Market Discussions

Hei,

I'm relatively new to larger scale industry and trading and so my question might seem a bit newbish. But please bear with me. Ofttimes I find myself perusing the "Sell orders" forum section and one thing has struck as very , very odd.

Every single T2 BPO auction I have seen been completed/sold in the past couple of months, has been a ludicrously terrible investment ISK-wise (according to my calculus). Just out of curiosity I have been running numbers on some of the BPO's and their respective auctions but I consistently keep getting 100% ROI times of 8-10 years, sometimes even higher. Does one even need to estimate the amount of time to gain back the investment with these BPO's? Does one assume that the resell value is higher than the purchase value?

Are all the buyers of these BPO's buying them just for the collectibility of them or what is the logic behind these purchases? Is there any?

Please enlighten a confused soul if you have any sort of understanding on this matter.

Poro

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.

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.

they are a another reason : The irrational thought of the fantastic gainsthat gets the BP0 T2

As other BPO , T2 have limits of Monthly produc , but this BPO allows to have a fixed cost of the expenses of BP, indeed the amortization follows the rule :

CostBpoRun= BuyPriceBpo / (ProductMonth * 12*ReferalPeriodeGame)*MaxRunBpo

ProductMonth= ( indication of Time production in Bpo Attribut , you can calculate them )
ReferalPeriodeGame ( period in Year )
MaxRunBpo ( indicat in Bpo Attribut )

in This case the buyer engage all isk in Bpo and need to have some visibility and stability to recovers isk of Bpo if he/she dont want to Sell his precious

But for the BPC of invention it is more to complicate to determine the cost
Certain players use the limit in the infinity of the rate of success of the function of invention but it is an errordBecause of the inherent parameter of distribution of this function
check :
Bernouilli distribution
Binomial distribution

Limit of this function to infini = near zero , but not null (some risk to have 0 succes in ten year exist ;)
Limit of engaged isk to infini = Near infinit ( function type y=aX )

for exemple with an AS if we use 1 character for invention bpo and other for Bpc T1

( with all skill at V )

NumberMaxinvention for Pos : 29 perMonth
MaxNbRun = 11 lignes*29*12 = 3828 try by year

ReferalPeriodProd = 10year => 38 290 try ( not near of infinity)

%success (per try)= 39.38 %( with user manual )
esperance (bionomial ) =23,87 %

but in periode product some player have 100% succes and some other have 0 success ,we need to use an average value
..
so player by invention engaged 38290 * Run cost gain almost 10% of successif we calculate the distribution function


when you buy a BPO dont forget this point
- use same run referal period with same run value
- the Cost of BPO must be lower than the Max Engaged isk of inventor in same periode (therefore bpo stat are more efficiency)

BUT
This reasoning would be valid if there was an adequacy of the market with the costs of prod
with-0.01 isk rulers , first vendor rulers and trader strategy , math skill of player ... are your worst and major proble

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?

You should spearhead a minimum wage for that poor 99%. I hear it helps with income inequality.

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.

I doubt there is a single bantam with even one large remote rep cap use rig, nor can there ever be one now. It's up there with the golden magnate. All it lacks is the perception of value.

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.

Property values in Detroit has been in decline for far longer than 2006. The auto industry created a large population of middle class. In 1943 the race riot happened, leading to a largely white middle class mass moving out of the city and into the suburbs. This created businesses to pop up in these areas. A mass freeway system was constructed in the mid century to accommodate mass transit from the suburbs into Detroit, so manufacturing jobs would still be viable. The poor population, however, was stuck in the city limits.

In 1967, Detroit saw another riot which destroyed large parts of the city. As the auto industry slowly moved their businesses oversees over a few decades, the growing generations of population in the suburbs started working at all the businesses that have popped up there. Leaving Detroit with buildings and infrastructure large enough to accommodate 1.8 million people at its peak yet only with 750k residents today. Many of whom are poor, which in turn means jobs are scarce.

Because large swathes of the city are abandoned, burnt, or inhabited by poor people(usually a combination) there's little tax revenue as the property values are brought down by these factors. What little tax income there is, is burdened by the large amount of pensions to be paid out to those working during the days when the city had a large population. Which leaves little to be spent on social services and infrastructure, such as police and working traffic lights. Lack of police and a desperately poor population has led to rampant crime. Coupled with corrupt and inept politicians(our previous major was sentenced to 28 years in jail for corruption 2 months ago), and you have why the property values in Detroit is trash. Speculators speculating on something they do not understand deserve what they get. Detroit will bounce back when the pensioners die, and considering they're old enough to get the pensions that isn't far off.

I wont comment on your mention of Australia's rental market though, I don't live there.

But I don't really see how the housing market in Detroit plays into t2 bpos though. Of course there's risk, there's risk in everything, why go outside when you could be hit by lightning? Every t2 bpo has appreciated in value. The rich are getting richer, and the poor are getting richer. This isn't rl, everyone grows in wealth in EVE. The ease in which t2 bpos make isk is attractive, the appreciation of value is attractive. And they're getting rarer.

You mention Grendell. An upstanding member of the community, and deserving so. Attractive rates, and a good value for your isk. Plus it's safe, because he's a trusted member of the community. Why's he trusted though? Because he hasn't stolen everyone's isk yet? What if Grendell walks outside and gets hit by lightning? You say a t2 bpo for income, which is an item in your possession, is foolish. I'd argue that trusting someone else with your isk is the foolish measure.