Friday, October 31, 2014

Investing 100b Isk - Update II

In July, before Crius, I started an experiment: If I had 100b isk to invest, what would I invest in, and would I make a profit? Some of the investments in some amounts were real, some were hypothetical. In my first update, post-Crius, I sold almost half my stock (mostly to buy orders) and made almost 5.7 billion isk, with very little research or effort. About half of that profit was really made.

Now I'm ready for my second update! I've since sold off everything except the remaining recon ships, and have turned another profit of some 6 billion isk with minimal effort (using none of that super-sophisticated market analysis stuff that awesome market gurus like the EVE Prosper market show uses, which everyone interested in the market should check out). That puts me at 12.4 billion isk profit. The big changes in this update include PLEX sale, a fortuitous selling of my bomber stock before a massive crash, and a major pay off from limited edition items. The updates are highlighted:

Category 1: Nestors -300m
Let's start with the only item I've yet to lose isk on, Nestors. I knew I would likely lose isk on them and I didn't "actually" buy any, but I thought there was a small chance they would be rebalanced, made useful, and spike briefly. They were rebalanced, but not enough to make them useful enough to actually use in decent quantities. So, I sold them and took the 300m hit--no big deal.

Category 2: PLEX! (Finally) +1.5b
In July I bought 32 PLEX at 795m, at the time a very high price. I didn't actually buy that many PLEX (I did actually buy about 10 PLEX from regional buy orders, and I used 5 for my accounts and sold 5 recently, making around 80-100m each). PLEX finally sailed past the 800m mark, so I simulated selling them to buy orders at 845m, making about 1.5b. Of course, I could hold on to PLEX and likely make a lot more isk. If I actually did make the investment, I would likely hold on to them. However, one of my original goals was to have all of my stock sold by December, and I predict a PLEX sale at the start of Phoebe, so it was a good time to sell.

Category 3: Bombers +500m
In total, I made around 500m from bombers, a lot given both my small initial investments and because they have since crashed. I sold them off in August when the prices started to fall from a spike. I count this one as a lucky break. The fact that they were going to be nerfed, crashed in price, then actually just got buffed but have stayed cheap, is pretty funny.

Category 4: Basilisk +70m
I bought Basilisks at a high price and I was lucky to sell them at slightly higher buy orders recently. I consider the 70m isk here more of a lucky break than a real profit.

Category 5: Limited (?) edition items--Geckos and Genos +4.8b
So far in my experiment, the bulk of my isk has come from limited edition items--Leopards, at first, and now Geckos. Geno implants are frequently used and seemed like a good investment, but they recently started slowing, even dropping in price. I decided it was a good time to sell them off and make a meager profit--my main worry here is that a lot people will return in Phoebe, people who have a stock of Geno implants, and will sell them off to make a quick profit. My bigger worry is that these implants as well as Geckos will be given out as Christmas gifts, so I thought it a good time to sell. Now for Geckos: it is insane to think I bought 400 for an average 17m isk. If I could go back and do this for real, I would have bought any and every Gecko that was going for less than 20m with all the isk I had, simply because they are so OP. They are so overpowered, in fact, that I would predict CCP will either nerf them if they give any more out as gifts, or will simply not give any more out. I could be wrong, but in September I sold my stock mostly to buy orders around 29m. They are also so OP and were such an obvious investment that I think quite a few traders and groups have stock piled them and I don't want to have stock around when someone decides to dump a few thousand Geckos on the Jita market, something that seems to have happened, slowly, when they peaked over 30m.

Wrap up (sort of) and some Lessons

That just leaves the recons left to sell. I could sell most right now and turn a small profit, even from buy orders, but I am holding out hope for a rebalance in Rhea and would assume recons will generally get a buff--but who knows. It seems like a good point, then, to offer some summaries of the project:

Overall, it went far better than I expected, but I was helped by the release of Crius which caused more market speculation than I think any release is likely to do again, expect, maybe, for a release which massively redistributes resources (e.g., perhaps in the upcoming null sec occupancy changes). Crius gave me a fortunate break, in that shortly after release a lot of speculation and market fluctuation occurred on items I invested in, items which have, since then, remained largely stagnant. Even though my predictions would have made around 12b, I actually feel less confident about investing than before I started, simply because of how unpredictable the market can be.

"Winners" for small scale investors, I think, are going to be PLEX and limited edition items that get wide use, but the timing is everything with these investments. The general lesson in my experiment is that it if you have a lot of isk to invest, is insanely easy to make billions of isk on the market while devoting very, very little time to it. However, the flip side of that lesson is that it is easy to make isk partly because the market in EVE is so irrational.

One thing I am curious about is the actual effects making large investments has on the market. It seems quite common in Jita for some trader or traders to buy out the entire stock of some items on the market. In the EVE Prospect show, Locke sometimes says this is to re-set the price, and is skeptical it makes much of a profit. I would like to know more, and might consider an experiment in "buying every order of X and seeing what happens" soon. If it never made isk it wouldn't happen so often, I would guess. Another lesson I've learned is that some of the "players" in the markets are big. Super big. When there are single sell orders of over 700 PLEX up (well over 500b isk) or hundreds of billions of isk in stock on, say, T3s gets bought out in a day, it is not hard to see that there are a decent number of players with isk into the trillions to invest. And the thing is, the more isk you have, the easier it is to make the market follow you, rather than attempt to play catch-up and follow it.

1 comment:

  1. I agree with Locke, in most cases it doesn't make much profit.

    Sure you might get a few sales at higher prices after a buyout but the higher the new price the faster the competition reacts, the more they flood the market and the quicker prices come back down again. Sometimes the competition gets so fierce prices drop to new lows and stay there for quite a while.

    The one who did the buyout can easily get stuck sitting on piles of stock that he can't move (at a profit) quickly enough.

    My usual response to such buyouts is to ship in a big stack from somewhere else and post it for somewhere in between the usual price and the jacked up post buyout price.

    What often does work well though is first pushing prices down until they get low enough you're confident you can resell them at a profit fairly quickly, then do a buyout and repost at the usual price. Of course then you're taking the chance that someone else will decide prices are low enough, do the buyout just before you were going to and buy all your stock in the area too.