Posts Tagged ‘market’

My Venture Into Speculation on the Mining Barge Changes of 08/08/2012

I did a tally yesterday on just how many blogs and feeds I currently view every day. ~94 was the answer; and it might be a little extreme. However for me, playing eve is all about accumulation of knowledge. Don’t get me wrong, I a real PvP player, I love fleet fights, I love small gang fights, I even love 1v1’s (although I really suck at them). But I also believe that to truly excel at this game, you need to back-up your fighting prowess with the ability to gather information, and proactively adapt you methods and styles in order to thrive in the new environments.
What’s more this doesn’t just pertain to PvP. In eve, if you want to individually succeed in PvP, you will also need to succeed in making money. Of course you can “opt out” of this gameplay style by purchasing PLEX, and I respect those who choose to do so (unlike a certain Goblin), but that play style is not for me. Today I want to look at a story of how this information gathering (on a topic as unrelated to PvP as you can get in eve) has enabled me to continue PvPing by earning me ISK.

Before I start, I want to preface this by stating that I am by no means a “Rich” eve player. My total wealth (liquid and assets) across four accounts is around 10Bn with an income around 700m per month (which is almost always spent immediately on PLEX + PvP ships), which is enough for me, but by no means an excessive amount. So here goes:

On the 14 of Aug this year CCP released a Dev Blog about some incoming changes to Mining barges and some changes to the T1 frigates. Now I love T1 frigates, and the changes were great, but what really got me excited was the section about Mining Barges. They were due to receive some “Balancing” and CCP was aiming to make hulks no longer the only option for miners. Although it was light on details, my observations on how the frigate changes had progressed, I had a fair idea of exactly what would happen to the mining barges.

Specifically my thought process was as follows: I know the hulk is the best mining barge. I know the Rifter was the best T1 frigate. T1 frigates were all categories into specialities and then balanced up to the level of the Rifter with that speciality in mind. I know that the Mining barges have been categorised into specialities… I am guessing that that same will happen, and that demand for non-hulk mining ships would dramatically increase.

With this in mind, I decided, that very day to dip my toes into the tepid waters of market speculation.

Initially I was timid and simply bough* 5 of each mining barge (except the Hulk, figuring that any % increase in demand for new ships would likely come out of the % demand for the hulk). The gamble, I thought, would come from the simple application of supply and demand principles. I demand for Skiffs etc was going to increase, and the production of them didn’t increase immediately to meet the demand, the cost of the ships would rise, and I would make a profit**. At this stage, I was looking at a 1.8bn ISK investment, and hoping for a few 100M ISK return.

As time went on, and I began to see an immediate slight rise in prices immediately after that dev blog, I decided to place large buy orders on the barges as well, which eventualy filled into around another 1bn ISK investment totaling me at around 2.8bn all in, across 75 ships.

Then on the 30/7 the game changed. A player blog I found linked on Redit, indicated that a Dump from SiSi showed a massive increase of mineral requirements to build the Barges. Assuming that the changes went live, as they were then (9 days before the go live date), I was, at least in the long run, guaranteed a profit on any ships purchased before the patch.

At this stage I had already produced a spreadsheet detailing my investment so far, and the minimum amount I needed the prices to rise by before I could sell for a profit (taxes). Now I took the new mineral amount, and using current market prices, divined the ISK rise in producing each ship. This number could then be added the current cost of the ships (assuming manufacturers would pass on 100% of cost increase to the customer, this is eve after all), giving me my predicted minimum sell prices post patch.

The only risk left (other than a change in the live production costs) was that too many players would speculate in the same market. My fear was that if 1000’s of players invested in the barges, impatient players might sell lower than the production cost (but still miles higher that pre patch purchase cost) in order to regain their capital early. This would slow the rise of prices in the ships, forcing me to hold onto mine for longer before I could sell for maximum profit. Thankfully Redit & the blog saved me.

You see in the Blog, the writer noted that after crunching the numbers the procurer was getting the best % increase in price. Redit bit into this and started to salavate over procurers (I’m sure not everyone did, but there were a lot of posts just about buying this 1 ship). Procurers of which I still only had 5 of were suddenly THE speculation of the masses. Luckily for me, my investment was much more evenly spread.

On the 8th of Aug I returned home from work at 4:30pm GMT and booted up my client. I noted that the T2 barges were virtually non-existent on sell orders (last minute investors?), whereas T1 was still in abundance, and only beginning a slow climb upwards in prices (still above my minimum sell point, but nowhere near my predicted price).

Immediately I placed all my Mackinaws on sale for [original selling price]+([increased mineral cost]*2) rounded to the nearest 100. ie. 400m (I bought them for 120-150M each). At this point I should note that there were some buy orders for 500M, and the sales statistics showed that at least 1 of these had already sold. However with limited online time, and other projects needing my ISK investments, I wanted to release my capital at a speed balanced between best profit and best speed. I also placed my Skiffs on the market at the same price.

Within half an hour 6 of the 9 Mackinaws and 1 of the skiffs had sold releasing 2.6bn ISK. The shrewd amongst you will see that at this stage I was still only 200bn ISK down on this whole deal with another 68 ships left to sell. As the evening went on, and Mack sales continued I began to see a rise in Coverter prices, and using a similar calculation to the T2 prices (but rounded to the nearest 10m), I added my stock to the market, in the hope that the market would speed past the mineral + extra cost point and over my sales.

I am still awaiting the sale of most of my T1 ships and currently stand 1bn in profit over this venture with a projected minimal return of 3bn (over my initial investment), although I will need to wait for the prices to rise to at least their base mineral cost before I can realise this final profit.

However, some interesting observations from my story:

– The new Mackinaw in VERY popular. Maybe there are a lot of high sec miners out there who don’t have orcas (not in a corp makes me sad [but richer] panda). Could this have been the bots buying new ships as per Nosy Gamer?

– 7 Sales in the first half hour of my time post patch!? Really? Why did these people not buy them on the 6th or earlier? When prices were around 150M? Did they miss the dev blog until they read the patch notes while updating? Did they read the dev blog but not bother buying one till (after) the last minute? Really!?

– I realise that I probably could have sold my Mack’s for more than the 400M I did, but honestly 400M was enough for me. At a profit of 250M each, the profit of just two of them will keep me in PvP ships for a month. I like money, but I’m not greedy.

*I actually believe that purchasing the ships from the market, with the information I had at this point was a massive mistake. By buying them rather than placing buy orders I was adding an extra 1.25% markup requirement to make a profit. cutting into what I thought would be a slim profit margin.

** Roughly translated:

1.    Buy mining barges

2.    Wait for more people to want them

3.    ????????

4.    PROFIT