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SencneS
Amarr Balsarferskratchin Inc Axiom Empire
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Posted - 2007.10.04 20:42:00 -
[31]
Everyone time someone says something about ISSO it makes me laugh, because I'm not an ISSO fan, I think their original prospectus was a little misleading. I can't, however, deny the fact they have stuck to their guns and paid 5% return every month.
Personally I consider my ISSO shares a write off that just happens to be giving me a little surprise every month. When they started the buy back I did consider selling them. Now my ISSO shares I only paid about 7.2mil for so I'm getting a lot higher return then most and in (I think) 2 or 3 months I will have got my full investment back. If I used the Buy back I'm making a nice little return even right now if I sold them.
I guess it's how you look at them, a loss, a liability, a solid company. My view point on them is "OK they could cave any minute, but I accept that, and I'm getting what they said they where going to pay.. 5% on IPO value.
Can't ask for much more really, if they are cooking their books, or pocketing billions they are still doing what they said they would do.
Amarr for Life |
Ezoran DuBlaidd
Rivers Enterprises Power Corrupts Industry's
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Posted - 2007.10.04 20:43:00 -
[32]
i've never looked at the ISSO reports as a whole before today.
after looking at them, putting the numbers on a spreadsheet and reading the actual reports -- i now see exactly what roemy was talking about.
the reports make no damned sense.
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Fury Banker
Fury Bank Corp
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Posted - 2007.10.04 21:10:00 -
[33]
Originally by: SencneS Now my ISSO shares I only paid about 7.2mil for so I'm getting a lot higher return then most and in (I think) 2 or 3 months I will have got my full investment back. If I used the Buy back I'm making a nice little return even right now if I sold them.
The argument that you're getting a higher return than most is flawed - it's exactly the same argument used to claim that mined minerals are free. Your ISSO shares have a realisable value of 10 mill ISK - and hence returns have to be measured vs that. You made a profit of 2.8 mill per share either when you bought them for 7.2 or when the buyback was announced - but, thereafter, you're getting the same 5% as everyone else.
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Shadarle
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Posted - 2007.10.05 02:40:00 -
[34]
Originally by: SencneS Everyone time someone says something about ISSO it makes me laugh, because I'm not an ISSO fan, I think their original prospectus was a little misleading. I can't, however, deny the fact they have stuck to their guns and paid 5% return every month.
Personally I consider my ISSO shares a write off that just happens to be giving me a little surprise every month. When they started the buy back I did consider selling them. Now my ISSO shares I only paid about 7.2mil for so I'm getting a lot higher return then most and in (I think) 2 or 3 months I will have got my full investment back. If I used the Buy back I'm making a nice little return even right now if I sold them.
I guess it's how you look at them, a loss, a liability, a solid company. My view point on them is "OK they could cave any minute, but I accept that, and I'm getting what they said they where going to pay.. 5% on IPO value.
Can't ask for much more really, if they are cooking their books, or pocketing billions they are still doing what they said they would do.
So because they are meeting the minimum payouts month after month they could lie to investors if they wanted to? They could cook the books. They could just slack off?
I could issue a 100 billion IPO and pay out 5% for a VERY VERY long time even if I didn't make 5% on it. If you make 2.5% you could pay 5% on 100 billion for years. Doesn't mean the business is doing well. 5% is a joke and I doubt most of the people would have invested if they knew after 10 months they'd be getting 5% still and not more. You can say it's the investors fault for investing if they wanted more... but it's not our fault if they aren't being straight up with us. If they are either not trying or they are cooking the books or just flat out lying then it is a SCAM in my book. And since they refuse to comment on anything it's hard to believe they have honest answers for it. And when they do make a comment they skip over all the questions and just throw a snarky insult instead.
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Ezoran DuBlaidd
Rivers Enterprises Power Corrupts Industry's
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Posted - 2007.10.05 13:28:00 -
[35]
Edited by: Ezoran DuBlaidd on 05/10/2007 13:29:23 review the monthly reports.
put all the numbers into a spreadsheet.
then all the words into a word document.
now, read each month, look at the numbers, read the next month, compare numbers, compare to what previous and next month also say.
the reports are missing information. because the words and the numbers (and sometimes the numbers from month to month), aren't telling the whole story.
edited: also, i keep reading about iss making offensive attacks, at the behest of bob it seems.
wouldn't that fall under one of the ISSO documentation quotes i listed above? i don't remember a vote being issued, much less passed, where the shareholders approved of a war.
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Roemy Schneider
BINFORD
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Posted - 2007.10.05 14:10:00 -
[36]
"However, after the announcement of the buy back order, a lot of people got more confident with ISSO"
see...? hate to say i told you so -.- any other shareholder suggestions considered for implementation in the (near) future? - putting the gist back into logistics |
SencneS
Amarr Balsarferskratchin Inc Axiom Empire
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Posted - 2007.10.05 17:39:00 -
[37]
Originally by: Fury Banker
Originally by: SencneS Now my ISSO shares I only paid about 7.2mil for so I'm getting a lot higher return then most and in (I think) 2 or 3 months I will have got my full investment back. If I used the Buy back I'm making a nice little return even right now if I sold them.
The argument that you're getting a higher return than most is flawed - it's exactly the same argument used to claim that mined minerals are free. Your ISSO shares have a realisable value of 10 mill ISK - and hence returns have to be measured vs that. You made a profit of 2.8 mill per share either when you bought them for 7.2 or when the buyback was announced - but, thereafter, you're getting the same 5% as everyone else.
Let say I purchase 100 shares, 720mil spent. Each month I get 50mil. Simple math is... (50,000,000 Dividends / 720,000,000 total invested )*100 = 6.94% Therefor my personal return is 6.94%
You are looking at the value of the shares being 10,000,000 in which the return on the shares value is only 5%. That does not negate the fact that I am getting almost 7% on my own personal investment.
Amarr for Life |
Shadarle
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Posted - 2007.10.06 01:30:00 -
[38]
Which is the same argument people make when they consider the minerals they mined are free.
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SencneS
Amarr Balsarferskratchin Inc Axiom Empire
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Posted - 2007.10.06 03:23:00 -
[39]
Originally by: Shadarle Which is the same argument people make when they consider the minerals they mined are free.
What?!?...
I had to re-read what I had typed to see any relationship. And even to this point I am not 100% sure this is what you mean.
Let me just say, I do value my ISSO shares at 10mil. I don't know how you managed to twist this into thinking this is anything like a Manufacturer mining then selling the item undervalued. I'm not undervaluing the shares, if I wanted to sell them I'd sell them back to STINS for 10mil.
The simple fact is, on my investment of 720mil I get 6.92% of that investment every month. Regardless of how much the shares are worth, as long as the dividend is 5% of IPO value, my return will always be 6.92%. Why people are having a hard time with this concept is beyond me.
The more I think about it, the relationship between this and a Manufacture who mines their ore is almost non-existent.
Amarr for Life |
Ramblin Man
Empyreum
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Posted - 2007.10.06 03:54:00 -
[40]
Originally by: Shadarle Which is the same argument people make when they consider the minerals they mined are free.
That has absolutely nothing to do with this example. Put a little thought into it next time.
His earning money on shares is not an exclusive choice. He can earn money AND sell his shares. You cannot build with AND sell your minerals.
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.10.06 04:21:00 -
[41]
Originally by: Shadarle Which is the same argument people make when they consider the minerals they mined are free.
His argument is due to him getting the product at a lower cost he is earning higher profit margins on his investment.
It's no difference to having mineral contracts allowing you to build a covetor at only 17m, whilst most producers build them for 18.5m. You sell your covetor for the same price as other producers but your profit margin will always be higher than that of those competitors with higher production costs.
The mining relationship is irrelevant. The reason that is used (minerals are free as I mined them) is that they are not valuing the time and effort it took to obtain said items. In the case of SencneS there was no extra process/s that need valuation.
Regarding the minerals are free comment, one needs to separate the processes involved before calculating them as one. They need to calculate raw material sourcing costs, production costs, and marketting costs as three separate entities. Most don't do this which results in a flooded market with a fairly limited profit margin in most cases. Plus things like mission loot will turn the tables even further as no self respecting mission runner will run an evaluation on each piece of loot he recieves. That's why I want to see all non-named/faction etc loot removed from the loot tables completely.
Let market pricing be calculated and determined by traders and production characters (on t1 and t2). Let mission runners handle the named, faction, officer portion of supply as obviously this isn't available to the regular producer.
Man I just sent that way off topic. My main point was that your comment regarding this being the same as the "mining free mins" is incorrect in my opinion
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Shadarle
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Posted - 2007.10.06 06:40:00 -
[42]
Edited by: Shadarle on 06/10/2007 06:42:46 You can only say you're earning profits on 7 million if you do not also assume your shares are worth 10 million. Once you say your shares are worth 10 million then you've made a 3 million profit on the shares.
This is because you could sell the shares at any moment for 10 million. This is the opportunity cost for keeping them. Thus you're making 5% on their value. Your initial price is meaningless as you've already admitted you value them at the higher value, meaning you've made a 3 million profit per share.
In this case the difference is not very important. But it is the same kind of view that the "I mined it so it's free" crowd has. You could sell the minerals for X amount, thus you can't say that because you mined them you made a 100% profit on production of an item.
Basically you have to assume you either made a 3 million profit or you are making 5% on 7 million, you can't assume both. And assuming you are making 5% on 7 million is not a fiscally sound way of looking at it as you are ignoring opportunity cost. It's a very simplified way to view things.
But this has nothing to do with ISSO, with an entire alliance, being unable to make more money than a single person can. Which shows they are either A) very poor traders, B) cooking the books, C) a combination of both, D) ________.
Fill in the blank for me Stins.
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.10.06 06:47:00 -
[43]
I will agree to disagree, and leave you and Stins to your dispute
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Dr Slurm
General Commodities
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Posted - 2007.10.06 06:57:00 -
[44]
Just for clarity:
ROI = Return on Investment Investment = The amount of ISK that was paid for shares.
Therefore the lower the investment the higher the ROI.
Ergo Scenecs is right.
This is not comparable to the "free minerals" argument, in fact its completely different. This is a cold hard equation that is balanced which can't be disputed. <sig>
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Shadarle
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Posted - 2007.10.06 07:07:00 -
[45]
Originally by: Dr Slurm Just for clarity:
ROI = Return on Investment Investment = The amount of ISK that was paid for shares.
Therefore the lower the investment the higher the ROI.
Ergo Scenecs is right.
This is not comparable to the "free minerals" argument, in fact its completely different. This is a cold hard equation that is balanced which can't be disputed.
However it would not be balanced if the shares were listed as a 10 million isk asset.
As I said, if you want to assume your shares are still only worth 7 million (which is incorrect) then sure, you can say you're making returns on the 7 million.
ROI itself is an over-simplified way to account for shares. You have to calculate the value of the shares and calculate the return on that. And for this reason it is exactly like people who do not consider the money they could get for selling minerals when producing. Which is generally the same people who assume mined minerals are free.
But again, if you really think I'm wrong start a new thread about it. It obviously doesn't belong in this one. This thread is about ISSO and some of us are waiting for a REAL reply from ISSO/Stins.
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Dr Slurm
General Commodities
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Posted - 2007.10.06 07:14:00 -
[46]
Originally by: Shadarle
Originally by: Dr Slurm Just for clarity:
ROI = Return on Investment Investment = The amount of ISK that was paid for shares.
Therefore the lower the investment the higher the ROI.
Ergo Scenecs is right.
This is not comparable to the "free minerals" argument, in fact its completely different. This is a cold hard equation that is balanced which can't be disputed.
However it would not be balanced if the shares were listed as a 10 million isk asset.
As I said, if you want to assume your shares are still only worth 7 million (which is incorrect) then sure, you can say you're making returns on the 7 million.
ROI itself is an over-simplified way to account for shares. You have to calculate the value of the shares and calculate the return on that. And for this reason it is exactly like people who do not consider the money they could get for selling minerals when producing. Which is generally the same people who assume mined minerals are free.
But again, if you really think I'm wrong start a new thread about it. It obviously doesn't belong in this one. This thread is about ISSO and some of us are waiting for a REAL reply from ISSO/Stins.
I don't really care if I derail a thread, besides its not like Stins is going to answer you.
I never said the shares weren't worth the 10m ISK buy back option, they in fact are worth that much. BUT that doesn't change the fact that Scences investment was only 7m a share and thus has a higher ROI. ROI is relative to the investment, not the value of the share. Just because a share is worth more less does not change the amount of ISK invested. Investment in ROI is a constant, unchanging variable (unless you invest more or sell shares). <sig>
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Shadarle
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Posted - 2007.10.06 07:27:00 -
[47]
And you'll notice you're arguing a totally different point. I have not argued ROI, I have argued the proper way to account for things. ROI is a meaningless piece of information. If I buy minerals for 1 million ISK (that were actually worth 2.5 million isk) and build a ship and sell it for 2 million then my ROI was 100%, but that is a meaningless number. It doesn't account for what else I could do with the minerals. So it would seem like I'm doing great making an ROI of 100% but I should have made a lot more money.
Opportunity cost is key. If you ignore it then you're likely not maximizing your profits. I don't care about ROI as trying to maximize your initial ROI while ignoring the true value of your assets is foolish and is only giving you a false sense of reality.
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Dr Slurm
General Commodities
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Posted - 2007.10.06 07:34:00 -
[48]
Originally by: Shadarle And you'll notice you're arguing a totally different point. I have not argued ROI, I have argued the proper way to account for things. ROI is a meaningless piece of information. If I buy minerals for 1 million ISK (that were actually worth 2.5 million isk) and build a ship and sell it for 2 million then my ROI was 100%, but that is a meaningless number. It doesn't account for what else I could do with the minerals. So it would seem like I'm doing great making an ROI of 100% but I should have made a lot more money.
Opportunity cost is key. If you ignore it then you're likely not maximizing your profits. I don't care about ROI as trying to maximize your initial ROI while ignoring the true value of your assets is foolish and is only giving you a false sense of reality.
ROI isn't meaningless its a yard stick that can be used to relate IPO's and their rate of return. Comparing the size of an IPO and the ROI they provide gives you a good idea of the corporations current standing compared to another IPO of equal size. <sig>
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Shadarle
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Posted - 2007.10.06 08:43:00 -
[49]
Originally by: Dr Slurm
Originally by: Shadarle And you'll notice you're arguing a totally different point. I have not argued ROI, I have argued the proper way to account for things. ROI is a meaningless piece of information. If I buy minerals for 1 million ISK (that were actually worth 2.5 million isk) and build a ship and sell it for 2 million then my ROI was 100%, but that is a meaningless number. It doesn't account for what else I could do with the minerals. So it would seem like I'm doing great making an ROI of 100% but I should have made a lot more money.
Opportunity cost is key. If you ignore it then you're likely not maximizing your profits. I don't care about ROI as trying to maximize your initial ROI while ignoring the true value of your assets is foolish and is only giving you a false sense of reality.
ROI isn't meaningless its a yard stick that can be used to relate IPO's and their rate of return. Comparing the size of an IPO and the ROI they provide gives you a good idea of the corporations current standing compared to another IPO of equal size.
Ok... but that really isn't what we're discussing as the IPO in question is not being judged by its actual ROI but by the ROI based on a reduced purchase price. It doesn't mean the IPO is any better than it would be if it was purchased for full price. The only difference is the 3 million/share profit made.
Though I am a bit curious. When IPO's pay dividends, do they do so on initial investment or on NAV? It seems NAV would be the correct way to do it... but on initial investment is much easier and less confusing for investors. It seems to me they all do it on initial investment, so I guess my real question is: Do any do it on NAV instead?
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Dr Slurm
General Commodities
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Posted - 2007.10.06 09:08:00 -
[50]
Originally by: Shadarle
Originally by: Dr Slurm
Originally by: Shadarle And you'll notice you're arguing a totally different point. I have not argued ROI, I have argued the proper way to account for things. ROI is a meaningless piece of information. If I buy minerals for 1 million ISK (that were actually worth 2.5 million isk) and build a ship and sell it for 2 million then my ROI was 100%, but that is a meaningless number. It doesn't account for what else I could do with the minerals. So it would seem like I'm doing great making an ROI of 100% but I should have made a lot more money.
Opportunity cost is key. If you ignore it then you're likely not maximizing your profits. I don't care about ROI as trying to maximize your initial ROI while ignoring the true value of your assets is foolish and is only giving you a false sense of reality.
ROI isn't meaningless its a yard stick that can be used to relate IPO's and their rate of return. Comparing the size of an IPO and the ROI they provide gives you a good idea of the corporations current standing compared to another IPO of equal size.
Ok... but that really isn't what we're discussing as the IPO in question is not being judged by its actual ROI but by the ROI based on a reduced purchase price. It doesn't mean the IPO is any better than it would be if it was purchased for full price. The only difference is the 3 million/share profit made.
Though I am a bit curious. When IPO's pay dividends, do they do so on initial investment or on NAV? It seems NAV would be the correct way to do it... but on initial investment is much easier and less confusing for investors. It seems to me they all do it on initial investment, so I guess my real question is: Do any do it on NAV instead?
In the case of Sencnes the ROI is relative to his own portfolio. <sig>
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Fury Banker
Fury Bank Corp
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Posted - 2007.10.06 10:28:00 -
[51]
Originally by: Dr Slurm
Originally by: Shadarle
Originally by: Dr Slurm Just for clarity:
ROI = Return on Investment Investment = The amount of ISK that was paid for shares.
Therefore the lower the investment the higher the ROI.
Ergo Scenecs is right.
This is not comparable to the "free minerals" argument, in fact its completely different. This is a cold hard equation that is balanced which can't be disputed.
However it would not be balanced if the shares were listed as a 10 million isk asset.
As I said, if you want to assume your shares are still only worth 7 million (which is incorrect) then sure, you can say you're making returns on the 7 million.
ROI itself is an over-simplified way to account for shares. You have to calculate the value of the shares and calculate the return on that. And for this reason it is exactly like people who do not consider the money they could get for selling minerals when producing. Which is generally the same people who assume mined minerals are free.
But again, if you really think I'm wrong start a new thread about it. It obviously doesn't belong in this one. This thread is about ISSO and some of us are waiting for a REAL reply from ISSO/Stins.
I don't really care if I derail a thread, besides its not like Stins is going to answer you.
I never said the shares weren't worth the 10m ISK buy back option, they in fact are worth that much. BUT that doesn't change the fact that Scences investment was only 7m a share and thus has a higher ROI. ROI is relative to the investment, not the value of the share. Just because a share is worth more less does not change the amount of ISK invested. Investment in ROI is a constant, unchanging variable (unless you invest more or sell shares).
The mistake you're making is that you're assuming that your investment doesn't change in value. If you buy something for 7 million which is worth 10 million then although you invested 7 million, your investment is now worth 10 million. It doesn't matter how you word it, the fact is that you have a share worth 10 million which is giving 5% profit per month. The 3 million difference between 7 million and 10 million is profit you made in the past.
The mistake I was pointing out was believing that buying that share at 7 million meant you got a higher rate of dividend than someone who bought at 10 million. You don't - you both get the same. Dividends are measured either as a percentage of issue price or as a percentage of the share's value - both of which are identical for both shares (though it's anyone's guess what the latter actually is).
Irrespective of what happened in the past, that ISSO share is paying now 5% of it's value in dividends each month.
Ricidc made a similar error. If the minerals to build a ship are worth 18.5 but you buy them on contract for 17 million then you DON'Y make 1.5 million more profit building that ship than someone who bought the minerals for 18.5 million (assuming you both sell it for the same price). You made exactly the same profit on the ship - but you also made 1.5 million profit on the minerals. If you mined the minerals then you made 18.5 million profit from mining and exactly the same profit on the ship.
That's all ignoring broker fees and assuming a fixed value at which you can buy/sell minerals on the market of course.
And yes, 5% per month is pretty weak. My combined profits this week (Fury Holdings + Bank) were somewhere around 2.7 billion on something like 47 billion total capital. Looks like I also make almost as much ISK per month on my own as they do with their non-loan ISK and a whole alliance plus 4 times the capital.
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Dr Slurm
General Commodities
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Posted - 2007.10.06 13:01:00 -
[52]
Originally by: Fury Banker
Originally by: Dr Slurm
Originally by: Shadarle
Originally by: Dr Slurm Just for clarity:
ROI = Return on Investment Investment = The amount of ISK that was paid for shares.
Therefore the lower the investment the higher the ROI.
Ergo Scenecs is right.
This is not comparable to the "free minerals" argument, in fact its completely different. This is a cold hard equation that is balanced which can't be disputed.
However it would not be balanced if the shares were listed as a 10 million isk asset.
As I said, if you want to assume your shares are still only worth 7 million (which is incorrect) then sure, you can say you're making returns on the 7 million.
ROI itself is an over-simplified way to account for shares. You have to calculate the value of the shares and calculate the return on that. And for this reason it is exactly like people who do not consider the money they could get for selling minerals when producing. Which is generally the same people who assume mined minerals are free.
But again, if you really think I'm wrong start a new thread about it. It obviously doesn't belong in this one. This thread is about ISSO and some of us are waiting for a REAL reply from ISSO/Stins.
I don't really care if I derail a thread, besides its not like Stins is going to answer you.
I never said the shares weren't worth the 10m ISK buy back option, they in fact are worth that much. BUT that doesn't change the fact that Scences investment was only 7m a share and thus has a higher ROI. ROI is relative to the investment, not the value of the share. Just because a share is worth more less does not change the amount of ISK invested. Investment in ROI is a constant, unchanging variable (unless you invest more or sell shares).
The mistake you're making is that you're assuming that your investment doesn't change in value. If you buy something for 7 million which is worth 10 million then although you invested 7 million, your investment is now worth 10 million. It doesn't matter how you word it, the fact is that you have a share worth 10 million which is giving 5% profit per month. The 3 million difference between 7 million and 10 million is profit you made in the past.
The mistake I was pointing out was believing that buying that share at 7 million meant you got a higher rate of dividend than someone who bought at 10 million. You don't - you both get the same. Dividends are measured either as a percentage of issue price or as a percentage of the share's value - both of which are identical for both shares (though it's anyone's guess what the latter actually is).
I make no mistake. Investment is a constant until you a) invest more b) sell stock. You can't dispute this. Your total investment is not related to the worth of the shares. They are two completely seperate variables. I never said you are getting a larger dividend then the person who paid 10m a share. That wouldn't be possible.
ROI = the % returned on the amount invested(constant)
Perhaps this diagram will help.
Trees Forest __|__ | | | | V V V
^ ^ ^^^^^^ ^ ^ ^^^^^^ ^ ^ ^^^^^^ ^ ^ ^^^^^^ | | ||||||
Notice how the trees are in front of the forest AND you can see them. <sig>
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.10.06 13:32:00 -
[53]
Originally by: Fury Banker
Ricidc made a similar error. If the minerals to build a ship are worth 18.5 but you buy them on contract for 17 million then you DON'Y make 1.5 million more profit building that ship than someone who bought the minerals for 18.5 million (assuming you both sell it for the same price). You made exactly the same profit on the ship - but you also made 1.5 million profit on the minerals.
Kinda silly argument though. Either way you made a profit. If you want to attribute that profit to your secondary tier (manufacturing after purchasing) then it still relates to a higher profit margin regardless
I won't release business plans that say I made a 3% profit margin on minerals purchased along with a 2% profit margin on ships produced. Whilst one could argue that this was the case it really is irrelevant in the big picture as the profit margin stays the same in both instances.
Are we all really this bored arguing such trivial points?
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Ezoran DuBlaidd
Rivers Enterprises Power Corrupts Industry's
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Posted - 2007.10.06 14:17:00 -
[54]
i'm not arguing the point. i'm still asking when the shareholder vote occured, which authorized ISS to make an offensive war happen.
along with all the other things that have been asked.
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Dr Slurm
General Commodities
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Posted - 2007.10.06 14:23:00 -
[55]
Originally by: Ezoran DuBlaidd i'm not arguing the point. i'm still asking when the shareholder vote occured, which authorized ISS to make an offensive war happen.
along with all the other things that have been asked.
Despite my segway in this thread, I would like to see those questions answered also. <sig>
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Shadarle
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Posted - 2007.10.06 17:12:00 -
[56]
Originally by: Ricdic
Originally by: Fury Banker
Ricidc made a similar error. If the minerals to build a ship are worth 18.5 but you buy them on contract for 17 million then you DON'Y make 1.5 million more profit building that ship than someone who bought the minerals for 18.5 million (assuming you both sell it for the same price). You made exactly the same profit on the ship - but you also made 1.5 million profit on the minerals.
Kinda silly argument though. Either way you made a profit. If you want to attribute that profit to your secondary tier (manufacturing after purchasing) then it still relates to a higher profit margin regardless
I won't release business plans that say I made a 3% profit margin on minerals purchased along with a 2% profit margin on ships produced. Whilst one could argue that this was the case it really is irrelevant in the big picture as the profit margin stays the same in both instances.
Are we all really this bored arguing such trivial points?
It really is not a trivial point. If you do not account for the difference then you are potentially producing items for a loss of profit.
You have to know where your profits are coming from. Buying minerals cheaper does not mean you make a larger profit producing items, it means you make more profit overall. The difference is huge. You can't let yourself believe production is profitable just because you bought the components cheaply. You always have to remember the opportunity cost. You have to know that you could sell those minerals. You then must make more producing then you could selling the minerals. If you don't split out your profit centers then you won't know if you're maximizing your profits.
And Slurm, we are NOT talking ROI. We do not care about ROI. You're right in a math sense that he is making his returns on 7 mil, no one will argue the strict definition of ROI in that case. We are saying ROI is a poor way to look at it in this case. So you can repeat 100 times the definition of ROI, we aren't arguing with you on that point.
And now that two people have shown they make the same or more money than ISSO with far less capital I think it really demands a response from Stins.
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.10.06 17:22:00 -
[57]
Originally by: Shadarle Buying minerals cheaper does not mean you make a larger profit producing items, it means you make more profit overall. The difference is huge. You can't let yourself believe production is profitable just because you bought the components cheaply. You always have to remember the opportunity cost. You have to know that you could sell those minerals. You then must make more producing then you could selling the minerals. If you don't split out your profit centers then you won't know if you're maximizing your profits.
If I have a good mineral price on say a ballistic control unit, and I can produce it for 35k. Someone else without that good mineral price produces for 39k. Now, we are both selling the item for 50k per unit.
No matter what, it still boils down to me making 15k per unit whilst my competitor is making 11k per unit. I do understand what you are saying (in that you could just sell the minerals at regular price and then sell the module for the same price as my opponent, but the end result is exactly the same. I still make exactly the same amount of money in either case.
One could then confuse the situation even more by saying that having the extra market orders for selling the minerals separate incurs excess broker fee's thus actually meaning that my selling of those built items at 4k above my competitor makes me even more money than selling the minerals separately.
As long as you value your produced end unit at a price that follows regular mineral price guidelines + profit, there is no difference in the outcome.
Simple question. In my above example (paragraph 1) am I making more, less, or the same isk overall by selling the minerals separately? (not counting brokerage fee's in this instance)
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Shadarle
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Posted - 2007.10.06 17:33:00 -
[58]
Edited by: Shadarle on 06/10/2007 17:33:13
Originally by: Ricdic Simple question. In my above example (paragraph 1) am I making more, less, or the same isk overall by selling the minerals separately? (not counting brokerage fee's in this instance)
Obviously the same. But you have to know where the profit is coming from or you will make false assumptions as to the profitable of any given item. You may understand that, but most do not.
Assuming your shares are worth 7 million so you can assume you're making 7% profit instead of 5% is a false way of looking at things as it is not looking at opportunity cost or real values.
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Nummb
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Posted - 2007.10.06 20:38:00 -
[59]
Originally by: Shadarle Edited by: Shadarle on 06/10/2007 17:33:13
Originally by: Ricdic Simple question. In my above example (paragraph 1) am I making more, less, or the same isk overall by selling the minerals separately? (not counting brokerage fee's in this instance)
Obviously the same. But you have to know where the profit is coming from or you will make false assumptions as to the profitable of any given item. You may understand that, but most do not.
Assuming your shares are worth 7 million so you can assume you're making 7% profit instead of 5% is a false way of looking at things as it is not looking at opportunity cost or real values.
So, if he sells back all his shares for 10mil isk each then he will have earned a profit from purchasing his shares for 7 mil plus collecting dividends from the begining. Now if he repurchases shares at 10 mil isk each he will get a 5% return like everyone else but he will be way ahead of new investors because he already made 3 mil isk profit per share.
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Shadarle
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Posted - 2007.10.06 20:54:00 -
[60]
Originally by: Nummb
Originally by: Shadarle Edited by: Shadarle on 06/10/2007 17:33:13
Originally by: Ricdic Simple question. In my above example (paragraph 1) am I making more, less, or the same isk overall by selling the minerals separately? (not counting brokerage fee's in this instance)
Obviously the same. But you have to know where the profit is coming from or you will make false assumptions as to the profitable of any given item. You may understand that, but most do not.
Assuming your shares are worth 7 million so you can assume you're making 7% profit instead of 5% is a false way of looking at things as it is not looking at opportunity cost or real values.
So, if he sells back all his shares for 10mil isk each then he will have earned a profit from purchasing his shares for 7 mil plus collecting dividends from the begining. Now if he repurchases shares at 10 mil isk each he will get a 5% return like everyone else but he will be way ahead of new investors because he already made 3 mil isk profit per share.
Yes. But there is no actual need to sell them back and then re-buy them. You can just account for the difference on paper or in your head. In either case the value of the shares is 10 million, despite whatever you payed for them.
Just like buying trit when it is priced at 2.5, then waiting 2 months till prices reach 3.5. If you then build with the trit you should not account for the trit at a price of 2.5 in regards to your profits for building an item. You should regard your 2 month holding of the trit for a profit of 1 isk per trit and then revalue your trit to 3.5 when determining build cost.
Doing this is the proper way to evaluate where you're making your profits so you can determine if you're making more buying the trit or building the items. Or buying the cheap shares and reselling them, or holding the shares.
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