PoE Hedge Fund - OFFICIAL NO-GO AS PER GGG

MysteriousVisage, thanks for the reply. It's nice to meet a fellow trader on here. I appreciate you taking the time to think about this and respond. I'll break down my response into sections.

"

MysteriousVisage wrote:

I see one problem, there is no actual investing happening here. At least not in the same sense as it occurs in the FOREX market place. The PoE currency market is in no way analogous to FOREX - as someone with experience in this area as well.
. . .
Additionally, anyone can trade in PoE but calling what you are doing "investing" would involve a very charitable interpretation of the word. You basically set a buy price and a sell price and then sit around waiting for PM's you - risk nothing. In my opinion what makes CFD trading fun or interesting is the risk factor trading on leveraged positions for higher returns.

So, you've got a really narrow definition of investment. Investment simply means to contribute capital towards a venture in hopes of profiting. Whether or not you are using leverage, trading on margins, etc., is simply details. In fact, most investments don't involve leverage, and many don't even involve risk necessarily. While FOREX certainly utilizes leverage, and thus increases the risk significantly, I'm not saying that I'm starting a fund based on a FOREX-clone approach to currency trading. Also, as I mentioned, currency trading is one small part of the a diversity of strategies I use to accrue profit. It's relatively small and only happens when there appears to be reversals or major momentum in our market. Otherwise, the buy/sell spread is too significant and the market fluctuations too small to find much room for profiting.

Also, my strategies don't consist of setting my calls and puts and then waiting for offers. Far from it. I engage in active accrual of currency through engaging in profitable runs, opportunistic flips, etc. It's much more engaged than you're imagining. If it were as easy as setting a buy/sell, then everyone would be turning 50c into 1200c every week. Protip: they don't, because they can't (or occasionally won't). Also, I wouldn't enjoy it nearly as much, and I wouldn't be pursuing this as a venture.

"

The price of currencies in PoE is more or less fixed, so for a 20% take you're really not doing anything except being paid a premium for your time. The only real volatility is in the exchange rate of exalts to chaos and that market is not as large as many would speculate.

This is wrong. The price is certainly not fixed. It is influenced by a diversity of mostly fluctuating factors. Some are constant (currency recipes, drop rates), but most are changing constantly and result in volatility that can be profitable (league timing, size of active player base, functional relevance of currency given league mechanics, etc.).
And again, currency trading is a small part of what I do. Item pricing is most definitely not fixed. Flipping deals are out there if you know where to look. Composite items sell for more than constituent parts. Currency drops while pursuing other goals. Corruption and linking rates can be favorable for some items. In other words, there are many ways to make money, but most people aren't good at it or don't have the patience for it. I am and I do.

"

Why would you even take 20% of a person's return? It doesn't make sense and smacks of a scam, you should be able to take some fee sure but it should be very small thus your incentive is to grow the fund not simply skim chaos from the few investors you get. The fee should be proportional to the service provided and this service, from my perspective, is quite minimal. If trading is so fun for you why charge a fee at all just give people a proportion of their trade equal to the growth in the over all account (fund) - this would be a more honest way to run things. You will make more currency by virtue of being able to facilitate more bulk trades than smaller investors anyway so you will see more growth and can scrap the scam fee.

How is a transparent fee analogous to a scam? That makes no sense. Additionally, you either seem to think hedge funds are scams, or else you don't know how they work. Common practice is for the fund manager to make both a salary and to take a percentage of the fund's performance within a given time period. That's how such funds work. What I'm proposing is actually a lot less involved and expensive than most fund structures.
I mean, I'm providing a service for people. I'm literally making them money. Why on earth would I do that for free? It makes no sense to ask that of someone, and to call it a scam is so far off base.
I've considered other models for monitizing this service, but they tend to be less favorable to the investors and a lot more work to keep up with (think commission fees). Taking an agreed upon % of growth as payment for that growth is reasonable, transparent, sensible, and motivating for me as manager. The more $$$ I make you, the more money I make me. And to say that this service is minimal does it a discredit, I think. If I can grow ~50c into over 1200c in a week, then I can offer people sizable returns. Again, figuring out how it will scale with large sums will be a challenge, but I think I can nonetheless offer significant returns on investment. If I gave someone 50c and they gave me back 1000c a week later, I'd consider that valuable as hell.

"

I'd be willing to invest the 50-100c and give this a shot OP. Just shoot me a PM.

I'll do that, saysay, thanks.

"

Shagsbeard wrote:

I had a pretty thriving 'business' in Dark Age of Camelot. I was honest with people telling them specifically my costs and asked them only to cover them. I made 'profit' off good will... and far more profit than my 'competition' made by trying to figure out how much to charge so the players wouldn't feel taken advantage of.

End game was that there was really no value to anything in the game, even though I once thought that there was. You'll get there too. A stack of 100 exalts only holds value because you imagine it should. They really don't. You'll either eventually quit playing, or you'll simply hoard them for their perceived value. Maybe you'll trade for an item or two which will quickly make the game even that much more boring.

I can't see it lasting.

See... money in the real world is power. Political power. You can make actual change to your environment with it. You can change "the game". Here, nah. Currency stops being meaningful, either at the end of the league or when you have what ever items you might want.

That's the problem with you Shag. It's not that you don't have working parts. It's that those parts are shoved so far up your proverbial ass. You make claims and support them with outlandish assumptions. The basis on which you align process is logical. Post, the excretion stinks like shit.

Henceforth your folly. A stack of 100 exalts only holds value because you imagine it should. Moving parts, as it were. It's contestant on the whole. Let's, for a split second, assume that everyone in their right mind is factually aware that pixels don't hold "value" in the context of this discussion and your individual perceptions of what "value" is.

Pretty sure that's the basis of your screwed up fallacy argument. You know, the one where you "imagine" yourself to be the only person on an even keel. People are aware of the value. They are aware of the value it hold's to them. As an individual. In context, who gives a fuck if that "value" does not translate into "real world" "monitory" or "power".

I'll take a page out of your book.

"Value" "Power" and "Wealth". Changing the environment. Wild speculation here I know. But's let's "imagine" that all of these things aren't exactly what you depict them to be. Value is arbitrary. Power is arbitrary. Wealth is arbitrary. Personal whims. Of which, the source of perceived value, power, and wealth see's fruition.

If nobody enjoyed what they did. What the fuck is the point of living?
Your logic is ridiculous. To assume that anything, which is not infinite, has no value.
Value to an individual "like anything" IS based on what it means to that individual. Value isn't and does not have to be synonymous with infinite, nore any of your prescribed boundaries.

In this case, "value" may be the act of the trading hence the "enjoyment". That's pretty simple and respectable. No?

On the other-hand, you know what else only holds "value" because "we", in context, perceive it too? That's right, the answer is

"

magicstop wrote:

So I was thinking that it would be interesting to use my skills to start an investment opportunity of sorts for other players. I was thinking of something like a hedge fund. For those unfamiliar, a hedge fund is basically an investment opportunity for people who contribute to a fund that is then aggressively traded and managed. The fund pays out as it profits, so the contributors essentially earn free money. Of course there are fees for joining and participating.

My biggest concern with this is that you claim you don't need any in-game currency to trade and make a ton of profit. The only reason this happens in the real world is because corporations have limited funds and use this as a way to earn both their customers and themselves more funds. So if you're doing this for "fun", what's stopping you from quitting tomorrow when it's no longer "fun"? ..like the other user did in 2016?

The reason people won't give you funds to do this: this isn't the real world, and there's nothing to guarantee the transaction. Worse, there's no path of remediation if you fail to live up to your promises (ie: can't sue, can't enter arbitration).

While your intentions might be noble --if we give you the benefit of the doubt-- the idea is doomed to fail (by fail I mean that this won't last long). People with little currency in game hold on quite tightly to that currency, and those with plenty of currency don't ever need to do something like this. Because this is a game, players rank instant gratification much higher than delayed gratification. That's one reason why people complain so much about the current state of trading in game.

"

magicstop wrote:

...I can raise money for my own personal benefit without issue. But I'm interested in something bigger than that. I'm not in need of "funding" as you put it...

Then prove it and link your verified stacks of mirrors here. ;-)

For the naysayers, a shavs isn't quite as important as a retirement plan. It is safe to say I would be ok to lose the investment and see tomorrow's sun rise. I think op has a good idea if it is what he considers fun gameplay. I would hate it. That said, pm me and I would give you 1k chaos, op. Someone has to have some faith.

As for my criticism, if you don't set a life span on the deal, should we be expecting substantial returns on our investments through the eternity of standard? And what if I give you 50c the first day of a league, ? Will I get returns for the next 3 months? Questions worth considering imo

cipher_nemo, thanks for expressing your concerns. I think you speak for a lot of players when you mention them, and as I indicated in my OP, the confidence/trust issue is the biggest hurdle to overcome. I'm actively brainstorming solutions, but if you have any suggestions, I'm definitely interested.

I do want to clarify that I never meant to claim that I "don't need any in-game currency to trade and make a ton of profit." As with anything, you've got to have money to make money. I simply meant to communicate that I don't need your money to make my money. I'm good on moderate to large amounts of currency. No, I'm definitely not rolling in mirrors, but I just bough a 6L Shav's, a slew of 21/20 gems, etc., on my most recent income and I'm gearing up to do it again this week. What I do need, however, is your money to make you money. I've no interest in giving away hard earned money. Just in sharing my skills with those lacking the knowledge or time.

"

magicstop wrote:

MysteriousVisage, thanks for the reply. It's nice to meet a fellow trader on here. I appreciate you taking the time to think about this and respond. I'll break down my response into sections.

"

So, you've got a really narrow definition of investment. Investment simply means to contribute capital towards a venture in hopes of profiting. Whether or not you are using leverage, trading on margins, etc., is simply details. In fact, most investments don't involve leverage, and many don't even involve risk necessarily. While FOREX certainly utilizes leverage, and thus increases the risk significantly, I'm not saying that I'm starting a fund based on a FOREX-clone approach to currency trading. Also, as I mentioned, currency trading is one small part of the a diversity of strategies I use to accrue profit. It's relatively small and only happens when there appears to be reversals or major momentum in our market. Otherwise, the buy/sell spread is too significant and the market fluctuations too small to find much room for profiting.

Perhaps I was too focused on the currency flipping part of your strategy, this was my mistake. I have found ample room to profit through buying and selling currency to the tune of several hundred chaos per session, but it's certainly not investing it amounts to hoping on my part. The only reason I suggested I didn't feel that was technically "investing" isn't because I was trying to tear you down, but because when I engage in it it is nothing like investing - although it may satisfy the strict definition. You do what you want, but I would never partake.

"

This is wrong. The price is certainly not fixed. It is influenced by a diversity of mostly fluctuating factors. Some are constant (currency recipes, drop rates), but most are changing constantly and result in volatility that can be profitable (league timing, size of active player base, functional relevance of currency given league mechanics, etc.).
And again, currency trading is a small part of what I do. Item pricing is most definitely not fixed. Flipping deals are out there if you know where to look. Composite items sell for more than constituent parts. Currency drops while pursuing other goals. Corruption and linking rates can be favorable for some items. In other words, there are many ways to make money, but most people aren't good at it or don't have the patience for it. I am and I do.

Again, perhaps that's been your experience. It certainly hasn't been mine. I can quite easily set my currency prices and ride the same price out for weeks at a time with little to no adjustment. As I said I don't buy or sell exalts because that's far too risky for what I'm trying to achieve. Thus, I have not noticed any of the volatility you speak of. I think there is initially quite a bit of uncertainty when the league starts but by the end of month 1 the majority of the prices have stabilized. I'm not, nor was I ever referring to item trading only to currency flipping as I mistakenly assumed this was one of your main activities.

"

How is a transparent fee analogous to a scam? That makes no sense. Additionally, you either seem to think hedge funds are scams, or else you don't know how they work. Common practice is for the fund manager to make both a salary and to take a percentage of the fund's performance within a given time period. That's how such funds work. What I'm proposing is actually a lot less involved and expensive than most fund structures.
I mean, I'm providing a service for people. I'm literally making them money. Why on earth would I do that for free? It makes no sense to ask that of someone, and to call it a scam is so far off base.
I've considered other models for monitizing this service, but they tend to be less favorable to the investors and a lot more work to keep up with (think commission fees). Taking an agreed upon % of growth as payment for that growth is reasonable, transparent, sensible, and motivating for me as manager. The more $$$ I make you, the more money I make me. And to say that this service is minimal does it a discredit, I think. If I can grow ~50c into over 1200c in a week, then I can offer people sizable returns. Again, figuring out how it will scale with large sums will be a challenge, but I think I can nonetheless offer significant returns on investment. If I gave someone 50c and they gave me back 1000c a week later, I'd consider that valuable as hell.

Honestly I've never been involved with hedge funds -although I've had lunch with George Soros on one occasion (not pertinent but I felt name dropping would be fun)- because I prefer to actively manage my investments. Simply put, you can ask whatever you want and pretend you're managing a hedge fund, but in the end you're just offering an in game service. A service I would not pay for and one I think it is a bit dubious to seek payment for. In the end you do what you see fit, I'm merely offering my perspective as a potential client as one is want to do when ideas are posted in public forums. You are charging your clients a fee to use their currency to make you money - this would be fine in the real world but I think it a bit silly in the world of arpgs. Feel free to disagree.

"

quicksixteen wrote:

For the naysayers, a shavs isn't quite as important as a retirement plan. It is safe to say I would be ok to lose the investment and see tomorrow's sun rise. I think op has a good idea if it is what he considers fun gameplay. I would hate it. That said, pm me and I would give you 1k chaos, op. Someone has to have some faith.

As for my criticism, if you don't set a life span on the deal, should we be expecting substantial returns on our investments through the eternity of standard? And what if I give you 50c the first day of a league, ? Will I get returns for the next 3 months? Questions worth considering imo

Thanks for the offer, quicksixteen, and for the vote of confidence (or at least the willingness to roll the dice). I'll PM you about setting you up as an initial investor if this moves forward (though initial investments would likely be capped lower than 1000c, just to ensure a smooth launch). Your willingness to give it a shot is much appreciated; hopefully I can help make you some scratch!

As for your concerns, currently, I'm imagining a setup where I would guarantee your deposit returned within the first X number of days (might depend on size of deposit; would have to think about ratios or scaling factors). After that, you would continue to receive your 80% (or whatever it ends up being) of the fund's growth over whatever length of time you wished to participate. You could withdraw partially or fully at any time (given enough processing time for me to ensure that your funds are liquid and available). This would of course impact your profits. I think it makes sense to say that each fund would conclude at the end of each league and would be paid out in full. I don't play enough standard to want to setup a fund there initially, though I may if a league fund is successful.

"

MysteriousVisage wrote:

Honestly I've never been involved with hedge funds -although I've had lunch with George Soros on one occasion (not pertinent but I felt name dropping would be fun)- because I prefer to actively manage my investments. Simply put, you can ask whatever you want and pretend you're managing a hedge fund, but in the end you're just offering an in game service. A service I would not pay for and one I think it is a bit dubious to seek payment for. In the end you do what you see fit, I'm merely offering my perspective as a potential client as one is want to do when ideas are posted in public forums. You are charging your clients a fee to use their currency to make you money - this would be fine in the real world but I think it a bit silly in the world of arpgs. Feel free to disagree.

Damn, man. When you name drop, you name drop big. I'm not at all ashamed to admit that I'm jealous! I'd love to hear about the circumstances of that lunch.
Anyway, I hope I didn't come off with too much hostility. Again, I appreciate your critiques. I ultimately do disagree with you about the appropriateness of charging in-game currency for an in-game service. I think it's fair and legitimate. This game already has a strong history and culture of charging in-game fees for service, such as for mirroring service, or paying people to power level you, or paying people for Shaper runs, etc. I feel very comfortable asking people for a percentage of their profits that I have earned for them.

In terms of currency fluctuations, you should scope out poeninja if you haven't already. You can view some of the historical price fluctuations, although I do wish they offered a bit more magnifying power when reviewing the data. Great site, nonetheless. I've used it to make sizable profits off of currency pairings, such as when Annulment Orbs started shooting up in prices a few weeks ago. I've also had some losses, such as losing .1c per unit on some Blessings that I sat on too long.

I don't understand how it would scale....

If you have 100 chaos, you can make trades with chaos. If you have 1000 chaos, you can make larger trades. At 1000000 chaos.... is there a point? Does anyone trade in sums that large to make a point in having an investment past a certain point? I get if the investment is used to craft mirrorable items that are then charge mirror fees etc etc then possibly? But currency flipping? Does having a large investment allow you to pay other people to run uber lab as employees (pretty sure someone did that in a previous league to success)? If it isn't scalable wouldn't that mean the more investors there are /more currency invested in you, the less payout per person / investment would be?

I have no investment experience myself other than currency flipping in poe. My real world job is owning a successful hobby gaming store, so I'm just curious.