Ok, so this post will be a bit off-the-wall, and I'm hoping more to generate comments than anything else. The gold blog community is awash in amazing posts right now with detailed lists on items to stockpile, items to dump, items to flip, and items to avoid. I can't say it enough, that's awesome. I would not describe my forte as being able to track down or even analyze item-related trends. I don't have the time or focus.
However, something that I've been mulling for a while and has been recently quasi-confirmed, is how the future of true WoW profit will arise. To somewhat cartoon it a bit, I think there are three main levels within the WoW economy:
Commodities or "origination"
This is the bread and butter of trade in WoW. Ore, leather, etc. Ok, we all get that. You originate the materials.
Value add items
This is the second tier of production, where a commodity is modified to add value. Cutting a raw gem is a fine example, or crafting blacksmithing items. If the commodity business is the bread and butter, this is the meat and potatoes (geesh, sorry, I'm writing this while Horde is finishing another lopsided loss in Wintergrasp). No explanation needed, really.
Derivative profiteering
Most auctioneers fall into this category, on a small scale. Identify disequilibrium, profit, etc. No lecture needed for this part. HOWEVER, here's where it gets interesting. For a few months now, I've wondered when someone would string it all together and try to run an actual business in WoW. This is a truly derivative activity, and I'm not aware of it being done yet. It could take the form of insurance/annuities, or even basic savings/investment management (i.e., some poor soul who doesn't like to farm and is afraid of the AH gives you his hard earned 1k gold and you agree to pay interest on it or invest it and take a cut of the profit). The issues of collateral and counterparty risk are significant enough that I can see why this isn't common. I have read a few blurbs about it existing in another online game, but again I don't have time to research it and I'm not sure if it's an apples to apples comparison.
When I saw a post on another blog highlighting a new pay-based "remote auction house bot" that allows you to use the remote AH to buy/flip items, I thought two things: "uh oh" and "oh boy." I do not use this addon, nor can I see myself doing so. However, I think this is a watershed event. The program itself turns AHers into, essentially, day traders. Granted, the 200/day post limit is still hard-wired by Blizz, but I hope the significance of this is apparent...
Anyhow, I don't have any answers, and as stated originally I view this post as one long question. The comments I've received on this blog so far have been insightful and intelligent, so how do YOU feel about these developments? Where is WoW heading re: finance? Are there any true banks in WoW that you know of, and if not how long will it be?
Showing posts with label strategy. Show all posts
Showing posts with label strategy. Show all posts
Wednesday, November 3, 2010
Thursday, October 28, 2010
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
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
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