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Inflation, Speculation and Profit
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TravisWB
#1 - 2012-04-24 02:03:40 UTC
It seems that many of you don't understand basic economics.

Overall inflation, as in all prices rising steadily and relentlessly as has been the case in EVE over the last 3 years, does not mean you are making money on items you have bought long ago and held waiting for higher prices.

Because, dear child of socialist training, when all prices go up price is only a relative factor.

Say you had a unit of trit you bought when it was 2isk and now you sell it at 4 isk. Did you make 2 isk? of course. Was it profit?

Lets see, uh, say a round of small antimatter was 5 isk back when you bought your 2 isk trit. Now that same round of AM is 10isk. Have you actually made any money on your trit?

NO.

Prices are actually relatively the same, it just takes longer to make the isk and therefore the truth of the matter is evident.

Inflation makes everyone poorer.

Speculation on the other hand is a shell game in which you buy items in the hope you can sell them at a higher price in the future and then BUY THEM BACK LATER at a lower price. Viola, that is the profit incentive in speculation. It is not merely buy and hold as in the INFLATION scenario already described. Oh, and buy the way. It is also your ONLY method of making a legitimate profit in this game of terror, murder, theft and piracy.

All other activities are just self delusion that you are making profit via inflation when the reality is you are losing money daily.

Inflation makes all things cost more.

Cost is how long it takes you to earn enough isk to buy a thing.

When it takes longer, you are poorer and will be induced to take drastic actions such as the purchase of PLEX from CCP in order to obtain the isk you can no longer afford to invest the time required to EARN isk via any method you choose.

Exactly as CCP has intended.
Karn Dulake
Doomheim
#2 - 2012-04-24 02:05:13 UTC
Quote:
Because, dear child of socialist training, when all prices go up price is only a relative factor.



American detected
I dont normally troll, but when i do i do it on General Discussion.
Corina Jarr
en Welle Shipping Inc.
#3 - 2012-04-24 02:07:53 UTC
Its still profit because after the patch when folks dump their mins the supply will be huge while demand has dropped.

And the cycle will repeat until a new equilibrium is found... or CCP realize they made a mistake and change minerals somewhere.
Corina Jarr
en Welle Shipping Inc.
#4 - 2012-04-24 02:08:41 UTC
Karn Dulake wrote:
Quote:
Because, dear child of socialist training, when all prices go up price is only a relative factor.



American detected

Non-United Statesian detected...


Ouch no wonder we call ourselves Americans...
Akita T
Caldari Navy Volunteer Task Force
#5 - 2012-04-24 02:12:19 UTC
TravisWB wrote:
Overall inflation, as in all prices rising steadily and relentlessly as has been the case in EVE over the last 3 years, does not mean you are making money on items you have bought long ago and held waiting for higher prices.

I'll see your claim of constant and steady inflation and raise you a "prove it".
List the highest and lowest prices a Raven has ever sold for on average and the rough date that happened.
Then pick a few other random different items with decent trade volumes and do the same.

Akita T evewiki profile | | | Build your own EVE-ready PC
TravisWB
#6 - 2012-04-24 02:16:59 UTC
Don't be fooled, The American Government indoctrination system known as public education has been relentlessly churning out socialists for over 20 years. Observe that the leader of that once great nation is a MARXIST.

Speculation is buying low, selling high, buying back at a lower price and then using or reselling at a gain = profit.

Everything else considered profit in this game is a delusion.
Akita T
Caldari Navy Volunteer Task Force
#7 - 2012-04-24 02:20:07 UTC
TravisWB wrote:
Speculation is buying low, selling high, buying back at a lower price and then using or reselling at a gain = profit.
Everything else considered profit in this game is a delusion.

So let's say that the HYPOTHETICAL average inflation rate was 10% per year across almost everything.
If I buy something today and sell it a year later at 20% markup compared to the price I bought it at, did I make a profit ?
Your opinion seems to be that I didn't. I say that I made at least around 10% profit.

Akita T evewiki profile | | | Build your own EVE-ready PC
TravisWB
#8 - 2012-04-24 02:27:10 UTC
Akita T wrote:
TravisWB wrote:
Overall inflation, as in all prices rising steadily and relentlessly as has been the case in EVE over the last 3 years, does not mean you are making money on items you have bought long ago and held waiting for higher prices.

I'll see your claim of constant and steady inflation and raise you a "prove it".
List the highest and lowest prices a Raven has ever sold for on average and the rough date that happened.
Then pick a few other random different items with decent trade volumes and do the same.


Most, if not all, manufactured goods are subject to the whims of the marketplace and the player mood of the game. It is not uncommon to see ships especially sell for far less than cost of production.

Inflation begins with the price of the basic building blocks such as ores, ice products, planet and moon products. I believe you can probably choose any 10 items from the basics and 9 of 10 or 10 of 10 will show a roughly 300% price increase over the last 3 years.

Eventually, even things affected by fad failure increase in price.

Example, Fleet Issue Stabber, do your own research.
Alavaria Fera
GoonWaffe
#9 - 2012-04-24 02:31:37 UTC
Aha, another inflation troll.

Triggered by: Wars of Sovless Agression, Bending the Knee, Twisting the Knife, Eating Sov Wheaties, Bombless Bombers, Fizzlesov, Interceptor Fleets, Running Away, GhostTime Vuln, Renters, Bombs, Bubbles ?
TravisWB
#10 - 2012-04-24 02:33:56 UTC
Akita T wrote:
TravisWB wrote:
Speculation is buying low, selling high, buying back at a lower price and then using or reselling at a gain = profit.
Everything else considered profit in this game is a delusion.

So let's say that the HYPOTHETICAL average inflation rate was 10% per year across almost everything.
If I buy something today and sell it a year later at 20% markup compared to the price I bought it at, did I make a profit ?
Your opinion seems to be that I didn't. I say that I made at least around 10% profit.


That is only part of the equation.

The rest is, what does it cost you to replace said item?

If you sold at 10% over the current market price and can replace the item you sold and have a 10% differential then yes you made a profit.

But, if the new market price is the same as your selling price and you have to pay market price to replace your item then NO, you actually lost value though the monetary numbers are larger.
Kengutsi Akira
Doomheim
#11 - 2012-04-24 02:53:21 UTC
Alavaria Fera wrote:
Aha, another inflation troll.


so hows that "take over all of 0.0 then quit the game" plan workin out?

"Is it fair that CCP can get away with..." :: checks ownership on the box ::

Yes
Alavaria Fera
GoonWaffe
#12 - 2012-04-24 03:19:56 UTC
Kengutsi Akira wrote:
Alavaria Fera wrote:
Aha, another inflation troll.

so hows that "take over all of 0.0 then quit the game" plan workin out?

There are no plans to take over all of 0.0 (unlike I guess BoB). Not that the ~ooh~ higher-us have divulged anyway. Your own spai may differ.

For example, NC. might get to sit where they are for a while unless some other neighbor decides to do to them what said neighbor did to someone in Branch when that someone was cascading.

Triggered by: Wars of Sovless Agression, Bending the Knee, Twisting the Knife, Eating Sov Wheaties, Bombless Bombers, Fizzlesov, Interceptor Fleets, Running Away, GhostTime Vuln, Renters, Bombs, Bubbles ?
Whitehound
#13 - 2012-04-24 03:36:37 UTC
TravisWB wrote:
Akita T wrote:
TravisWB wrote:
Speculation is buying low, selling high, buying back at a lower price and then using or reselling at a gain = profit.
Everything else considered profit in this game is a delusion.

So let's say that the HYPOTHETICAL average inflation rate was 10% per year across almost everything.
If I buy something today and sell it a year later at 20% markup compared to the price I bought it at, did I make a profit ?
Your opinion seems to be that I didn't. I say that I made at least around 10% profit.


That is only part of the equation.

The rest is, what does it cost you to replace said item?

If you sold at 10% over the current market price and can replace the item you sold and have a 10% differential then yes you made a profit.

But, if the new market price is the same as your selling price and you have to pay market price to replace your item then NO, you actually lost value though the monetary numbers are larger.

A million ISKs did buy you more trit a few months ago than it does now. One needs more ISKs to buy anything now than one did back then. What some see as a profit or a win is not more than protecting the value of one's ISKs. If one did not invest, but kept the ISKs then one made a loss. Only when the prices fall and one still possesses the ISKs does one make a profit.

If I get you right, then I agree with you.

Loss is meaningful. Therefore is the loss of meaning likewise meaningful. It is the source of all trolling.
Akita T
Caldari Navy Volunteer Task Force
#14 - 2012-04-24 03:37:49 UTC  |  Edited by: Akita T
TravisWB wrote:
Akita T wrote:
TravisWB wrote:
Speculation is buying low, selling high, buying back at a lower price and then using or reselling at a gain = profit.
Everything else considered profit in this game is a delusion.

So let's say that the HYPOTHETICAL average inflation rate was 10% per year across almost everything.
If I buy something today and sell it a year later at 20% markup compared to the price I bought it at, did I make a profit ?
Your opinion seems to be that I didn't. I say that I made at least around 10% profit.

That is only part of the equation.
The rest is, what does it cost you to replace said item?
If you sold at 10% over the current market price and can replace the item you sold and have a 10% differential then yes you made a profit.
But, if the new market price is the same as your selling price and you have to pay market price to replace your item then NO, you actually lost value though the monetary numbers are larger.

It is irrelevant how much it costs to replace that item, especially if you don't NEED that item (but even if you do, as long as it's NOT the ONLY item you need).

Maybe the items I want is PLEX and Drakes, but I have bought and held technetium instead.
I don't HAVE to want to use technetium for anything myself to have bought it at 10k two and a half years ago and sell it now at 200k and make a HUGE profit, even if you account for any price increases of PLEX or Drakes in the past two and a half years (since it's beyond obvious they didn't go up in price anywhere near 20-fold).
As long as you sell something for more than the inflation-adjusted price you bought it for (or could have sold when you decided to keep), you HAVE made a profit.
Or are you saying that I actually didn't make a profit ?

Also, if you want to be nitpicky, the most relevant price indicator is not ISK, it's time, or better said, average player time required to acquire a particular item.
You will notice that for most items, the ratio between that average time and its cost in ISK has remained relatively steady, and most ISK price fluctuations actually come from changes in the average time required to get it.
The shift in ISK price BEYOND that "time needed" change factor is closer to the actual inflation rate than just the raw ISK price difference.

Akita T evewiki profile | | | Build your own EVE-ready PC
D Program
#15 - 2012-04-24 05:59:22 UTC  |  Edited by: D Program
You decide to quit the game for a year.

You have 500 ISK CASH in your wallet and 1 trit steady price is 2 ISK on market.

It takes 250 trit to build a magic ship. Lets say magic ship costs 750 ISK on market. (50% pure profit from manufacturing and selling)

The person who is quitting, buys 250 trit before he quits.

A year goes by...

Person decides to come back.

Now trit costs 4 ISK on market.

Therefor magic ship manufacturing costs 1000 ISK and on market it sells for 1500 ISK (50% pure profit from manufacturing and selling)

The person can manufacture the ship and sell it and have 1500 ISK.
He is now up to date with the inflation vs his former capital and can start playing the game without any losses nor profit.

IF he would have kept the ISK as CASH in his wallet.
He could buy only 125 trit and that is only half of the magic ship manufacture cost. Sad

Person is sad in this case.

Generally. Selling minerals today, which were bought back in the day, is actually keeping your capital value updated with the current flow of inflation. It is not profit nor loss.

ALTHO if you actually sold your minerals now for 5 ISK, 1 ISK more than current market. You did make profit yes, but you could have just bought the minerals for 4 ISK and sell them at 5 ISK and make same profit anyway, didn't have to hold those minerals for a year.

What is this sorcery?

http://www.eve-cost.eu
Montevius Williams
The Scope
Gallente Federation
#16 - 2012-04-24 06:04:30 UTC  |  Edited by: Montevius Williams
TravisWB wrote:
The American Government indoctrination system known as public education has been relentlessly churning out socialists for over 20 years.




Im giving you a thumbs up just for this statement alone. Now I can say this to people at work and feel smart. lol

+1

Edit: As a matter a fact, Im using this is my sig. Hope you dont mind

"The American Government indoctrination system known as public education has been relentlessly churning out socialists for over 20 years". - TravisWB
wiskyjack
New Eden Mining Organisation
The Craftsmen
#17 - 2012-04-24 07:09:48 UTC
I see a flaw in your argument,

A year ago I bought 2 hulks after hulkageddon for 70 million each. One I left in hanger never used, the other I use.
The one I use has more than paid me back the 140 million. Both can sell for 350+, which at a rough guess is 250% up on my original outlay.

If I sell today I will have over one billion in my wallet including isk made from mining.


How have I not made a profit
War Kitten
Panda McLegion
#18 - 2012-04-24 11:50:43 UTC
TravisWB wrote:
... Viola, that is the profit incentive in speculation. ...


What does a bowed string instrument have to do with profit incentive?

I don't judge people by their race, religion, color, size, age, gender, or ethnicity. I judge them by their grammar, spelling, syntax, punctuation, clarity of expression, and logical consistency.
Whitehound
#19 - 2012-04-24 11:54:19 UTC  |  Edited by: Whitehound
wiskyjack wrote:
I see a flaw in your argument,

A year ago I bought 2 hulks after hulkageddon for 70 million each. One I left in hanger never used, the other I use.
The one I use has more than paid me back the 140 million. Both can sell for 350+, which at a rough guess is 250% up on my original outlay.

If I sell today I will have over one billion in my wallet including isk made from mining.


How have I not made a profit

Because ISK itself has no particular value.

Your ISKs now will only buy you another Hulk, just as they did back then.

You do have more ISKs, but you cannot profit from having more than you could have profited back then. Hence, no profit.

Loss is meaningful. Therefore is the loss of meaning likewise meaningful. It is the source of all trolling.
Misanth
RABBLE RABBLE RABBLE
#20 - 2012-04-24 11:54:47 UTC
..never seen this type of thread before, refreshing!

AFK-cloaking in a system near you.
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