Starter Cash: Of Eggs and Arbitrage
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?
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!