seebs

Ahh, see.

That's where the magic happens.

How much capital is "in" the stock market?

Let's say I have a thousand shares of Apple, and Apple stock sells for $280. Is that $280,000 of capital? Okay, so, say Steve Jobs has a bad cold, and Apple stock drops to $200 overnight. Now do I only have $200,000 of capital? Where'd the rest go?

Here's the Big Dark Secret: The money people put into initially buying stocks from the issuing companies got invested. The money that is traded shuffling those shares around, though, is not "invested" in the same way. That money doesn't go to the companies whose stock is being traded. They don't get that money. You can buy a million shares of Apple (if you're rich enough) without Apple Computer getting so much as a penny. All you're doing is betting that it'll go up. You aren't doing anything to affect outcomes one way or another.

Investment generally carries the connotation that your choice to spend money in one place rather than another is expected to have some kind of influence on outcome. I can invest in a better build machine for my software projects, because the build machine could affect the outcome. But you can't "invest" in Apple in that sense -- there's nothing you can do such that you're buying stock and this leads to them being able to produce better computers.

And yet, I'm the one who's willing to explain points, offer corroborating evidence, use concrete numbers, and point to real world events. You're the one who's being all smug and condescending but has not yet actually made a single point. You know something? How about you say it, instead of telling us all how much you know but aren't willing to talk about? Oh, that's right. Every time you say something concrete it turns out you were completely full of it. Like, say, blaming "speculators" for market crashes that had, in each of several cases, nothing to do with them at all.

I know this is gonna sound shocking, but economists actually study things like stock market crashes, to report on how they work and what causes them.

I fixed your post for technical accuracy.

You're (now that I've fixed your post) quite right -- your repeated assertions do not make your claims true.

I know it must sound really weird to talk about "reasoning" and "evidence", and that's probably just more proof to you that I'm some kind of crazy guy, because being a true economist you know that economic theory is what your gut tells you is true, not what some "research" or "evidence" or "logic" would support.

But it comes down to this: If you want anyone to come to believe what you believe, you will have to persuade them. And if you want anyone to come to believe that you have support for your beliefs, you'll have to present some of that support. Otherwise, you're just another excellent demonstration of the Dunning-Kruger effect, reminding us all that people who are smug and dismissive of others, but never advance arguments, usually don't know what they're talking about.

And how do you determine this?

There can indeed be no discussion if, rather than supporting or documenting your claims, you simply assert that anyone who doesn't accept your presuppositions has "profound misconceptions".

Conversation, have you ever heard of it?

Perhaps more importantly, I think you're overlooking a key distinction, that between "the majority of stock owned" and "the majority of stock traded".

Most owners are in for the relatively long hall. Most trades are shorter term. (Think about the reasons for this; if I hold a thousand shares for a year, and you trade a thousand shares a week, 52 times as many shares are short-term trades as longer-term holdings, even though we are both holding the same number of shares...)

In general, the long-term holdings don't have a huge effect on prices; it's trading, not holding, that sets prices. The "price" of a stock isn't some kind of abstract measure of value; it's just the price of the last single trade. Think of it as being equivalent to the topmost number in the "last 5 transactions" window... because that's what it is.

An interesting assertion.

I've been dealing with an investment portfolio (and more "investment" than "speculation") for something on the close order of twenty years now.

I don't know that I'd agree with "unintended". Abused, maybe.

But who said I thought that was the whole of it? I just think it's the part that dominates trading prices over the short term. Because, after all, if you're in a stock for the long haul, with no plans to buy or sell for twenty years, you are having very little effect on price. While someone who's buying and selling today may well be affecting the price.

Heck, look at the number of sudden jumps or falls the market has had in the last couple of years caused entirely by glitches in software that's trading stuff in seconds and minutes, not even days... That stuff affects prices, and it affects prices quite a bit.

And underneath it all... The majority of individual actors who are buying and selling stock are speculating. Sure, there's exceptions, but for the most part, they're buying something because they think it's going to go up, or selling it because they think it's going to go down.

Done!

Yes, but...

He's so FUNNY. If I got another group invite from him, I'd probably string him along for a while while laughing myself sick at his tanking.

That is why I had "investment" in scare quotes -- because very, very, few people actually invest, but a lot of people speculate.

To be fair, even long-term investments are ultimately about perceived value -- what matters is what you can buy or sell for, not what you would be able to buy or sell for if everyone could magically discern the "true" value of a thing. But in the long run, at least in theory, perceived value is influenced by actual value.


This is a fascinating theory, but the general consensus I've seen among economists has been that, in general, informed speculators are a major stabilizing force on stock prices. It's the people who don't know how to pay attention that are bad.

Not really. Consider that the existence of "market makers" is widely believed to be a benefit to the functioning of the exchanges that have them... Why are they there? To be, in essence, "flippers" -- to make sure that there is enough flow in things to avoid the insane fluctuations you get when there's very low supply and demand.

The economic problems have not, generally, had to do with "flippers". They've had to do with large number of people developing wildly unreasonable beliefs about what prices were reasonable.

He invites you to the team, then makes you run to PI to do level 50 quests. In the mission, he yells at people in all caps with lots of !s, saying he is herding things and no one should attack until he says so, then he runs around missing some mobs and picking up others, and does a mediocre job of keeping threat up on the ones he happened to get, while other groups that he missed aggro on people who are then attacked, which he doesn't notice or do anything about. At some point, he asks you if you want to join his SG. If you refuse, he says that's unfortunate and kicks you from the team. This repeats.

It's pretty epic lame.

Flipping doesn't have anything to do with "the same item over and over". It's just buying something with intent to resell it at a higher price. Virtually all stock "investment" is pure flipping.

But they're not. "Raise prices" is in general false -- the overall trend of prices due to flipping is necessarily downwards due to market fees. It cannot be otherwise.

Highest bidders and lowest listers is true on every single occasion. Raising prices is not usually true, or even often true.

Not necessarily true, and indeed, it can't be generally true, because transactions always destroy inf, meaning there's less inf when there are more transactions.

That doesn't mean prices are higher. It could mean that prices are on the average lower, but we're extracting energy from the differential between high and low prices.

Imagine an item which sells for 1 inf half the time and 100k inf half the time. Average is 50,000.5 inf.

Now imagine that I start bidding 100 inf and selling at 40k. My 40k sales are quite profitable for me, even though they're way lower than the previous high point. The average is no about 20,050. Lower average, but I'm making money.

Suggestion: Don't make claims about statistics unless you've got a math background to make them from.

Empirically, this is not the case. The market tends not to be hugely stable in the game because of RNGs and regular fluctuations -- demand is higher on weekends, for instance. Part of what flippers do is move items around to meet that demand, buying items during the week and selling them on weekends.

No, people would just vendor everything.

I'll take Crafting Badges for 500, Alex.

One makes for a more pleasant game than the other.

Here's the thing. Unstable markets hurt random bystanders. Stable markets hurt only the people who were actively trying to take advantage of the unstable market. If you don't have any interest in the market, you're better off with a stable market -- meaning that stable markets are good for the huge majority of people who don't play the market and don't read this forum. Unstable markets can be profitable to people who want to play them, but even then, they're annoying -- and you can often make money more reliably in a stable market.

Basically, if I'm given a choice between making life hell for newbies and people who don't have the time or inclination to think about the market, or mildly inconveniencing a small number of people who don't care about the newbies and casuals... I'll take the latter.

It's not "buyer" vs. "seller".

Agreed. And then there's the other aspect of it: I suspect that, on the whole, the average price when flippers are around is lower than the average when they're not. Note that this isn't the same as saying that'd be true of the average prices of items that people are likely to flip compared to the average prices of things people aren't likely to flip. There are day traders in the stock market, but there aren't many people trying to day-trade regular, non-collectable, postage stamps... Because there simply isn't enough money involved to make it sensible. The stuff that's too cheap to bother flipping isn't cheap because it's not flipped, it's not flipped because it's cheap.

Realistically, it looks to me as though Alchemical Silver is really worth about 50k inf. Yeah, it's awesome being able to get a stack for 10k in a few days... But it sucks not being able to get any at all for under 100k when I just need one. Overall, the stable 50-60k market is better for me than wild fluctuations, at least when I'm in my role as "I just want to finish putting enhancements on my mastermind, is that too much to ask?"

Every profession. I had them all maxed out on one toon or another, and I always made money at it. Just a matter of paying attention.

... This is not the first game in which I've been a marketer.

I have a firm policy of not dating people who won't play computer games with me. :P

(This is oversimplified, but basically... In the long run, if you have to choose between your hobbies and your love, unless your hobby was "underaged girls", something is wrong with your relationship.)

I've been on a couple of teams with a stalker who was doing stuff a scrapper couldn't have. Say, taking out that one annoying lt in each pull before it got a single tick of action. That paid off nicely.

In the only other one I played much, while many items were worth less than the sum of their parts, you could easily make a fortune levelling most trade skills if you knew which ones were the other way around...

You have proof of this? Please identify the method by which you determined which players participated in each of those transactions.

If they're listing for less than the flipper is listing for, they get sold before the flipper's do.

Yup!

Which is pretty much obvious, because if the flipper's transactions aren't going through, there's no flipping.

What does it "need" an asterisk for? If it doesn't have that asterisk, who dies?

You miss the point. If someone else is listing the item for less, the flipper isn't selling items and is not affecting sale prices.

Except I don't concede it. I concede that there exist purely hypothetical scenarios in which you can point to someone who would have been better off without the flipper, but I don't concede that, in general, "patient and intelligent" buyers and sellers are "hurt". In any given transaction where you think a flipper "hurt" someone, I can point to someone else who got a better deal as a result of the change.

Really, though, what you're doing here is revealing the problem. When you say "patient and intelligent buyers and sellers", you really mean "cheap and greedy people who want to get better deals than other people get". Those are the people who are "hurt" by the flippers -- because those are the only people who benefit substantially from a highly volatile market.

The people who are getting stuff for half its usual price are getting it by paying someone else less than that person would have gotten in a more stable market. They're hurting someone. The people who are selling stuff for twice its usual price are getting it by charging someone else more than that person would have gotten in a more stable market. They're hurting someone.

The flippers "hurt" only the aggressors who are making the market suck in the first place -- the people who call it "patient and intelligent" when they take advantage of other peoples' ignorance to pay less and sell for more, but "abusive" when someone else pays more and sells for less.

No, but as a general rule, we discount sociopaths when talking about "everyone", because fair's fair; they discount us, we discount them.

The game community as a whole benefits dramatically from stabilized prices in the middle of the range, and in the long run, that tends to lead to a market where it's easier to buy something quickly without paying such a huge premium.

But apparently, the way in which a stabilizing force is good for other people is a bit too subtle?

Ahh, yeah. Him.

The guy who has sent me something like 30% of the requests I've ever had as to whether I'd like to join a super group.

Yes, he's a sucky tank. Yes, he's a jerk. Grats on finding yourself back in Atlas Park -- he booted my level 9 tank out in the middle of a mission, leaving me in PI at, well, level 9. Lucky for me I had a WW teleporter.

And yes, he's an abysmal tank. It's not enough that he yells at people about "herding" and so on... He doesn't even actually pick up all the groups in the room! We're not talking about high level blasters managing to peel a couple of critters off him; we're talking critters on which he has no aggro at all.

I think I have him on global ignore, but maybe I shouldn't, because I suspect I could have endless fun stringing him along. "Oh, yeah, I'd love to join your SG, but I have to say goodbye to my current SG." "Oh, man, the guy I was gonna talk to logged while we were in the mission, can you hang on a bit?"

I mean, hey, it's free levels for lowbies, as long as you bring wakies for yourself.

(I should point out, BTW, that he's done this to multiple toons ALL OF WHOM have clear RP backstories. And the reason I gave for not joining his supergroup was that he's not my spouse, and I'm pretty particular about only being in supergroups which are run by my spouse. My spouse knows where I sleep, and perhaps more importantly, where I don't sleep.)