Saturday, August 28, 2010

Pack Rats

It amazes me how much people collect for the sake of just having stupid shit. No, No, it's great to show off your guild bank full of enchanting mats...that you will never use. I see all the time other players showing off their stockpiles but yet they don't have anywhere near the liquid gold they should for maintaining a stockpile of such size.

I guess there is some glory behind just having 9000 inks in your bank. I've seen on other websites players showing off screenshots of their massive stockpiles. Who gives a shit? Seriously. Talk about the mechanics behind gold making not your damn e-peen. Especially for those that claim to be serious at making gold.

The issue is that you end up buying more than what you would ever need to meet a certain demand and normally for some markets you would never even have the opportunity to buy that much in the first place due to scarcity in the market place, especially at the price threshold you are trying to meet. The other issue is that, depending on the amount of time that you have to unload these mats, is if too much time occurs after your initial purchase then markets could crash or slowly decrease in value which in turn devalues your entire assets. If this happens are you even making a profit? You might even be lucky to just break even.

Depending on the market you can have some really high demand periods where it just doesn't seem like you have enough materials ever to meet that demand. Which is great! You buy up as much as you possibly can to create a good stockpile to meet it. But guess what? It isn't going to last forever. There will be a downturn in the market. Think of this. You end up buying a massive stockpile of epic uncut gems, let's say you invest 40 to 60 grand in gems at 80 to 90 gold per gem. Everything is going great but you begin getting through half of that investment and then markets fall and now there is a chance you could be taking a loss on those same investments. This is just a strategy that I would like to put in the mind of everyone. There is too much advice out there that just pounds your brain saying buy as much as possible. I'm all about having large stockpiles but there should be a limit to this business decision.

After a while you should have a pretty good feel for your realm's economics but even having a grasp on that you can see some bizarre swings in markets.

Questions for Comments
How large of a stockpile do you maintain? Do you have a limit? Have you ever had a bad buying experience with market crash?


Markco said...

The reason good auctioneers have such big stockpiles is that they buy materials below a certain price knowing they can eventually sell it back. If they were to stop buying then they would run out pretty quickly so they over buy on purpose. We make so much gold that we can continue buying and stockpiling in order to keep the competition from getting cheap mats. It's a vicious cycle because if we stop buying materials the price of our end products would go down an then all the items we bought would be less valuable so we continue to buy. You end up makin tons of gold and by default having tons of items left over.

Robbie said...

I do not have the space to hold onto vast amounts of items yet i do have banks/gbank full of stuff - thousands of ink - and strangely thorium ore.

The other day i spent about 20k on Cardinal Rubys - I think i would buy alot more stuff to play more markets but i am on one of the worst servers in terms of ah prices in Europe.

I will continue to hoard certain things until next Exp as long as break even i could not really care.

Yet i have to agree not much point in posting or putting up pics about how much you have i suppose that is just about showing off to a slight degree.

NakedJay said...

@ Markco,
I agree with you, I have had some epic stockpiles in the past but I've also had a feel for the markets on my realm. Depending on said market I would know how much I would need to stockpile to meet said demand. There is a supply threshold, that I know and you most certainly know, that you would need to maintain but not exceed.

But yes, all good serious gold makers have stockpiles but there are conditions that must be met to determine what are good investments. Of course price thresholds are a major factor in forcing your competition out. But as I have said in the past, scarcity of supply can cause prices to go up of materials, especially epic uncut gems, where you are unable to beat competition, it happens to all of us.

@ Robbie,
20k on cardinal rubies is always a good investment, I blew through 20k worth of red gems last weekend, cardinal cuts are always the biggest demand gems.

I have a list of things that I am hoarding as well for Cataclysm, my post was more talking about current business and not future stockpiles. Markco's list of items to stock for Cata is a great reference.

Anonymous said...

I think people confuse sales with profit. I don't want to "break even" or make just a few gold profit. It isn't worth the time. So I try to concentrate on the higher profit items (which fluctuates) and stay aware of my stock because the prices can drop pretty fast. If prices for mats are too high, I stop making the item. No one says you have to make xxx items per day - I think we just get into a habit of posting. My 2 cents.

Anonymous said...

NakedJay, you say that scarcity of supply causes prices to go up. That's true, but that's also precisely WHY you, and ONLY you, want to be the one who's stocking up and at the same time denying others. If your competitors know there's gold to be made, they WILL buy e.g. cardinal rubies regardless of whether you will. Then wouldn't that have created the scarcity of supply ANYWAY, whether you were the one who bought the rubies or not, which would result in exactly the competition you do not desire?

Don't be afraid to stockpile. Markets always fluctuate as you say, but they don't fluctuate so fast that you wouldn't have time to unload them before you sense lowering demand and prices of your products (unless an unexpected patch hits that completely screws the economics of that single item you're listing). Of course, you want to do everything sensibly.

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