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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 13:39:00 -
[1]
BSAC Mineral Market Manipulation û MinMa«
As I mention before, IÆm interested in raising a large amount of ISK (~ 1-2 Trillion) with the purpose of manipulating the mineral market. If you have any concerns regarding security please address them elsewhere. This post is to gauge interest in this area.
Although I would love to reveal the exact details of how I plan to run this venture, I donÆt want the idea to be scooped. Therefore, IÆm going to release just enough information to give a rough idea of the venture. The basic idea is very simple and it has been used successfully by others in the past; buy low, hold, sell high. IÆm adding a new twist to this basic idea. IÆm going to manipulate the mineral market by ôartificiallyö creating demand and supply on target minerals and items. In order for this to work, I need a large sum of ISK. For instance, in Metropolis alone 300 Billion ISK in minerals was traded last month.
About a year ago, I was fortunate enough to participate in Dr SlurmÆs OCR project. All the calculations shown here are based on his OCR .xls data distribution covering December 27, 2005-06. Interestingly, 3,771 Billion ISK in minerals was traded in Heimatar during that time. I would like to share the results from a simulation I ran to determine whether or not this idea is feasible. Using a single item, OCRÆs daily average mineral price, and a 1,248 Billion ISK budget spread over one year, I obtained the following:
Purchases: 1,248,640,780,070.40
Market Sales: 699,926,316,773.40 Delay Sales: 1,098,925,839,840.00 Total Sales: 1,798,852,156,613.40
Profits: 550,211,376,543.00 ROI (year): 44.06% Monthly ROI: 3.088%
Believe or not, 3.088% is a very significant number; itÆs 550 Billion ISK that is actually free money available in the mineral market. This return does not include the effects of mineral price manipulation which will only increase returns. Also all minerals were bought and sold at the average OCR price. So there are additional earnings to be made by setting up buy/sell orders.
Links: BSAC - Trust OCR project
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Vanya Nenharma
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Posted - 2007.11.07 14:14:00 -
[2]
I'm with you as long as you will buy my minerals ;), than hold it for a while and I will provide more minerals cheaper than yours - when yours hit market. Because minerals does not require manufacturing you just need to get it from filthy miners.
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Dr Slurm
General Commodities
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Posted - 2007.11.07 14:31:00 -
[3]
Wow looks like you made some real use of that data.
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Hexxx
Minmatar
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Posted - 2007.11.07 15:21:00 -
[4]
Shoot for 1.5 trillion.
Oh, and good luck.
Consulting, IPO Template, and Stock/Bond definitions.
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Kitex
Blacktag Test Labs
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Posted - 2007.11.07 15:38:00 -
[5]
Meaning no disrespect, I'll be very surprised if anyone has any serious interest in funding this. It's just too much.
3% is probably an admirable return on 1-2 trillion, but the scale will be irrelevant to any prospective investor. I've come to expect at least 6%.
My biggest objection to your plan is that mineral manipulation on the kind of scale you're proposing would probably result in net loss to my operations exceeding 3% monthly.
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Mahavy Seth
Viper Squad Triumvirate.
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Posted - 2007.11.07 16:22:00 -
[6]
Edited by: Mahavy Seth on 07/11/2007 16:22:07
Originally by: Kitex Meaning no disrespect, I'll be very surprised if anyone has any serious interest in funding this. It's just too much.
3% is probably an admirable return on 1-2 trillion, but the scale will be irrelevant to any prospective investor. I've come to expect at least 6%.
My biggest objection to your plan is that mineral manipulation on the kind of scale you're proposing would probably result in net loss to my operations exceeding 3% monthly.
If you read all of it, hes just saying thats the average return on his calculations and it can/will change once he starts manipulating prices, I'm sure with proper data, and studying of the market once he starts this endevour it could reach 6%+ easily.
Lots of other investments have started out around 3-4% in this forum and have reached anywhere from 6-8% per month and stayed there after the first 3-4 months, and at the same time doubling the value of the shares/bonds purchased.
As I posted in his original thread, I support this, I think it will be very hard yes, but if he cant do it, how will it hurt you? You will get your isk back eventually, and still have made some on top.
I myself have taken over a market on a certain manufacturing product in Jita before and made billions very quickly once I got everything set up correctly. It will be the same for this, slow, then explosion.....if handled correctly that is.
I think the pure potential in this outweighs the risk, but thats just my opinion.
Mahavy
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 16:23:00 -
[7]
Originally by: Dr Slurm Wow looks like you made some real use of that data.
Yes indeed very useful information. I wished you had continued the OCR project. Do you by any chance have this yearÆs mineral data for Heimatar and Jita? Is it too much to ask?
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 16:32:00 -
[8]
Originally by: Hexxx Shoot for 1.5 trillion.
Thanks for the support. However, the venture will start small, somewhere around 300 Billions. That should be large enough to cause some interesting ripple effects in the mineral market.
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Shadarle
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Posted - 2007.11.07 16:50:00 -
[9]
Expected returns of 3% are just no where near the level I'd require to participate. I know it could go higher... but it would have to more than double for me to start thinking about it.
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 17:03:00 -
[10]
Originally by: Kitex
3% is probably an admirable return on 1-2 trillion, but the scale will be irrelevant to any prospective investor. I've come to expect at least 6%.
The problem when people simply quote interest rates is that interest rates are ill defined. We have no standard definition and people compare simply by the numbers quoted. Some common definitions are:
1) Interest_rate = 100 * Dividend_per_share / Original_share_price 2) Interest_rate = 100 * Dividend_per_share / NAV_share_price
Definition one applies to ôBond typeö investments, where you get a defined return and your share value does not change over time. Definition two applies to ôGrowth typeö investments where your share intrinsic value growths over time. Both of these calculations donÆt even consider buy back price.
Comparing ôBond typeö investment with ôGrowth typeö investments based on rates alone is like comparing apples with oranges. I added this link to a pdf file that shows what IÆm trying to describe. The graph shows the proper way to compare 10,000 ISK invested in a 7% ôBond typeö vs. invested in a (4%, 5%, and 6%) ôGrowth typeö investment.
Graph
Our goal is to achieve 5-6 % ôgrowthö returns, which I think is doable based on the simple model presented in the OP.
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 17:14:00 -
[11]
Originally by: Shadarle Expected returns of 3% are just no where near the level I'd require to participate. I know it could go higher... but it would have to more than double for me to start thinking about it.
This is not a ôBondö Fund and there is no minimum guaranteed return. ItÆs a ôGrowthö Fund; you will get whatever returns the Fund makes. The 3% is based on a simple model buying directly from the market using 2006 average daily mineral prices.
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Shadarle
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Posted - 2007.11.07 17:25:00 -
[12]
Originally by: Block Ukx
Originally by: Shadarle Expected returns of 3% are just no where near the level I'd require to participate. I know it could go higher... but it would have to more than double for me to start thinking about it.
This is not a ôBondö Fund and there is no minimum guaranteed return. ItÆs a ôGrowthö Fund; you will get whatever returns the Fund makes. The 3% is based on a simple model buying directly from the market using 2006 average daily mineral prices.
I do understand this. But it is yet another thing I dislike when investing. I dislike growth investments in general (there are exceptions). I'd much rather get all the profits returned in dividends. Especially with a 300 billion IPO I don't think I'd want it growing any larger.
This is just the way I personally feel, I'm sure many others feel differently. But even if I knew there were 6% guaranteed returns I wouldn't definitely invest, yet the best guess atm is 3% returns with the hopes of 6-7%. That is simply too low for me these days, I've had my expectations raised. I want hopes to be 10%+ and expectations to be 6-7% minimum. Others won't be as demanding as I am though
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 17:35:00 -
[13]
Originally by: Shadarle
This is just the way I personally feel, I'm sure many others feel differently. But even if I knew there were 6% guaranteed returns I wouldn't definitely invest, yet the best guess atm is 3% returns with the hopes of 6-7%. That is simply too low for me these days, I've had my expectations raised. I want hopes to be 10%+ and expectations to be 6-7% minimum. Others won't be as demanding as I am though
I respect your opinion and I wish I could promise 10%+ ôgrowthö percent, but that is simply impossible in the mineral market.
The power of a growth fund is in its compounded interest. A 3% ôgrowthö fund will outperform any 7% Bond. Granted it will take it will take 53 months to do it.
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Shadarle
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Posted - 2007.11.07 17:38:00 -
[14]
Originally by: Block Ukx but that is simply impossible in the mineral market.
I have to disagree here. I happen to know it isn't even hard to achieve. Though I've tried a bit less than 300 billion, it just argues the point that such large sums probably shouldn't be used.
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 17:44:00 -
[15]
Originally by: Shadarle
I happen to know it isn't even hard to achieve. Though I've tried a bit less than 300 billion, it just argues the point that such large sums probably shouldn't be used.
Well, I agree with you. If you can make 10% ôgrowthö and scale it into the 100Æs of billions then you shouldnÆt invest here.
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Shadarle
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Posted - 2007.11.07 17:51:00 -
[16]
Originally by: Block Ukx
Originally by: Shadarle
I happen to know it isn't even hard to achieve. Though I've tried a bit less than 300 billion, it just argues the point that such large sums probably shouldn't be used.
Well, I agree with you. If you can make 10% ôgrowthö and scale it into the 100Æs of billions then you shouldnÆt invest here.
I guess it depends what you're trying to achieve. If you want to give large returns then 300 billion is way too much. If you want to do something big that no one has done before then 300 billion is not enough (ISSO has done 300 bil).
But shareholders should know that having 300 billion will mean lower returns than if you had say 100 billion and lower still than having 50 billion, etc.
So it's a trade-off between returns and "wow".
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 17:56:00 -
[17]
Originally by: Shadarle
I guess it depends what you're trying to achieve. If you want to give large returns then 300 billion is way too much. If you want to do something big that no one has done before then 300 billion is not enough (ISSO has done 300 bil).
But shareholders should know that having 300 billion will mean lower returns than if you had say 100 billion and lower still than having 50 billion, etc.
So it's a trade-off between returns and "wow".
I thought is clearly stated it in the OP. "IÆm interested in raising a large amount of ISK (~ 1-2 Trillion) with the purpose of manipulating the mineral market."
The 300 B is a starting point, not the end point.
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Ramblin Man
Empyreum
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Posted - 2007.11.07 18:03:00 -
[18]
It's an impressive idea, and it seems you have the numbers to back it up (nice use of the data, I must say! ).
However, due to the nature of the ISK requirements and the fund itself, I think you'd attract more interest selling it as a cooperative with a few big players all moving the same way. However, I'll be the first to admit I know next to nothing about game theory and higher economics, so there may be reasons why doing it that way is unsound.
If it is, though, then that's the way I'd go. That way it's much more realistic that you'd reach critical mass on capital.
Welcome to the dark side old friend. .Shar Where we hate people through words. |
Shadarle
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Posted - 2007.11.07 18:03:00 -
[19]
Originally by: Block Ukx
Originally by: Shadarle
I guess it depends what you're trying to achieve. If you want to give large returns then 300 billion is way too much. If you want to do something big that no one has done before then 300 billion is not enough (ISSO has done 300 bil).
But shareholders should know that having 300 billion will mean lower returns than if you had say 100 billion and lower still than having 50 billion, etc.
So it's a trade-off between returns and "wow".
I thought is clearly stated it in the OP. "IÆm interested in raising a large amount of ISK (~ 1-2 Trillion) with the purpose of manipulating the mineral market."
The 300 B is a starting point, not the end point.
Indeed, but this runs counter to the goals of a regular investor. An investor generally wants profit. The more money you have the more you can manipulate the market, but the more money you have the harder it will be to make a good return.
Hopefully you'll be able to find people willing to invest 300 billion for your 3-6% profits. I'll stop posting here as I will only hurt your efforts it seems.
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.11.07 18:25:00 -
[20]
Edited by: Ricdic on 07/11/2007 18:25:58 Block you have run a public corp before now haven't you? What was the value of that corporation? Basically how much public isk were you in control of at that time? I think that's where the big problem will occur.
You are talking of 300b like it's church change and 1-2 trillion as your expectation. This is a phenomenal amount of money and frankly I don't think I could find anyone in this game I would feel comfortable holding onto such an amount.
As Rambling Man said, unless you can split it up somehow between a handful of people I can't see this having a chance.
edit: said wrong person
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2007.11.07 18:52:00 -
[21]
Originally by: Ricdic
Block you have run a public corp before now haven't you? What was the value of that corporation? Basically how much public isk were you in control of at that time? I think that's where the big problem will occur.
BSAC NAV is about 26 Billion.
Originally by: Ricdic
You are talking of 300b like it's church change and 1-2 trillion as your expectation. This is a phenomenal amount of money and frankly I don't think I could find anyone in this game I would feel comfortable holding onto such an amount.
As Rambling Man said, unless you can split it up somehow between a handful of people I can't see this having a chance.
Yes, you are absolutely correct trust is a BIG BIG issue in a huge Fund. ThatÆs why I introduced the MinMa Trustee system to mitigate security. In essence, the Trustee system will split assets among various investors.
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FastLearner
Fury Holdings Brutally Clever Empire
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Posted - 2007.11.07 19:10:00 -
[22]
Edited by: FastLearner on 07/11/2007 19:14:53 I could, in theory, be interested in participating in such a scheme. There are two key elements I look for before investing Fury Holdings / Fury Bank funds:
1. How well protected am I against scamming/going inactive. 2. What is the likely range of profits (minimum, expected, maximum).
In the case of your proposal, #1 looks absolutely rock solid: the use of a trustee system means (if I read it right) that my only real exposure is to lack of performance. Trustees would be independently conducting organised and coordinated trading to affect the market in a beneficial (to them) way.
#2 is the potential problem for me - as the targetted returns are significantly below the minimum I'd consider acceptable. That, however, isn't necessarily the end of it: as I could see definite secondary profit sources arising from being a participant in such a scheme.
My main concern is the number of participants. To a large extent the success of such a scheme depends on certain key information being kept relatively confidential. Anyone involved in the scheme has the ability to privately profit from the information they have access to. From my perspective I'd seriously consider becoming involved in one of two scenarios:
1. If there will be a lot of trustees and a low entry barrier to becoming one then I'd buy-in at the absolute minimum, regard that pretty much as a written-off cost of doing business and use the information obtained to profit (even at your scheme's expense) to the maximum. 2. If the intent is to keep trustees to a minimum by setting a realistically high buy-in amount then I'd be far more tempted to commit a significant amount of ISK and restrict my side activities to those which would also benefit the scheme as a whole.
Trustees are not only entrusted with (their own) assets, but also with information on the scheme's goals, objectives and tactics. It's the latter which actually concerns me more than the former.
EDIT: I note I've set no figures on what I consider to be significant amounts of ISK. For the purpose of this discussion I'd be looking at 10 billion as about the absolute minimum to even be considered as a trustee - and I'd frankly prefer the barrier to be set even higher (30 billion, or 10% of initial capital would be about my ideal level of buy-in). There'd be nothing to stop potential trustees raising funds from smaller IPOS/bonds - I'd do a burst of promotion on Fury Bank (or finally get around to releasing the long-delayed Premium Bonds) to raise whatever funds I committed.
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Pang Grohl
Gallente Sudo Corp
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Posted - 2007.11.07 20:17:00 -
[23]
Originally by: Block Ukx
Originally by: Shadarle
I guess it depends what you're trying to achieve. If you want to give large returns then 300 billion is way too much. If you want to do something big that no one has done before then 300 billion is not enough (ISSO has done 300 bil).
But shareholders should know that having 300 billion will mean lower returns than if you had say 100 billion and lower still than having 50 billion, etc.
So it's a trade-off between returns and "wow".
I thought is clearly stated it in the OP. "IÆm interested in raising a large amount of ISK (~ 1-2 Trillion) with the purpose of manipulating the mineral market."
The 300 B is a starting point, not the end point.
It's a grand plan for sure. Though, I'd liken to using a sledgehammer when flyswatter will do. I see it taking far less than the monthly traded isk volume to be able to guide the market where you want it, and even less to maintain that position once you've achieved it.
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Ambo
2nd Outcasters
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Posted - 2007.11.07 20:32:00 -
[24]
It seems to me that this is a pretty risky proposal for, at best, moderate returns... I just don't see it being attractive unless someone has 10s of billions that they can literally do nothing else with.
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Letias
Caldari Teikoku Trade Conglomerate Visions of Warfare
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Posted - 2007.11.07 21:32:00 -
[25]
My concern with this venture is not trust so much as feasibility. You basically need 300 people to invest 1 billion each and from what i have seen average investment is towards the 250 million mark. I have no issue with the trust of the venture or the ability of Block, but i would prefer to invent in something that i know will sell out. At this stage is just don't see it happening.
I could at the moment put maybe a billion in but who would supply the other 299, would you still start with a small amount or is it pointless in this venture seeing as your aim is market manipulation?
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FastLearner
Fury Holdings Brutally Clever Empire
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Posted - 2007.11.07 21:34:00 -
[26]
Originally by: Letias My concern with this venture is not trust so much as feasibility. You basically need 300 people to invest 1 billion each and from what i have seen average investment is towards the 250 million mark. I have no issue with the trust of the venture or the ability of Block, but i would prefer to invent in something that i know will sell out. At this stage is just don't see it happening.
I could at the moment put maybe a billion in but who would supply the other 299, would you still start with a small amount or is it pointless in this venture seeing as your aim is market manipulation?
You don't want 300 people investing 1 billion, you want 10 people/organisations investing 30 billion or 6 people/organisations investing 50 billion.
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Letias
Caldari Teikoku Trade Conglomerate Visions of Warfare
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Posted - 2007.11.07 21:36:00 -
[27]
It might be what you want but how likley are you to get it?
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Shadarle
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Posted - 2007.11.07 21:44:00 -
[28]
Originally by: Letias It might be what you want but how likley are you to get it?
Lets see... finding 300 people or finding 6-10 people. Seems like 6-10 is easier.
300 people don't even read this forum regularly, heh.
If this seemed very profitable he'd have no problem getting 30-50 billion from 6-10 people.
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Letias
Caldari Teikoku Trade Conglomerate Visions of Warfare
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Posted - 2007.11.07 21:47:00 -
[29]
Well it seems like he is having problems that kinda was my point.
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Hanoi Hana
Mitsubishi Group
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Posted - 2007.11.07 21:52:00 -
[30]
Edited by: Hanoi Hana on 07/11/2007 21:53:32 Will the returns remain at 3% after you begin trading and the market tries to follow you? The 3% is based off of no market response. I am not sure if this is significant or insignificant, because I'm not smart enough to extrapolate this further on my own.
How hard would you have to work to run this manipulation, also? Is it an hour per day, or 0.01 constantly for 40+ hours a week? It is one of many important things to consider when trusting somebody with a large amount of money.
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