Regrets, I've had a few...

Quick note here...while I'm sure that most of you are here due to Markco's blog carnival via JMTC, just in case you aren't, please make sure to check it out!



Anyhow, cheesy Sinatra reference aside, I'm less concerned with providing a few anecdotes regarding my tactical mistakes than with trying to convey the larger philosophical errors that befall me (and likely many others).  So with that in mind I've compiled my top five pitfalls that every auctioneer has likely experienced at some point:

1) Being too timid.
I'm very risk averse, to a fault.  One theme you'll notice on this blog, and I hope to expand upon in Cataclysm, is that I tend not to follow the quick tips or one-off items.  Other auctioneers are far, far better than I at noticing items mispriced in the marketplace and capitalizing quickly before the profiteering flames out, or snatching a rare item and flipping it a few weeks/months later for obscene profits.  That said, if something is fundamentally sound, go for it and go for it big.  If there are 50 stacks of saronite ore on the AH for 12g and you are down to your last 600g, buy them all.  Don't stop at 5 or 10.  I've done that all too often myself (well, not the "last 600g" thing) and only dipped my toes in when I should've gone head first.  Recognize the fundamentals and keep an eye on margins, and you can't lose.  The rest is only a question of scalability.

2) Getting involved in niche markets without understanding them.
At the end of the day, you are solely responsible for your actions.  I've followed quite a few tips, despite my own misgivings, because so many sources said they were wise.  The off-hand Inscription items Faces of Doom and Iron-bound Tome are prime examples.  I know plenty of people made a handy profit off them.  I just could not sell them.  Period.  For long stretches of time.  I stuck with it too long because others insisted it worked.  I don't doubt them, but it wasn't worth my time.  Thankfully I only crafted a few, but it was a hassle I wouldn't revisit.  The point being, although I just finished saying you shouldn't be timid, that doesn't mean you should go hog wild.  Know your markets.

3) Not using the trade channel enough.
 I hate /trade.  Absolutely, completely, and totally hate it.  At best, it's 95% stuff I'd rather ignore and at worst it serves as a stark reminder of so many things wrong with WoW and people in general.  However, it's also one of your best sources for bargains, mostly on the buy side.  That impatient guy who just cashed in his honor for gems who is selling epic gems at very negotiable prices?  Yeah, that makes /trade worth it.  Well, in non-election years...

4) Being a packrat.
One near-universal truth of AH-ism in WoW is that item values decrease over time.  Yes, there are some items that hold up well or even increase over time (adjusting for inflation, and there have been a litany of posts lately about this topic), but in general that bright shiny thing everybody wants so badly today will be passé
tomorrow.

As an example, I knew that redeeming frost badges (well, the former frost badges) in order to sell primordial saronite would've been smart when I quit raiding back in April.  I had accumulated a pretty hefty stack of badges with no real outlet and no desire/hope for top tier PvE gear.  I cashed in and sold a few at 1.2k gold or thereabouts, but was content to sit on a stack of 700 frost badges for months and months.  Those saronites now go for 300g if you're lucky, and my newly converted points aren't really helping me much (nor will they confer any tangible advantage in Cata).

We're at a unique time now where being a packrat can actually be helpful, but notwithstanding the last month or two of an expansion, in general you should not really be holding onto all that much stuff. 

5) Beware of sunk cost fallacy! 
Sunk cost fallacy occurs in real life quite frequently.  It happens in gambling when someone continues to play despite having lost tons of money because, well, they've already lost tons of money.  The reverse can occur when you're up big (i.e., had a nice day of sales) and you go purchase something frivolous.  You should always know when to exit a market or strategy, and the amount of time/money/effort you've already put into it should not factor into the judgment thereof.

Happy Hunting!
-Q

Saronite Shuffle Redux in Cata?

What I don't know could fill a library (or a blog?), but I do know that Blizz likes to repeat themselves quite a bit throughout WoW and that there are definitely observable cycles w/r/t crafting and professions.  Waaaay back before this blog existed, or many others for that matter, I found that you could prospect saronite, craft some cheapo rings, disenchant them, and sell the dust for tons of gold (back when stacks of dust would go for amounts that would make your mother gasp).  I know others did it first, and I was hardly a trendsetter in the saronite shuffle -- it would be ridiculous for me to be such a revisionist -- but it made me enough to get a Traveler's Tundra Mammoth in very casual fashion. 

My problem back then was that I wasn't greedy enough, or I was too risk averse.  I stumbled upon a real gold maker and was too stupid to capitalize fully.  I'll likely write about this topic if I participate in the upcoming JMTC blog carnival, but I was happy enough just conservatively working toward the mammoth and once I got it I stopped the shuffle.

So, flash forward the better part of two years, and I'm thinking "hmmm, what will the saronite shuffle be in Cataclysm?"  I checked out the Cata version of wowhead to just sniff around a bit, and three items.  Full disclosure on a few points here: 1) if someone has posted this on another blog before, I apologize.  I haven't seen it, but it's extremely likely someone wrote about this ages ago.  2) I've only just started researching this superficially, i.e., about 5 minutes of time invested.  3) I'm very likely wrong!

That said, the items that raised my eyebrows were:
Hessonite Band
Alicite Pendant
Jasper Ring

Now, I don't see any disenchant info, but these are BoE rings made by combining a cheap vendor item (or so the comments say) along with some uncommon quality gems that are prospected from the beginning ore in Cataclysm.  Sound roughly familiar?

This, my friends, has saronite shuffle redux written all over it.  I'll vet this further in the near future, but assuming the cycles alluded to above run their course again, keep a very close eye on things.  The initial rush won't be an opportune time, as ore will be too costly, but once supply and demand balance out a bit I'd be prepared to go all in on this.

Stockpiling for Cata as a "store of value" and hedge against inflation

As alluded to in my previous post, the guys at Call to Auction were gracious enough to field a question from me.  I was a bit long-winded, but in short was trying to draw comparisons between the real world and WoW in how commodities are used as a store of value to hedge against inflation.

Store of value, you say?  Hedge against inflation?  Quaaid, you're going crazy and taking this too seriously!  You may be right about both, but there are very legitimate (and useful) conclusions that can be drawn from the real world into Azeroth.

The Real World

The example I used in my Call to Auction question was gold...as in, the precious metal that costs something like $1,350 per ounce these days.  Without regurgitating my long-winded statements/questions, the gist is that holding certain valuable commodities has two effects (for our purposes): 1) it guards against inflation, and 2) it's a safe haven.  $10,000 in 1970 was a lot then, and not so much now -- in the "needing to survive" sense -- however, if you plunked that $10k into gold back in 1970, you'd be in pretty nice shape today.  Alternatively, if you lived in a developing country whose currency was subject to hyperinflation (South America and Africa are ripe with examples), turning your money into gold would guard against that.  Regarding the "store of value", in the real world gold is a safe haven.  Go look at the price of gold since 2005 or 2008 and look at it now.  One can argue this point ad nauseam, but investors frequently flea uncertainty in equity markets by putting money into gold.

The Not-Real World
So, are there any items in WoW that act like real world gold?  Well, not really, or not any that would have the same impact.  However, there are some items I'm going to start stockpiling over the next month.  I am very concerned that my decent amount of gold now will become not-so-decent once inflation hits in Cataclysm (and, boy, will it ever).

Markco's response to my question above on the Call to Auction podcast was to listen to their last few episodes for items to stockpile.  He's right.  They've covered this a lot.  However, my unstated point was how do you dump gold now into something that can be easily liquidated in a few months?  The key point here is liquidated.  The two considerations in my mind are:

1) Liquidity.  Sure, you may throw 200k gold into a Swift Spectral Tiger and sell it in six months for 750k.  I think that's a real possibility and honestly not a terrible idea.  Yeah, the aforementioned concentration risk (see my other post from a couple weeks ago) is a headache, but I think you'd come out ok in the long run.  However, I want to toss gold into something liquid, such as cloth, ore, mats, etc. and be able to recoup that amount (and then some) a month or two after Cata drops.

2) Price-per-slot.  This is a real killer.  The most liquid items also tend to have low absolute value.  Saronite Ore can frequently be bought from the AH, turned into bars, and sold at a slight profit.  That's risk free.  Awesome.  However, the ore essentially vendors at 12g50s, meaning you don't get much bang for your buck per slot.  Sure, you could pre-smelt it into bars and then titanium, but see point #1 about liquidity.

So, the idea is to find items that are fairly liquid and yet yield a decent PPS for storing in your bank.

Things I Love

• Enchanting mats and some scrolls - dusts and essences have demonstrated their ability to hold value in every expansion, and this one won't be any different.  I'll be holding onto raw mats as a good PPS and liquid investment. 
• Scrolls - an adjunct to the above, enchanting is a powerful profession.  BoA gear creates an eternal market for old world mats as well as new world.  Plus, if Cata is like WotLK, there might still be a few worthwhile mid-tier enchants that sell (e.g., sort of how Mongoose does now).  These also stack incredibly well, so the PPS is through the roof.  Not as liquid as I would like, but should do ok.
• Glyphs - "Quaaid, you're nuts, glyphs are still going for 40g to 50g and higher right now even a week after the patch!"  Why yes, good reader, they are.  They'll also likely complete their crash in a few weeks, and I imagine you can pick up some fairly cheap or just crank out your own if you have a scribe once herb prices settle down.  So, it can be assumed that most players currently playing will be fully stocked on their glyphs.  And what happens when all those people who quit in the pre-Cata lull come back in December?  Oh yeah, they'll need glyphs.  Others will get bored or frustrated and level new toons as well.  That guy that rolled a DK right away when WotLK came out?  Yeah, he'll be leveling a worgen too.  And he probably plays enough that he's not broke, so he'll get glyphs too.

Things I Like A Bit

• Argent Tournament pets - not very liquid, but I think they'll store value really well.  I've sent a few Horde pets to Alliance side and can pretty reliably net 900g to 1,100g right now.  Given that Champion's Seals will dry up in Cata, and that these pets are pretty cool and should increase nicely over time.  The PPS is thus awesome.  I'll be fetching any that dip low enough, but this is more of a "buy and hold" item.
• Saronite Ore - sure, I just said that the PPS is low, but Saronite has so many uses I still think it's low risk enough to justify stockpiling.  You can prospect it (best choice in my opinion), craft it for leveling sets, or just flat out vendor it.  It's versatile enough that I will devote space to it.

Things I Don't Like

• Netherweave cloth/bolts/bags - with new bags apparently available pretty cheaply in Cata, I think those doing massive stockpiling of Netherweave are in for a jolt.  Yeah, it'll probably hold up ok, but the low PPS and high risk mean it's a no go for me.
• BoE items - I've read that a few people are grabbing various BoE items to sell to goblin and worgen levelers.  I'm sure that'll work just fine, good luck.  However, the high deposit cost for most of these items and "hit or miss" approach is extremely unattractive to me.  Can you see that super leet level 49 axe for 100g?  Probably.  Did it just take up 8 weeks in your bags and another 20g in sunk deposits before selling?  Likely.

Anyhow, if this blog is to be useful, this is the kind of conversation I want to initiate.  There are a lot of gold bloggers out there now, and sometimes it's a bit cumbersome or intimidating to post on their forums or blogs refuting ideas or generating new ones. 


Oh, and because anybody that read this far probably needs a random crazy picture:

Happy Hunting!
-Q

Call to Auction podcast and your humble Quaaid

I'll post more extensively once I'm back on my computer (this comes from my iPhone), but the guys at Call to Auction were kind enough to read and answer a question I sent in. They also humored me with a nice little plug for this blog, so huge thanks to them. They're the leaders in the field, so I appreciate the effort.

I'll actually address my question (and their answer) in an upcoming, meatier post, but at least wanted to return the favor in some small way. Want to hear what I asked? Go check out their podcast! Episode 18 is the latest, as episode 19 was a one-off special that addressed 4.0.1.

Quick reminder to check your gear

I'll try to keep 95%+ of my posts on topic (i.e., gold-making), but as a general reminder make sure to check your gear sets post-patch.  I don't raid regularly anymore, but noticed my raid set had a few very specific items that were best available for me as a holy paladin but were not the highest ilevel.  With the stats overhaul in 4.0.1, a few items I used only situationally all of the sudden became de rigueur.

I won't pretend to understand other classes, nor their gearing, enough to comment on what items may need to be switched out, but two trinkets and a libram was my grand toll.

Addons in 4.0.1, my initial patch postmortem, and tips going forward

Addons in 4.0.1

With a hectic real life schedule, and general post-patch chaos of the past few days, I haven't spent much time in-game other than to capitalize on "M&S"* (as Gevlon would say).  That said, I have made a few adjustments to my addons in 4.0.1.

First, Auctioneer is out.  I've used this addon for years, but it's just too bloated and too large.  It's a huge memory hog, and I have performance issues as it is.  Most of the features don't even qualify as bells and whistles, so I've finally cut the cord.  I'll miss BeanCounter, but that's about it.

Second, ZeroAuctions and Auctionator are in.  Well, to be fair, I've used QuickAuctions3 -- and ZA is the functional replacement for it -- along with Auctionator for quite some time, but mostly as a supplement.  They are now my primary gold-making addons. 

4.0.1 Postmortem

So, how did 4.0.1 go?  Well, as with many others in the gold-making blogosphere (ugh, I do hate that term, why do I use it?), I made an absolute killing.  My scribe doesn't have much of a knowledge set, and I didn't go crazy stocking up on herbs, but between pumping out Bold Cardinal Rubies and all of the glyphs I could, I've made about 30k the past few days.  I know that pales in comparison to others, who have reported 50k+ in one day's worth of sales alone, but in my own little corner of the world I'm happy with this.

Tips for the coming week

Although my primary purpose in this blog is to present theoretical and strategic approaches to WoW profiteering (again, I will never purport to be a master of finding little tricks and flash-in-the-pan techniques), I understand that if I'm to expand my reader base I need to offer concrete suggestions.  So, with that in mind, there a few areas in which I anticipate a surge:

Herbs - highly speculative, but I suspect the latecomers looked at glyphs and went "hmmm, time to crank those out!"  So now they're buying up anything and everything...without realizing that glyph prices are crashing.  If you have a stockpile and can get good prices, sell the herbs.  Or farm them, depending on prices on your server.  In general I steer away from farming, but there could be some niche opportunities

Enchants - with players returning to test out new talents and abilities, along with preparing for Cataclysm, I've seen a boost in demand for all sorts of enchants.  The good news is that the underlying materials are still cheap, especially if auctioneers stocked up on eternals assuming the gem transmute cooldown was being removed (take that, everybody), so if you have a jewelcrafter just crank out rings/necklaces and disenchant them.  You'll have cheap mats that you can turn into scrolls to sell.  Dream shards and abyss crystals are still cheap as well, and I've found high end weapon enchants are still moving. 

Meta gems and nightmare tears - I am shorting (i.e., expecting a decrease) in epic gems, so am trying to cash in while I can.  However, meta gems and nightmare tears have been flying off the shelves.  I suspect it's related to players returning and also reconfiguring their gear. 

Hope this was a useful post.  If it was -- or more importantly, if it wasn't -- please add a comment so I can work on improving.

Happy Hunting!
-Quaaid


*Just to save you the Google trouble, Gevlon is a prickly but entertaining blogger who runs the Greedy Goblin.  You can see his blog linked via my site, but M&S stands for "morons & slackers."  In this context, those who waited until Tuesday to address 4.0.1 needs in regards to gems, glyphs, etc. 

Convert, convert, convert

The honor-to-gems vendor will be removed as of 4.0.1, so my approach today is to cash in my Wintergrasp marks and Stone Keeper's Shards for Wintergrasp Commendations and then convert those into red gems.  I did some (very) back of the envelope math and don't believe any other conversion after 4.0.1 will be favorable to try to monetize honor or justice points, so am hoping to capitalize on the rush this Tuesday.

Bracers of Dalaran's Parapets

While I can't claim to have thought of this, it's brought up infrequently enough that I wanted to devote a post to a quick method I use for cashing in my emblems.

If you're anything like me, you probably run a few heroic dungeons a week (if not every day) and have a surplus of Emblems of Triumph.  One popular technique is to use the vendor in Dalaran to trade down for Emblems of Heroism, and then convert those into gems.

However, if you look a bit more closely at the vendors you'll notice that the Emblem of Valor vendor sells wrist armor that is bind on equip!  For 60 emblems you can purchase the Bracers of Dalaran's Parapets, which is a nice-ish entry level tanking piece.  While you can test the waters with the other pieces, I generally go for the tanking bracers because 1) there's always a market for tank gear, and 2) most importantly, tanks are willing to overpay more than perhaps any other spec.

This isn't a cash cow, but it is a great way to liquidate your supply of otherwise useless emblems.  Check your AH, as server mileage may vary, but it's a pretty quick and dirty math exercise to determine how to proceed.  Assuming you are a JC, or have access to one, if the selling price of 3 top epic gems is less than the cost of bracers, then go for the bracers.  If for some reason gems go for a lot (and I can't imagine how they would at this point), then go ahead and cash in for gems.  Most cut red gems on my server go for 150-ish gold on a good day, so even rounding up very liberally, let's say I could sell 3 for 600g total.  I usually sell the bracers at 900g, for a 50% increase in what I could expect from cut gems.  The volumes aren't super high, but I average about 3 sales a month (my scan below is missing one as well):

One additional reason I like this so much is that the deposit cost is de minimis.  If it takes a week or so for these to sell, no big deal, you're not wasting nearly as much on deposit fees as you would for the gems.  Plus, given that my primary professions are enchanting and jewelcrafting, it helps me avoid concentration risk.

Happy hunting!

A very tactical goal

I will fully admit that most of my WoW time is based on one goal (given that I haven't raided for months, PvP is dead, and everything else is stale pre-Cata), and that is to hit the gold cap.  I'm making a final push at the worst possible time.  I tried half as hard a few months ago and made gold easily, but now I'm refining my thought process and strategies just to eek out the final 45k or so I need.

Ultimately, this is highly beneficial.  I inadvertently discovered the saronite shuffle at the beginning of LK and didn't have the common sense to ride that as long as I could.  I got in, made a ton of gold, bought my mammoth, and got out more or less.  I tapped the market as needed, but was content to hover around 20k to 30k gold as needed.  It's really only the past six months I've made a passive (and now aggressive) goal to gold cap before Cata.

That said, margins are low and volume is down.  I have a few relative cash cows, but am steadfast is my desire not to fire sale.  I think that approach is wrong, and I'm willing to fall short of my goal in order to be better set for Cata and beyond.

Working for tips

This is a perfect illustration of why you should never respond to crafting requests in trade chat, nor spam trade with your profession links.  I can't say it enough, "LFW" are the three worst letters in WoW if you don't want to be broke.

The person in question was looking for the Black Magic enchant.  Granted, it's a vendor sold formula, so I can't say it's particularly rare, and thus likely doesn't deserve much of a premium.  Still, said person had been spamming trade looking for this enchant for a while.  The smarter thing to do would be to create a scroll and see if he'd bite eventually.  At worst it's likely a break even proposition, but if it sells (to him or anyone else) you can bet it'll create more than 15g of value for you.

I went into this transaction with the sole purpose of posting here...normally trade should be a one-way street (i.e., used for buying, not selling), but the opportunity to snag a screenshot and prove for the umpteenth time my philosophy was too tempting.

Arbitrage

Arbitrage (pronounced arb-eh-tr-ahj, btw) is a term tossed around on gold blogs quite frequently, but I don't think there's a firm grasp of what it means.  It's included in some addons as a basic price point comparison, but there are many forms.

In the real world -- and I hope that this blog ultimately touches on economic concepts beyond WoW so I can both educate and learn from other players -- arbitrage is most easy to understand from a market standpoint.  If Sam's Club sells boxes of Snickers for $10, and the corner store sells that equivalently for $18, an arbitrage opportunity exists to exploit the difference and sell for $17 a box outside the corner store.  You'd pocket $7 per box and likely get your face stomped in pretty quickly.  Not a wise choice.  Plus, it's probably technically illegal anyhow, and you'd be evading taxes.

The case above is an overly simplistic example of market disparity, but arbitrage also exists on stock markets, foreign exchange markets, and elsewhere.  On one hand, stocks can be priced differently from one exchange to another or versus their derivative instruments (i.e., futures).  There is also tax or regulatory arbitrage in some cases.

So what does this have to do with WoW, and how have you made it this far without falling asleep?  If you've read my previous posts (and nobody has), you should be rewarded with actual advice!!!  I believe there are two major forms of arbitrage in WoW, namely conversion and market arbitrage.  I don't count laziness arbitrage, i.e. buying pets in Netherstorm and reselling them, although I suppose I should.

1) Conversion arbitrage

Look at your AH.  Now look at the price of Borean leather.  Now look at the price of Arctic fur.

60 Borean leather = 10 heavy Borean leather = 1 Arctic fur

Such a simple example, but highly illustrative.  On my server, at a randomly selected time (well, as of this post), it's not even a particularly opportune moment for purposes of my demonstration and would STILL yield a nice profit.  About 14g per stack of Borean leather and 60g for one Arctic fur.

This can be done with almost all ore into bars, provided you have someone who can smelt.  Also, always keep an eye out for frozen orbs into eternal fires.  If the price of frozen orbs deviates from the price of eternal fires significantly, buy 'em, convert 'em, and repost 'em.


It's an oyster with two tickets to that thing you love.


2) Market arbitrage

Hypothetically this should increase proportionally with any population imbalances between Horde and Alliance for your server.  Mine is pretty Alliance-heavy.  If you can orchestrate a circumstance where a friend can babysit the neutral AH with you (or if you have a second account), do some scans of your respective Alliance and Horde AHs.  Both large ticket and small ticket items should have a disparity.  If that disparity exceeds a percentage sufficient enough to make it worth your time, likely 20%+, then try to move items cross-faction.  I know many pro auctioneers make a killing at this.  Due to various constraints it's something I've dabbled it marginally, but am looking to really take up in the near future.

4.0.1

In an attempt to build momentum, this post will be a bit off-the-cuff.  I'll write more about 4.0.1 in the next few days, but I really think there's going to be a glyph explosion once the patch hits.  Glyphs are now consistently pretty high on my server, and while I have a semi-equipped scribe I've never played that market as it's so incredibly time intensive.  Per my earlier post, if it takes a lot of time to yield a lot of profit, I don't think it's all that worth it.  Plus, the sheer size/scale of running a glyph house is fairly intimidating.

So.....that said, I'm priming myself to drop a decent batch of glyphs on the Tuesday of patch day.  I'll jump in and jump out quickly.  It's not a market I'm wholly comfortable with, but my investment is de minimis so I'm not concerned at all.  In fact, I'll likely try to grab cheap herbs to mill this weekend and maybe crank out 5-10 of some glyphs to capitalize while I can.

Regarding gems, I think I'm out of that market completely until the patch, and after cashing in a bit there will likely bow out until Cata has dropped.  The deposit costs aren't insubstantial, and for epics it's a flooded market.  Rares still sell ok for me, but I'm not a player who posts and cancels a lot, so it's basically a once a day exercise.  Gems just aren't that hot.

To anybody actually reading this, what are your thoughts?