Wednesday, April 25, 2012

When to hold, part 4: New record edition

Waiting for all the rorquals that some asshole dumped on the market in akora at 2.64 to sell has finally paid off. The minerals for the lovely item you see above cost me 1.7, for a single-hull profit of 1.55 billion, a quarter billion more than my previous record.

In the meantime thanatos have also caught up to the market, and I sold one for 100% profit. The only hulls which are still selling low are chimera (100m above mineral price), phoenix and naglfar (both below mineral price).

Something I'm noticing is that most ships seem to have a psychological break point for how high people are willing to go even in the brave new market. For dreads this seems to be about 3 billion, and carriers around 1.5. Ships have been sold above these values, but only a few (three, to be precise), and when the only ships available are above that they tend to sit for days without selling.

I'm not sure if this will hold true for the rorqual. My suspicion that it could stabilize above 3 billion without another mineral spike is very low, but unlike carriers and dreads it's an infrastructure investment rather than a disposable combat ship, so people may be less reluctant to pay very obscene prices for them. And ooh, lookit all them suckers people suddenly getting into 0.0 mining....


  1. I don't get it. If you knew that he is a temporary problem and the equilibrium price will be much higher, why didn't you buy him out and resell his ships, getting 600M/ship?

  2. Well, several reasons. For one, I didn't have the liquidity needed (~20b). For another, I didn't have enough data to be completely certain what prices would do or when -- 2.64 is already 500m above mineral price, and a very reasonable historical margin for rorquals, and hulls built at old mineral price are still being put on the market.

    I held because I thought it was a reasonably safe bet, but didn't feel comfortable investing because of uncertainty about when and by how much the price would increase.

    I'm not much of a trader, and I have to admit that this has prevented me from making the largest possible profits on the price increase. So far what has happened in the capital market is in line with my most optimistic dreams, though, and there are still a few ships which are certain things. Not buying into those at this point would be... negligent.

  3. However if you were unsure if the price goes higher, calling the 2.64 guy "asshole" who "dumped" on the market is largely incorrect. Such speech implies that he made a capital mistake, like selling under material price or selling below a buy order in the neighboring (high-sec) region. From your reply it's clear that he made a valid choice based on limited data, which turned out wrong but he had no way knowing it when he made it.

    I'm not being the "niceness police" here. I regularly call people morons and slackers, but when I do so, I'm in the firm belief that the guy did something utterly stupid.

    1. "Dumping" a market relates as much to usage of large quantities than to low prices. It is clear here that it is the large quantities that was the problem on a market like Rorquals.

      As for calling people assholes, I think the fact that they annoy you is a decent enough reason, if people actually needed one.

    2. Repost: ****ing thread edition

      Nah, he's been doing this for as long as I've been building capitals. Every few weeks he puts a bunch of rorquals on the market at the same time. He puts the hulls up individually, and each hull is priced ~20m under the current lowest on market, even if the lowest hull is his own. Because of this, the minimum price drops (briefly) by a couple of hundred million isk per unit. He sells himself short and forces everybody else to either hold until his stock clears or beat his price. Enough people are unobservent enough that they sell instead of holding, lengthening the amount of time that rorquals are selling below where they should be.

      If he were to undercut by small amounts and/or only put up one hull at a time, there is no question that he could make substantially more isk and still sell all his hulls before the next run finishes. If I can see it, then he's a moron not to.

      It is possible that I'm misreading the situation in some way, but I can't think of any way this situation could arise without a minimum of one person doing something very dumb.

    3. Now you're making the same mistake that you made that Gevlon already called you on, but you're making it on a larger scale, to justify the small-scale mistake you already made.

      "He sells himself short and forces everybody else to either hold until his stock clears or beat his price"

      No, he is not forcing everybody else to either hold or beat his price. Everybody else has exactly the same option that Gevlon already suggested you take, to buy his entire stock cheaply and sell them at what you have repeatedly asserted is the correct price.

      Or, even better, in the example you give, if this reliably causes a drop of hundreds of million in the short term, instead buy the ships that are hundreds of million below "correct price" and resell them a bit later.

    4. Sure, I could tie up 20 billion isk of liquidity for a week in order to make half a billion in profit, assuming that the normal variations in capital prices don't happen to be on the downswing at the time.

      It's a good thing you're here to tell me how not taking advantage of every single potential profit opportunity is the same thing as making a mistake. Clearly you know the market better than myself and existing capital traders.