money. Then in the acquisition round the second company acquires the first one for $10 and repays the loans eating up the extra investment. While you lose a bit of money on interest rate payments and the loss of the rusting train run, letting the second company make a full payout and eating up a competitors cash can be quite worth it depending on the situation.
If your company is running last or running close to acquisition, one very interesting tactic is to keep witholding with it and use the cash to either repay loans and/or buy other companies in friendly sales and take on their debt. This allows you to extract value that would have otherwise been shared and could also put the company into acquisition prior to the stock round leading to illiquid shares, i.e. locked money for your opponents! Once the company upgrades to a 10-share you can afford paying out since the share payout will have been diluted by that point.
One exception to this rule is purchasing shares for companies that are being shorted but are not fundamentally bad. The injection of capital will ensure that the president can cover loan interest and will most likely fully pay out to punish the short seller as much as possible!
Finally, note that no matter the situation, 1817 is unlike other 18xx games where keeping cash on hand is quite valuable as it guarantees your options whereas investing in others comes with many risks: share price dilution via mergers, illiquid shares, etc. Taking all of this into account, if you do have a lot of money to throw around and cheap shares available, investing in others might be a great way to: ride their coat-tails and/or to force them to react and make sub-optimal moves whilst you continue your game :).
Shorting is essentially the backbone of 1817. A short can also be thought of as debt that has a variable payment. When the interest rate is low, it is better to have your company take on the debt whereas when the interest rate is high, one can consider shorting and taking on personal debt and pumping that money into the company (buying shares or by floating a new company to inject cash via the sale of a train into an existing company).
While the rules allow one to calculate the book value of a company by adding the face value of its trains + tokens + shares in the treasury - loans held, this formula is quite tenuous when evaluating companies on the edge of their valuation. Depending upon the players, some might love the smell of money and jump on the shorting bandwagon, whereas some might play more conservatively and help a company being shorted, especially if it is looking to mount a defense! Utilized effectively, shorting can literally put someone out of the game.
If you are on the receiving end of a shorting spree, you should assess your book value before undertaking any defensive measures. In my experience, too many players have gotten emotional and fallen into the trap of defending a company by taking out the maximum amount of loans, only to have the loan interest rate then be jacked up by the short sellers via their newly floated companies. With an interest rate of $35 or above, it can then so happen that even a full payout will only keep the interest rate at bay leaving the company in a worse financial situation than before. The rules clearly state that if you do have an over-valued company then the best thing to do is:
Of course, if you have other well-funded companies that you could use to guarantee a friendly sale, or if your company never had any loans to begin with, then by all means go on a defensive spree. Always keep an eye on your potential cash flow and the interest rate though. Also, the playing order matters a lot - if a successful defense means that you still force the short sellers to pay out before they get a chance to collect dividends from their existing companies, then you can hurt them a lot by forcing them to sell stock in order to cover their short payments. This loss of stock will then hurt them when they want to generate revenue to cover their shorts in the next SR!
Finally, don't short strong companies, as it only makes them stronger and it is a great way to ensure your exit from the game :)
Mergers are great in order to reduce the pressure of train ownership and working towards getting some permanent trains for mid-game. Beware of merging to create a 10-share company too early in the game as it can lead to some unsustainable valuations (even at $50, a 10-share needs to be valued at $500)!
If you find yourself in a situation where some shorts did not work out and you are in need of some emergency liquidity, a neat trick is to merge two 5-share companies where you are fully invested with 3 shares each, to create a 6-share company and you now have 2 extra shares worth of liquidity if it comes down to emergency financing!
1817 is an incredibly well-designed game and offers and insane number of choices and options. While what you do is highly dependent on your opponents, basic 18xx rules also apply, i.e. don't own 2-shares of someone's company unless you are guaranteed to go before them, etc.
One exception to the above is the buying of the last train of its type. Given the fact that a train is exported, it might be beneficial to you to let the game trigger a phase change rather than you having to do it.
That's about it, have fun and good luck!
Many thanks to Stephen Yu for reviewing this strategy guide.