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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 04:26:00 -
[1]
The result of the Sansha invasions, if they really are a mill for costly battleships and the like, will be inflationary.
Ship insurance (as others point out in other threads) is rapidly expanding the money supply. Simultaneously the ship destructions are bumping up the demand curve.
The supply side skill requirements in EVE mean it can't flexibly adjust. The money supply increases as the velocity of money increases...so you get short-term inflation until the supply side can bleed the money-supply-and-demand impact on pricing. At which time the players will figure out the invasions and/or lose interest in the expansion, causing a crash in that demand.
This is a rather traditional business cycle, and will foment a recession in approximately one month or one week after successful strategies for defeating the Sansha Invasions are published.
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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 04:42:00 -
[2]
Trading strategies for a recession:
1. The temptation in the coming days will be to accumulate assets. Don't. Get ahead of trend by liquidating stocks. 2. Sell factory equipment that you own - especially arrays - now, where possible. 3. Return to the market after the market has cooled and buy capital goods from sellers eager to get out of losing arrays. 4. Now is a very bad time to get into bonds. Bad market results will turn even the most charitable folk into defaulters. 5. Now is an excellent time to issue bonds. Especially bonds you have no plan to repay.
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Dethmourne Silvermane
Gallente Northstar Cabal R.A.G.E
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Posted - 2011.01.26 04:50:00 -
[3]
Would you argue now is a good time to issue bonds you intend to repay?
If so, why - particularly given your statement that bonds are not a good market to invest in due to a likely default given market circumstances.
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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 04:58:00 -
[4]
Issuing right now has two huge advantages:
1: Your collateral (if any) is getting a great valuation 2: Your interest rates are heavily mitigated by inflationary risk borne by your creditors
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Lethal Entrepreneur
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Posted - 2011.01.26 05:05:00 -
[5]
Hmm technetium has spiked 10k in price alone today....
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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 13:14:00 -
[6]
Only if you believe you can time the top. Buying into a bubble just as it is overheating is a delicate move.
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Mavnas
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Posted - 2011.01.26 17:26:00 -
[7]
I think you're horribly confused.
Massive increases in demand result in a boom, not a recession.
Quote: 1. The temptation in the coming days will be to accumulate assets. Don't. Get ahead of trend by liquidating stocks. 2. Sell factory equipment that you own - especially arrays - now, where possible. 3. Return to the market after the market has cooled and buy capital goods from sellers eager to get out of losing arrays. 4. Now is a very bad time to get into bonds. Bad market results will turn even the most charitable folk into defaulters. 5. Now is an excellent time to issue bonds. Especially bonds you have no plan to repay.
1. So you want to react to inflation by holding more money . 2. See above. Demand going up? Quick reduce capacity... WTF? 3. At this point you would realize the extent of your losses. 4. That's true, but mainly because inflation will erode the real value of the bonds. 5. This is always true.
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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 17:39:00 -
[8]
Originally by: Mavnas I think you're horribly confused.
Massive increases in demand result in a boom, not a recession.
The boom is already underway. What I'm suggesting is that you sell into it and get liquid.
Quote:
1. So you want to react to inflation by holding more money .
Yes, because demand fundamentals for assets will erode faster than inflation will spike. You're already seeing inflation now - after the recession begins you'll see deflation.
Quote: 2. See above. Demand going up? Quick reduce capacity... WTF?
Demand has gone up. It is about to drastically drop, because there is an imminent recession. Therefore, reduce capacity.
Quote: 3. At this point you would realize the extent of your losses.
Recessions are about loss mitigation. You will lose less liquid than you will use by converting lots of minerals into assets currently selling at inflated prices. Particularly if you have a large stockpile when the bottom drops out. After the Incursions are figured out and the recession beings, you won't just be .01'ing to sell your stuff; you'll be 10,000'ing.
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Vaerah Vahrokha
Minmatar Vahrokh Consulting
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Posted - 2011.01.26 17:58:00 -
[9]
Quote:
Ship insurance (as others point out in other threads) is rapidly expanding the money supply
Stopped reading here. - Auditing & consulting
When looking for investors, please read http://tinyurl.com/n5ys4h + http://tinyurl.com/lrg4oz
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Lorkin Desal
Caldari Lone Star Partners
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Posted - 2011.01.26 18:09:00 -
[10]
Originally by: Lethal Entrepreneur Edited by: Lethal Entrepreneur on 26/01/2011 05:06:29
Originally by: Cleansing Spite
Technetium has spiked 10k in price alone today....[/quote
Rly - and I was at uni and cant liqudate, damn.
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lord xavier
K-Tech Research
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Posted - 2011.01.26 19:03:00 -
[11]
Yay! I can makes muhkneez then since you wont be! ---------------------------------- Biomass is free (of) Eve4life! |
Akita T
Caldari Navy Volunteer Task Force
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Posted - 2011.01.26 20:53:00 -
[12]
Edited by: Akita T on 26/01/2011 20:55:42
Do you even understand what the word "recession" means, OP ?!? If you would have said "bubble-bursting", maybe, just maybe... but recession ? Come on... Also, most of your advice is back-asswards, or at least, lacks the proper timing data necessary to make it correct. _
Make ISK||Build||React||1k papercuts _
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Arkon Mar
Caldari Tau Draconus Corp Interstellar Commerce Commission
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Posted - 2011.01.26 21:24:00 -
[13]
Originally by: Akita T Edited by: Akita T on 26/01/2011 21:01:14
Do you even understand what the word "recession" means, OP ?!? If you would have said "bubble-bursting", maybe, just maybe... but recession ? Come on...
Also, most of your advice is back-asswards, or at least, lacks the proper timing data necessary to make it correct. Last but not least, Sansha incursions are a blip on the radar compared to some of the heftier wars that rage on in 0.0 on a more or less regular basis in terms of minerals obliterated, whatever demand minibubble happens is purely a manufacturing capacity not able to keep up with a sudden short-term spike in demand, that will correct very soon. The potential for profit in dealing with blueprint sales and purchases is dwarfed by the potential profit in simply using those blueprints in this period.
TL;DR : storm in a glass of water, much ado about nothing, yada yada yada
I agree. The long term upheavel in 0.0 has done more to unsettle the marketplace and cause consumer confidence to drop, adding to the uncertainty is what CCP is going to "nerf" next, leads one to question how to proceed in the coming days.
This is where the day to day knowledge of the marketplace, is the foundation on which to build. We are constantly watching the market, adjusting our orders, our products and our research to meet the need of the moment while planing for long term profitability.
Scaremongers use the words "recession" and "depression" to describe their frustration for their inability to make decisions or adjustments that will directly affect their bottom line. Profitability in lean times is possible through long term planning, consistent reachable goals in the marketplace and investment in your personnel and or process.
Ships, equipment, resources are only as limited as your desire to establish your own internal means of manufacture and support.
Build your corporations to be self supporting and the recession will not dictate your profitability.
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Cleansing Spite
Caldari State War Academy
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Posted - 2011.01.26 21:30:00 -
[14]
Originally by: Akita T Do you even understand what the word "recession" means, OP ?!?
I'm intimately familiar, yes.
Originally by: Akita T If you would have said "bubble-bursting", maybe, just maybe... but recession ? Come on...
Are you aware of significant "bubble-bursting" that did not result in a recession? The last several - housing, tech, etc. - resulted in recessions. Market collapses are disruptive events that typically have broader impact on the overall economy.
In this case, I believe a traditional "inventory recession" will take place. The bubble will create an over-expansion of capacity.
Originally by: Akita T Also, most of your advice is back-asswards, or at least, lacks the proper timing data necessary to make it correct.
The business cycle in EVE is oriented around expansions. In this case, this expansion contains a significant market-altering event on the demand side without significant changes to the supply side. Your point on timing is well-taken, but we're clearly in the bubble. Bubble strategies differ, but I'd rather be early to get out rather than risking being late on calling the top.
Originally by: Akita T Last but not least, Sansha incursions are a blip on the radar compared to some of the heftier wars that rage on in 0.0 on a more or less regular basis in terms of minerals obliterated, whatever demand minibubble happens is purely a manufacturing capacity not able to keep up with a sudden short-term spike in demand, that will correct very soon.
That correction, as in OP, will foment the recession. Note there is a significant 0.0 conflict taking place concurrent with the Invasion events - a perfect storm of demand.
Quote: TL;DR : storm in a glass of water, much ado about nothing, yada yada yada
Care to wager? I'll own this prediction, financially. Of course, I lack significant in-game assets to make it interesting.
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Cyaxares II
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Posted - 2011.01.26 21:51:00 -
[15]
I am not aware that any measure of output is available to us.
Neither do we have any data on employment (nor any sensible definition of "employment" in EVE), capacity utilization, or any other indicators that you might look for when considering a possible recession (I wouldn't want to rely on changes in the price level as the generation of money in EVE is quite peculiar and does imo not mesh well with models of RL economies).
How would we recognize a recession if it were to hit us?
--
<Abuser> Won't the wave of intelligent bots make CCP work at least in the direction of securing the engine? <[IA]Morpheus> Of course it will, that's obvious. |
lord xavier
K-Tech Research
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Posted - 2011.01.26 22:33:00 -
[16]
Edited by: lord xavier on 26/01/2011 22:33:20 "Significant conflict" really doesn't even cover what is going on in the south at the current moment in time. You have multiple larger forces going out in a large scale force looking to wipe out one of the larger single-alliance entities, and their immediate renters and friends.
What is currently going on with the incursions, as Akita explained, is a small portion of the demand. Granted, this is the highest demand for ships High sec has seen. But, Image that over 75,000 of the users who play on eve actively(/semi-actively) are all based out of low sec. The smaller ranges of people who do not have T2 building capabilities get their ships and fits out of high sec. Now, the demand for these items in the incursion constellations is coming from large market hubs (Jita, Amarr, Rens, Dodixie, etc..) and moved to these constellations for purchase. Prices are going up because these ships are well, IN THE AREA, so people will pay whatever price so they can jump right back out into the site.
If you had bothered to try these incursion sites out with the recommended pilots. You would see these are no joke. People are losing ships left and right over these new beacon sites. I highly doubt a recession will form over this. The supply of ships is very very large. Prices may rise a tad bit while you have everyone, their mother, their sister, their 1st future ex-wife and their pet gerbal, fuqov, running these sites. Ships will be in demand and bought at higher prices for convenience. ---------------------------------- Biomass is free (of) Eve4life! |
Chainsaw Plankton
IDLE GUNS IDLE EMPIRE
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Posted - 2011.01.26 22:44:00 -
[17]
you are right, a few people losing a few ships is going to grind the whole economy of eve to a halt, their necks will snap at the pace, and we will all be in economic despair!
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Mavnas
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Posted - 2011.01.26 22:56:00 -
[18]
Quote:
1. So you want to react to inflation by holding more money .
Yes, because demand fundamentals for assets will erode faster than inflation will spike. You're already seeing inflation now - after the recession begins you'll see deflation.
But the inflation is driven by demand... That demand won't go away tomorrow. It may be weeks before people are too disgusted with the whole Sansha thing.
Ok, so it looks like what you really think is that the bubble bursting is an imminent event. I'm pretty sure that's not true, since incursions just started. I'm almost embarassed that I didn't set up a char to produce Drakes in anticipation.
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Alice Celadon
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Posted - 2011.01.26 23:48:00 -
[19]
I understand the desire of all you newly-minted MD posters to show how much real life market knowledge you can successfully apply to EVE.
You end up sounding really stupid. Don't feel bad, if you follow my posting history back you'll find my much stupider bloviation. You need to step back and realize you're working with a severely limited data set in an *economy* that really isn't comparable to any other economy that's ever existed.
In direct response to the OP: I've often made the mistake you're making, which is to extrapolate a long-term behavioral trend based on transient post-patch behavior. Incursions will only matter in the next few months if they become *the most profitable* PVE activity for hisec or nullsec. Unless the rewards for Incursions change significantly, forget it.
Let me start a list of things which I think likely heavily influenced the market over the last year to give you an idea:
Sanctums Sanctums Proliferation of Sanctums in Secluded Systems T2 Material Rebalance AOE Titan Nerf --> T2 and BC fleets Neurovisual Input Matrix --> Melted Nanoribbons PI is droll --> POS fuel goes skyward SP remap causes short-term surge in demand for specialized ships
Incursions are unlikely to have any great impact on the EVE economy, because frankly they're not set to provide any "necessary" materials for the average player, nor do they look like they will be the most profitable activity in either null sec or empire. Unless you can clearly map how Incursions will both
A. Become the norm for income-generation B. Continue to cause players to lose droves of ships (note the intimate coupling of this point to "A.")
your premises are deeply flawed.
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Alice Celadon
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Posted - 2011.01.27 00:09:00 -
[20]
And now I will go point by point and show why your brilliant traditional economic analysis has down's syndrome in EVE.
Are you aware of significant "bubble-bursting" that did not result in a recession? The last several - housing, tech, etc. - resulted in recessions. Market collapses are disruptive events that typically have broader impact on the overall economy.
In this case, I believe a traditional "inventory recession" will take place. The bubble will create an over-expansion of capacity.
On earth, you would be correct. In EVE, I challenge you to go to the Sell Orders forum and offer 10% or even 1% above NPC cost for fully-researched BPOs. The ground would shake with sellers. The amount of excess "capacity" that exists in EVE is utterly ludicrous from the standpoint of a traditional economy. It's comparable to a few hundred thousand GMs waiting with baited breath for Ireland's yearly car consumption. This is why when Deklein Coalition recently began disposing of Maelstroms in the thousands, the price on that item rose barely 10% for only a short while.
The business cycle in EVE is oriented around expansions. In this case, this expansion contains a significant market-altering event on the demand side without significant changes to the supply side. Your point on timing is well-taken, but we're clearly in the bubble. Bubble strategies differ, but I'd rather be early to get out rather than risking being late on calling the top.
You're right about the EVE market being oriented around expansions -- but you're dead wrong about why. Unfortunately I don't have the data to test my theories on the matter (and CCP will probably never release the data I would need as it would be a huge boon to their RL competition to know about customer acquisition, retention, and behavior post patches). But a few things you may want to consider: Each patch brings probably ~50k new players into the game as a result of the feverish CCP marketing push. Go check what happens to PLEX prices after patches (hint: usually drops a bunch in isk value). I would argue that there are natural deflationary pressures which arise after every patch, as newer players exchange RL currency for in-game currency, and overall lower the average operating budget of the average EVE player.
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2011.01.27 00:18:00 -
[21]
Edited by: Akita T on 27/01/2011 00:19:48
Originally by: Cleansing Spite Are you aware of significant "bubble-bursting" that did not result in a recession? The last several - housing, tech, etc. - resulted in recessions. Market collapses are disruptive events that typically have broader impact on the overall economy.
The key word here being "significant". The ship price bubble, if you can even call it that, will not be anywhere near "significant enough" in magnitude to even call it a proper bubble, let alone a bubble large enough that when it bursts you can call the result a depression, and besides, it will NOT radically affect mineral prices, because it's a matter of specific item manufacture capability shortages, not of raw material shortage.
Quote: In this case, I believe a traditional "inventory recession" will take place. The bubble will create an over-expansion of capacity.
There's simply too much ISK to be made by simply purchasing new BPOs of whatever "in demand" ships will be mostly needed to be manufactured (or invented), and there's no good reason to believe people will be willing to sell those blueprints noticeably below NPC price when this is over, the more likely scenario is that they'll keep them in mothballs instead if they're not manufacturing from them and can't sell them at nearly the price they purchased them at.
Quote: Note there is a significant 0.0 conflict taking place concurrent with the Invasion events - a perfect storm of demand.
And there was an even larger demand spike before at the minerals level, when everybody got their learning SP reimbursed. Have you noticed a huge spike in prices ? Sure, they did increase somewhat, but to call that a spike is really stretching it. No huge spike, no really big bubble to talk of, no big crash worthy of the word "recession".
For something to even begin to qualify as "recession", I'd say you need at least a 10% drop overall in a relatively short timespan (which I seriously doubt we'll see any time soon), and to really call it a proper recession, more along the lines of 20% (which I am almost but certain we're not going to see in many fields, if any, let alone overall). The "great depression" of the 1930s had almost an overall 50% drop in production capability, give or take, with some fields experiencing a 90+% drop, IIRC.
Stop using the word "recession" for something that's little more than a blip compared to normal seasonal fluctuations. You might as well talk about "the two booms and two recessions" that happen every single year in EVE otherwise.
_
Make ISK||Build||React||1k papercuts _
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Mavnas
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Posted - 2011.01.27 01:36:00 -
[22]
Well to be fair, the availability of Drake BPCs seems low.
I'm trying to think up a get rich quick scheme based on Incursions, but no price spike seems that big :( I did make 8m moving a drake from a non-hub system to a hub and reselling it at a profit.
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Kagen Stryker
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Posted - 2011.01.27 10:03:00 -
[23]
Originally by: Mavnas Well to be fair, the availability of Drake BPCs seems low.
I'm trying to think up a get rich quick scheme based on Incursions, but no price spike seems that big :( I did make 8m moving a drake from a non-hub system to a hub and reselling it at a profit.
Try not looking at the spike, but what they are demanding and how little it is supplied in the main systems. If at all. I made 2.3 billion last night just by moving stuff into the incursion site. Had I more capital to start with, it may have been more.
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