http://en.wikipedia.org/wiki/Greater_fool_theory

Limited issue items such as t2 bpos and AT hulls have actually offered some of the best passive isk returns in the game, many appreciating at around 10%/month for the last year. You don't hold it for the isk generating potential, you hold it to resell it to someone else at a higher price.

My personal opinion regarding the reason for this state of affairs is that wealth inflation in the top 1% is increasing at a far faster rate than it is among the general population and these items which are pretty much exclusively traded among the super rich are priced based upon the disposable income and need to sell things for liquidity of that group. Their perceived value has remained constant among that group but the amount of isk at the disposal of that group, and therefore the value they place on their isk, has changed. They inflate in value in proportion to the wallets of the people who deal in them and those wallets increase in size at a far faster rate than those of the general population.

In a world of infinite resources, finite commodities will have value, if only for the prestige they grant.

Thank you for the enlightening replies.

So basically in this case the commodity is perceived as ultrarare, therefore increasing its value, while it also grants a steady income all the while hoping that a "Greater fool" will buy it from you with a even more inflated price.

At least by the last two parameters this is akin to a "bubble" situation, is it not?

wealth inflation in the top 1% is increasing at a far faster rate than it is among the general population

A bubble in a society with unlimited wealth generation and accumulation.

Such an environment can still have bubbles burst. I have seen it in other MMOs.

Sure, for items like AT ships and such a bubble burst is inevitable, but this is an item that also makes you money as you hold onto it. The price drastically falling just means the time it takes to earn back your investment falls as well.

Outside of CCP intervention, or the T2 market getting gutted, the "bubble" will probably never burst.

Also, frigs with large rigs aren't really "rare". I mean, you can't get them anymore, but there's probably thousands, if not tens of thousands, of them out there.

Sure, for items like AT ships and such a bubble burst is inevitable

All it takes is for word to spread of a few big losses taken on T2 BPOs to undermine investor confidence in them, and you may start to see more and more people selling out of the market. That is how a bubble bursts. This doesn't happen if the items are a sensible use of productive capital, but T2 BPOs are not even a remotely sensible investment for any purpose other than chasing capital gains.

Ya know, outside of the fact that high-end bpos don't get panic sold and are competed for by the same people on every auction, and any low/med bpo that's undervalued gets scooped up by resellers.

IRL, the same thing happened to residential property in Detroit in 2006. And also in 1998, long before the crash. Some properties got sold by determined or desperate sellers at low prices. Speculators bought them up ASAP, expecting capital gains.

Some of those speculators did well, others lost everything, and a few others got government bailouts.

I am not in any way claiming that the T2 BPOs will all crash any time soon, it's possible for a bubble to be sustained for a long time, but purchasing a T2 BPO under the expectation of continued capital gains is not a zero risk proposition. And purchasing one for the passive income is a very foolish decision indeed; Grendell's bonds pay quite a lot better.

I remember being laughed at for trying to sell my guardian vexor for 20b.

AT ships get destroyed both in transport, and in combat. T2 BPOs only get destroyed in transport. Its also easier for AT ship owners to, at considerable risk, flaunt their wealth by going out and killing things. Finally, when fielding 3x AT ships might make the difference in winning another 50x AT ships, your going to be willing to pay a great deal of isk for them. All together, it means I wouldn't count on an AT ship price collapse.

Unless they decide to re-issue them someday, because CCP is, well, CCP. Also, as more cool AT ships come out, the earlier ones, which for the most part are garbage (looking at you mimir/freki) will probably fall in price, because why have a useless paperweight when you could have a theoretically useful paperweight.

AT ships would be plenty useful. But the people who win them typically don't engage in the small gang warfare where they would shine. Also I don't know of anybody who would use the damn things in normal combat.

**** if I had one I'd ride it into to battle till 50 bil blew up and left my pod in it's place.

Some of them do get used in PvP.
http://themittani.com/news/first-chremoas-destroyed-prize-ship-down
https://zkillboard.com/ship/33397/

http://themittani.com/news/first-moracha-destroyed
https://zkillboard.com/ship/33395/

Unless they decide to re-issue them someday, because CCP is, well, CCP. Also, as more cool AT ships come out, the earlier ones, which for the most part are garbage (looking at you mimir/freki) will probably fall in price, because why have a useless paperweight when you could have a theoretically useful paperweight.

Unless they decide to re-issue them someday, because CCP is, well, CCP. Also, as more cool AT ships come out, the earlier ones, which for the most part are garbage (looking at you mimir/freki) will probably fall in price, because why have a useless paperweight when you could have a theoretically useful paperweight.

Hey have vaguely read through all the comments, but one thing that struck me is are you guys calculating this with only one character working the BPO? I have 5 characters that could run inventions in my pos very efficiently. So lets say i get a BPO of Neutron Blaster Cannon II or whatever they are called which would with max ME/PE levels and 0 copy cost generate an estimate of 500k/hour in profit per slot. If I then have the isk and run it 24/7 with 50 slots it means that I would make the BPO cost back within 30 days. Am I missing something or?

500,000x50 = 25 000 000 / hr
25 000 000 x 24 = 600 000 000/day
600 000 000x30 = 18 000 000 000/month

Expenses would be the cost of the POS and thats it, meaning a 350ish mill a month.

I haven't looked this through much but this is just what popped in my head while reading the comments.

aight, still seems to be profitable, I can get 50 copies with 300 runs each within 14 days? those 300 runs will last me 4 weeks+ to manufacture = I can keep a steady chain of production while at the same time have 49 slots open for the research of other bpo's. This is of course all theoretical as I would not want to manufacture 300x50 guns every month as I would flood the market and never sell them off.

I am not saying anyone is wrong or right, just trying to find new possibilities to make space money!

ah okey then it makes sense that it takes time to make a net profit out of it. I said on the BPO site that it took 6hrs/copy i think, dont remember exactly. But anyway any money you make on it is a profit right ? and then you can always sell it off.

You're bad at economic thinking and should look up opportunity cost. Not all profit is profit.

But the profit on this is bad compared to the investment, but getting a couple of extra millions while you wait to sell the t2 bpo for higher is not a bad profit is it now?

As someone said it is like buying/selling a house or property, you rent it out to minimise the cost of the upkeep and then you hopefully sell it for more then you bought it.

It can be dangerous to just assume that some class of assets will never go down in price, which is what you're doing here. Get enough people thinking like that and it's basically how you make an economic bubble. Housing is a good example. Most of the time it works as you say, but if you buy at the wrong time you can take a huge loss in principal.

There's nothing wrong with taking the risks of course if you know about them! You really need to at least consider that the BP may not necessarily be worth the same or more than you bought it for. Maybe you'll still estimate it's a good deal and worth the risk, but don't just assume that the risk isn't there.

Let me dig this topic a little to help me understand something.

In sell orders forum there is an auction for Co-Processor II BPO starting at 36B ISK.
The price of this item has fallen recently, although daily volume is quite nice.
With current price, according to Fuzzwork this BPO can provide almost 600k ISK/h in a POS manufacturing slot. That is 5.26B ISK per year assuming 24/7 production.

It still doesn't explain to me why anyone would freeze (let's say it can be resold) 36B ISK.
Ok, in comparison to invention it is very convenient to produce from BPO...
So, help me understand what am I missing here.

I am not in any way claiming that the T2 BPOs will all crash any time soon, it's possible for a bubble to be sustained for a long time, but purchasing a T2 BPO under the expectation of continued capital gains is not a zero risk proposition. And purchasing one for the passive income is a very foolish decision indeed; Grendell's bonds pay quite a lot better.

One of the great things about Eve is that a new player can compete in most things with older players reasonably well. Except where it comes to buying T2 BPOs!

For this reason alone, I'm against T2 BPOs, though I love them as well for some strange reason.

The answer can probably be found by looking at what the price of that print was a year ago, two years ago, three years ago, etc. Back in 2010 people were goggling at the fact that there were buyers for T2 BPOs when it took three years to make a 100% profit. Since then the prices have gone up a huge amount. With the print you identify, let's say it takes 7 years to make a 100% profit, or 14% profit a year. That's a little over 1% a month, which may seem terrible to most people but which is only a little under the baseline amount that isk can be lent out at to the most trusted figures. Eve has an aging player-base with increasingly large numbers of rich vets who want to put their isk somewhere and earn something. With a T2 BPO not only do you get a very low effort safe return (safer than lending the money out!) but you also get the chance that the price of the print itself will rise further as the trend of greater numbers of aging rich vets who want a safe harbour for their isk continues.

Please stop posting about stuff that you dont know anything about. There have been a few developments that caused that price spike and the current fuss about the amount (2 collections) that are getting (re)sold. I have all the answeres but unfortualy (and cause you trolled me a few years ago) there is no such thing as free information.

This is completely correct.

Interestingly, it's similar to the housing rental market in Australia. Noone in their right mind buys a house for the income from renting it out, a bank will pay more interest if you just deposit the money. Landlords buy houses because they anticipate capital gains, and rent covers half the interest payments on a mortgage.

T2 BPOs are the same.

Are people using T2 bpo's as collateral against debt?

Frequently.

Are they being valued according to latest sales or some other arcane process? It seems like it would be tempting to inflate the value to a certain point and the next time you get a big ole chunk of ISK loaned to you, just letting the BPO go.