Phase 3: Profit !

The cake does not lie about profit!

Sometimes I wish that Blizzard would let us make up our own titles. Me? I’d be Bigjimm, “Master of the Obvious.” Why? Because to make gold, that’s really all I do- I master the obvious. I made my first 100k by prospecting saronite ore into common (green) quality gems (bloodstones, chalcedonies, etc). Why did this work? Because of the saronite shuffle. What was my strategy? It was obvious. I couldn’t believe I was the only person selling green gems for 2-5g each. Were those gems worth 3-5g in infinite dust each? Yes, sometimes. But not all the time. And I would have had to have gotten ugly in the enchanting mats market, and that’s a hassle I didn’t need. I had a 100% of a middle market- I’ll take that over 10-50% of a high-competition market any time. But I digress…

ANYWAYS, this post is about something that is obvious. It’s about buying something now that will be worth something more later. This is an economic phenomenon known as arbitrage, with a slight twist. Let’s talk economic theory for a sec.

Classic arbitrage is, basically, buying something in one market (Market A) and selling it in another (Market B) for a profit. Back in the day this was something as simple as buying Pork Skins (or Garlic, or Gold, or any other commodity/widget you can think of) in the New York market for $1 and selling that same bundle of Pork Skins for $1.50 in Chicago. A good example of this in WoW is when people buy a faction-specific pet for a few silver from a vendor on one side, and try to sell it for a ton of gold to the other side via a neutral auction house.*

(*For all the econ majors out there, I recognize that this is a good example, but not a perfect one. There is also an issue of access- namely, they’re often faction specific pets, so you must rely on someone from that faction for supply. So please, give me the benefit of the doubt on my hack-WoW-econ, and keep reading.)

But again, I digress. What is the item I’m talking about? It’s a stupidly, amazingly, incredibly common item. It’s been written about in almost every WoW gold blog I’ve read. It’s an obvious strategy, but it’s on that will give you 500-1000% returns. What, dear reader, do I suggest you buy?

Small Eggs.

That’s it. Buy small eggs. Buy them now. Why? Because Christmas Winter’s Veil is coming. What do you need eggs for? For a delicious chocolate cake. Why is that valuable? Because when winter comes around, people need to complete Bad Example a number of Winter’s Veil achievements. (Thanks for the clarification, Justarb!)

To complete this strategy you have to be a long-term investor. And, also, I should say upfront that Cataclysm might completely end this strat, because they might remove those achievements. However, I consider these to be relatively low risks, because eggs are cheap now. Everyone is out leveling new toons, not thinking about winter- it’s the dog days of summer! Who’s thinking about Winter’s Veil?! So, just look for Small Eggs on the AH. Every day, every time you scan, look for eggs. If they’re cheap for your market (say… 60-70% of market value), then buy them. And wait. When December comes, sell them for 500%, or turn them into delicious cakes and sell them for more.

What does this have to do with Arbitrage? Well, if you’re doing this then you’re practicing arbitrage, but with that aforementioned twist- Time. Market A, to continue the example, is your AH market today; market B is the market in six months, during Winter’s Veil. So instead of changing locations at the same time, you’re changing time in the same location. It’s not classic arbitrage, but it will do- buy something cheap now, sell it for more later.**

(**Again, for all those econ majors, I understand that this concept could also be called “speculation” or even generally “investment.” However, my goal is to inform as well to enrich, and so I thought I’d try to make people think about arbitrage, time, and cost all at once. Please, again, permit my my blogger-liberties.)

Also… it’s a middle market! It’s the market I love! It doesn’t make anything, but it let’s someone else make something, namely the cakes! You’re not making them (well, maybe you are) but you’re selling to those who will. This is a gravy-train. Selling to buyers is a hassle; selling to sellers is what I prefer. So buy eggs, sit on them, and wait for the cash to roll in.

Finally, if you’re starting out and the eggs are too serious an outlay (ie: you can’t afford to spend all of your 10g on eggs that won’t gain value until 6 months from now) then go out and FARM THEM. They drop from mobs of level 1-18. No matter what the level of your toon, you can go farm for 10 mins and get a few eggs. Try it now, sell for more later!

GL! /bow

First things first: Good news everyone! Zekta has written a post about how Blizz is going to kill all life on Azeroth! Check it out. Now, onto what’s on my mind.

A while back, after my less-than-satisfying experience trying to buy an Ulduar run, I was not having fun anymore. My realm, Anetheron, felt too small. I knew the names of almost everyone in chat, even though I’d recently switched from Alliance to Horde. Most of my friends had already left for the seemingly-greener pastures of Alterac Mountains or Scilla, and I couldn’t find a guild that raided in the AM because it didn’t exist on my server. Generally, I dreaded logging in because playing WoW wasn’t fun anymore. I considered canceling my subscription.

I decided against quitting, however. You see, dear reader, I am at heart a RPG gamer. If I wasn’t playing WoW, I’d have to find something else to play. (Before WoW, I was still firing up Baldur’s Gate II upon occasion!) And my dissatisfaction wasn’t with the game, it was with the feeling on Anetheron. It really felt small- a few elite guilds that downed content, and then a bunch of fail PUGs and a slow auction house.

So, I decided to move. I spent real money ($25.00 US) and moved the line of code that is Bigjimm from one server to another. I had high hopes for the change, and also thought it would be a fun experiment in auctioneering. Before the move I’d spent about 50K gold on various stuff- a few runs, a few BOEs, etc. That left me with about 100k to try to move from Anetheron to my new server. Blizzard restricts the amount of gold you can transfer with a character- at level 80 the maximum is 20k gold. So that would be my challenge; how would I move 80k gold efficiently so that you, dear reader, can learn from my experience?

I began to plan. First I had to decide upon a new server, but that wasn’t hard at all. I’d had a vacation alt on Earthen Ring for a long time. That toon was a member of Alea Iacta Est (AIE), the largest guild in the world. (AIE, in case you don’t read any other WoW websites or listen to podcasts, is the guild that was created as the guild of the incredibly popular WoW podcast, The Instance.)

I liked being in AIE on that little vacation toon, and I’d already made 5k on Earthen Ring by playing the AH over time. However, the most attractive thing was the incredible number of people in AIE. There are multiple raid teams, all at various times and levels of skill. I figured that if I couldn’t find a raid team in a guild with about 5,000 members, I wouldn’t find it anywhere. Done and done. I’d move to Earthen Ring.

Then, to paraphrase TB, so it began. I started planning the move. One thing became obvious very quickly- Earthen Ring has a much larger population than Anetheron, and a much faster Auction House. This manifested in odd ways. On Earthen Ring you could find vanity items and high-end BOE items that simply weren’t available on Anetheron. For example, one of the few pets I don’t have is the much-coveted Hyacinth Macaw. On Anetheron there hasn’t been one on the AH for three months. On Earthen Ring, there are three for sale, and have been for a month (16k-22k gold, just in case you were curious).

Initially I thought this simple econ would carry across all markets, ie: more population= more demand= demand pressure on prices= stuff costs more. (If you’re lost already, take a look a look a the supply-demand curve that you learn on your first day of Intro to Macroeconomics.)

However, it wasn’t that simple. Increased population does translate into increased demand, but it also translates into increased supply. So in some markets, particularly specific commodities, prices were way down. It wasn’t something that I was able to predict, so I picked a few areas and focused on them, trying to figure them out.

Here are a few examples, just for fun: on Anetheron, Lifelike Mechanical Toads sell for 225g or so on the AH; on Earthen Ring they’re about 135g. Saronite Ore on Anetheron goes for about 12g-14g/stack (Blizz hasn’t gotten to the bots yet, I suppose); the Earthen Ring cost is at least 18g/stack. Prices of Primordial Saronite (600g-ish), Titansteel Bars (100g-120g), Cardinal Rubies (120g), Eternal Fires (20g), and Frozen Orbs (17g) were more or less the same between realms. Most surprisingly, Dragons Eyes were almost twice as expensive on Anetheron (100g-120g each) as they were on Earthen Ring (60g-70g).

I had my plan, I’d done my research, the only thing left was to execute. And I’ll cover what I did in Part 2. As ever, thanks in advance for your feedback. We here at P3P love it.

GL! /bow

Good evening Azeroth, Here’s come next week weather forecast.
the incoming storm of Dominion strike the Maelstrom, and reduced it’s strength.
We are expecting a few mutalisk drops as the marine force Advance.
Mechano-hog beware acidic vapor is not good for the engine, and do not included in your warrant.
Please consult your Gnome/Golbin Repair Tech for an extra rip-off.
Until the tomorrow, stay alive…

Expecting Quiet Time

Starcraft 2 is going to release in lesser than a week. (Jul 27, 2010)
We can expect a large portion of Denizen of Azeorth disappear for a month or two before the release of Cataclysm.

A straight forward prediction of the market would be:
Material price raise (the portion not from gold-farmer and bots decreased).
Demand on consumption and enchanting will tank.
Leveling goods (Both profession and player progression)

Seriously, why leveling an alt while Blizzard promise a much more fun low level experience?
Call me pessimistic, but I expect the login rate will decline until Cataclysm (and even blogosphere will had its update slow down)

Can anyone share their ideas other than these trivial prediction?

Off-Topic : Starcraft 2 Beta, QQ

This is a QQ session, recently I got an invitation from Blizzard on Starcraft 2.
Yes, at around 10 days before the Public release, they decided they need more beta tester…
I was excited at first, even that means I had to get owned by those Elite Korea player again and again and again (since we shared server with them).

After one days of Downloading the beta test version (Honestly, their Beta file server sucks). There are problems in my battlenet account, And nones of the solution worked on EU and US version would fix that… “You can fix the language pack issue, by attaching a trial WoW account to your battlenet account”, You __cannot__ attach that in Taiwan server

So after two days of Downloading and fixing issue, I decided the 7 days trial do not worth it at all…
I understand it’s free and tends to be buggy, but please put more effort on smoothen the process for people to help…

Until Next time,  En Taro Adun!