PoE Hedge Fund - OFFICIAL NO-GO AS PER GGG

EDIT - AS PER GGG'S RULING, INVESTMENT FUNDS WILL NOT BE ALLOWED. AS SUCH, THIS FUND WILL NOT BE TAKING PLACE. PLEASE SEE PAGE 7 FOR MORE INFORMATION. ALL INITIAL DEPOSITS WILL BE RETURNED WITH AN ADDITIONAL 50% GRATUITY AS A WAY OF SAYING "THANKS, SORRY IT DIDN'T WORK OUT."

So, I want to float an idea that's been bouncing around my skull for the last few weeks. I'd like community feedback, as well as to make sure I wouldn't be crossing any ToS lines.

I'm very good at playing the market in PoE. Between certain methods I have for generating currency and my constant market vigilance and trading, I am able to pull in quite a bit of currency consistently. This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

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.

In PoE, I think a very simply structured fund would be easy to start and maintain. There would be an initial joining fee and deposit. Then funds would be paid out on a weekly basis as the fund grows. The payout would likely be something like 80%. So for instance, if you deposit 100c, and then the fund grows 10% in a week, you would receive 80% of the 10% of overall growth, relative to your deposit. So 10% of 100c is 10c, and 80% of that is 8c. So you would make 8c in a week just for having your funds invested. The 20% would be my ongoing fee, so I profit for my actions and trades.

There are a diversity of trading/money-making opportunities in PoE. From currency trading, to specific runs, to selling certain niche items, to flipping items, money can be made if you know how. However, most people are interested in simply playing the game. They don't have the time or interest in the economic aspects of the game. This would be a great opportunity to take advantage of this component of the game without actually having to do anything.

Now, I know the biggest hurdle here is trust. Who am I? Why would you trust me with your currency? What kind of agreements are enforceable in PoE? In truth, I'm still struggling with this challenge a bit. I mean, I've been playing PoE on this single account since closed beta, and I've got over $1500 invested in support packs and MTX, so I'd never do anything to get banned. I've had countless successful trades, and I continue to do so. But I know that may not be enough for most people. I've been thinking about other options, such as having 24/7 streaming of the trading account so that people can monitor all transactions and reference it like a log to ensure that there is total transparency and no funny business. I would be open to hearing other suggestions for how to inspire confidence in such a venture.

Of course, I think after the first couple of weeks, when people start profiting and exceed their deposit in profits, they are going to trust the system. At that point, there is literally nothing to lose. But I know I'd need to convince people to get there first.

So, any thoughts? What are your opinions on such a venture? Would you participate? How would you secure it publicly? Are there any potential problems that you can't see your way around? Are there any ToS conflicts?

Oh, and in case I haven't been clear, all references to "money" and "currency" are to in game currency only. I'm not looking to break the ToS by involving real money, obviously.

So yeah, let me know what you think and if you'd be interested. I raised 1250c from 55c last week, and I'm looking to keep doing it. It'd be nice to help others out in the process and to make additional profits for myself at the same time.

Cheers!

This has so many problems that I can only scratch the surface:

1) Value in this game is an abstract notion. You talk about currency like it's real money. It's not... and the market doesn't treat it the same as a real money market would. It's a close enough approximation, so you wont get in too much trouble here.

2) The total wealth in the game is really small compared to real life economies. You can only take so much out of it before you start seeing that you're affecting the market. Your scheme has to get value from somewhere, and your "investors" are a large chunk of the source. You're essentially giving back what they've already earned.

3) It's going to be a ton of work and you'll tire of it in a week or so and ditch your investors. Wont even have a contract they can enforce on you. You'll just stop playing out of self-preservation. There's a good reason that hedge fund managers make a lot of money. It's a lot of work.

4) Forgot the big one: Your income isn't proportional to your wealth so much as proportional to the time you spend on it. You wont be able to make more and more as you gain investors. You'll find that you skills turning 20c into 1000c wont translate into turning 20ex into 1000ex.

Good luck with your experiment though. I hope you've thought through the negatives before you take people's investment.

why though? if you are that good and active at trading then you don't need anything to get you started and you can keep all the profit to yourself.

Some people would only see this as a scam, and a 24/7 stream would not make a good way to allow people to see what you are making and how much they should be getting. (Ohh no i "DC'd")

In short people would get pissed at you, report you heavily and that would possibly result in a temp ban, GGG may also see large amounts of items/currency entering your account with nothing gained (from your funders) and see that as potential RMT, others would actively out trade you or even manipulate the market to run the fund into the ground.

"

Shagsbeard wrote:

This has so many problems that I can only scratch the surface:

1) Value in this game is an abstract notion. You talk about currency like it's real money. It's not... and the market doesn't treat it the same as a real money market would. It's a close enough approximation, so you wont get in too much trouble here.

2) The total wealth in the game is really small compared to real life economies. You can only take so much out of it before you start seeing that you're affecting the market. Your scheme has to get value from somewhere, and your "investors" are a large chunk of the source. You're essentially giving back what they've already earned.

3) It's going to be a ton of work and you'll tire of it in a week or so and ditch your investors. Wont even have a contract they can enforce on you. You'll just stop playing out of self-preservation. There's a good reason that hedge fund managers make a lot of money. It's a lot of work.

EDIT:4) Forgot the big one: Your income isn't proportional to your wealth so much as proportional to the time you spend on it. You wont be able to make more and more as you gain investors. You'll find that you skills turning 20c into 1000c wont translate into turning 20ex into 1000ex.

Good luck with your experiment though. I hope you've thought through the negatives before you take people's investment.

Shag.

1) Magic literally stated that it's "obvious" that all references to "money" are towards in game "currency" and not "real money". Clearly, not "obvious" enough for you. Even when all obscurities are cleared, you still find someway to miss the point. "The market" is relative to the product. It's not rocket science. Pretty simplistic notion to grasp. Doesn't require "Shag" level clarification. Which tends to be more annoying than helpful in all aspects.

2) Total wealth? You mean, how the game automatically has an influx of wealth every nano second a user is participating in it? Real life economies eh? Of course an affect on the market is going to be present. It's called capital and capitalization. Just because you aren't capable doesn't mean everyone else with a vested interest isn't.

3) Who the fuck are you to tell someone what they will tire of and in which time frame they will do it in. Quite honestly, posting asinine shit on the level you do it is a lot of work. One might think you would tire of it in a week. Thing is, you don't have investors. However, that's little reason to try and sway others away from opportunity; just because you're an old prude. Magic "enjoys" playing the market. Sometimes more so than Magic "enjoys" playing the game itself. To put that into perspective for a simple mind. How long have you been playing POE? Take that head out your ass and think real hard about the involving contrast between "length" "enjoyment" and "activity".

EDIT: 4) Insert randomly generated numbers /w even more so fabricated and unsupported logic.

Good luck with your continued shit posting though. I really hope that you are able to comb through all the negative connotations before you let loose your bucket of rain upon an otherwise perfectly sunny day.

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magicstop wrote:

I'm very good at playing the market in PoE. Between certain methods I have for generating currency and my constant market vigilance and trading, I am able to pull in quite a bit of currency consistently. This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

"

lagwin1980 wrote:

why though?

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magicstop wrote:

This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

"

AmityXIII wrote:

This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

"

lagwin1980 wrote:

why though?

[/quote]

Still dose not explain why he can't just do what he is doing solo rather than asking people to fund him

"

magicstop wrote:

I'm very good at playing the market in PoE. Between certain methods I have for generating currency and my constant market vigilance and trading, I am able to pull in quite a bit of currency consistently. This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

"

lagwin1980 wrote:

why though?

"

magicstop wrote:

This is fun for me - there are days I prefer playing the market to playing the rest of the game, in truth.

"

lagwin1980 wrote:

why though?

"

magicstop wrote:

This is fun for me

"

lagwin1980 wrote:

Still dose not explain why he can't just do what he is doing solo rather than asking people to fund him

I tried to make that clear in the OP; sorry if I didn't.

The idea is that I enjoy trading. I'm doing it anyway. As you pointed out, 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, but I am interested in making something new, interesting, and compelling out of the already enjoyable trading process.
Again, I get it. It's going to be hard to convince people that I'm not out to scam them. I'm still brainstorming solutions, such as starting with friends and clan-mates, and having a public feedback thread as well as an ongoing earnings report. You'd be able to compare the earnings report with the live-feed with the feedback, etc.
But out to scam, I'm not. I have no need of scamming. I am interested in making more currency by trading for others, though. I'm also interested in generating profits for investors. The truth is, it's fun. Successful hedge fund managers don't make it by being solely interested in becoming rich. You have to love trading in order to make it that far. There's a reason so many people trade for a living, or even go broke trying. I currently trade IRL for my income, and I enjoy doing it in game as well.

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Shag, thanks for your feedback. I'll take it point-by-point just so I can attempt to address it all.

"

1) Value in this game is an abstract notion. You talk about currency like it's real money. It's not... and the market doesn't treat it the same as a real money market would. It's a close enough approximation, so you wont get in too much trouble here.

All money is abstract in our global economy. That's not at all an issue. As far as the PoE market, it does actually tend to treat its currency in a similar fashion to how real currency is treated. I trade FOREX, so I have some experience in the subject. I think your last sentence is correct. I'm not worried about this point. Also, I wouldn't strictly be doing currency trading. And riding the fluctuating value of currency is part of trading within a market. Sure, you can lose your ass when EX goes from ~50c to ~100c within a few days. But you can also make a killing. It's about being an active trader armed with the right tools and strategies.

"

2) The total wealth in the game is really small compared to real life economies. You can only take so much out of it before you start seeing that you're affecting the market. Your scheme has to get value from somewhere, and your "investors" are a large chunk of the source. You're essentially giving back what they've already earned.

The total wealth of the game is constantly growing. Every day new currency is generated. You can look at currency values over time (scale = years) to see this. That's not a problem. It simply means you have to stay abreast of current values so that you don't lose capital to inflation. You're also (if I'm interpreting you correctly) pointing out that trading is a zero-sum game. First, I'd argue that this isn't nearly as straight-forward as it is with real-life trading. In a video game, there are value metrics that have nothing to do with currency. Some people see currency only as a means-to-an-end in order to enjoy playing the game. If they enjoy grinding a map, and they happen to get currency or a valuable item in the process, it's just icing on the cake. So zero-sum, it's not. That being said, IRL trading often IS zero sum, and that's not a problem. For instance, I trade options. It's absolutely zero sum. If I make money, it's because someone else just lost money. That doesn't prevent trading by any means. It just means that there are fewer successful traders than there are failed traders. In PoE, that simply doesn't matter, because it's not a primarily trading game. People are mostly here to grind and blow shit up. A lot of people sell things for a small loss simply because they want the money and they want to get back to hosing mobs.
My "scheme" would get value from a variety of places. It would get value from investors, certainly, but that is basically seed money. The value is derived from profitable runs and currency generation, profitable trades, etc. I've already got the history of making money. I'm just looking to expand that. I wouldn't only be giving back what people have already earned. I'd be giving back PLUS some, which is the point of a fund.

"

3) It's going to be a ton of work and you'll tire of it in a week or so and ditch your investors. Wont even have a contract they can enforce on you. You'll just stop playing out of self-preservation. There's a good reason that hedge fund managers make a lot of money. It's a lot of work.

This part simply isn't true. Poor speculation on your part. Again, I already trade a lot. I'd simply be enhancing that process. In addition, I'd likely have an agreement in which I would guarantee the return of initial deposit within a certain amount of time. That way, even if I decide to quit afterwards, there's been no money lost for the investor. It is worth thinking about how to decide on reasonably sized investments, though. With this concern in mind, I'd likely be looking to limit the investments to a particular size that feels manageable within a reasonable time period.
By the way, when you love doing something, it's not work. I trade all day for a living and for fun. I don't consider it work, even if it takes considerable time and effort.

"

4) Forgot the big one: Your income isn't proportional to your wealth so much as proportional to the time you spend on it. You wont be able to make more and more as you gain investors. You'll find that you skills turning 20c into 1000c wont translate into turning 20ex into 1000ex.

This is a great point. I've thought about this a little, but I don't know that I have a solid response yet. There are certain trade opportunities that I currently don't take due to their prohibitively expensive nature, however. Those are the trades that generate profits on the scale of EX rather than C. With scaled investment capital, I'd be able to engage in scaled trades. Some of my income generation would certainly be less effective as I start dealing with larger sums of currency, however, and it's worth considering what impact that will have. Well said.

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Amity, thanks for attempting to get people to read the OP. All too often, people read something, respond in their head, and have an argument constructed before they even finish taking in the whole thing. I know this idea will be controversial, but I'm hoping people will take the time to read it and think about it.
That said, I'm all for critiques and concerns, as long as they aren't shitposts. I want you all to help me poke holes in this to make it better, ultimately.

There was another guy that came up with a similar idea. He at least knew how to spell hedge fund.

https://www.pathofexile.com/forum/view-thread/1405937

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Hallsttattian wrote:

There was another guy that came up with a similar idea. He at least knew how to spell hedge fund.

https://www.pathofexile.com/forum/view-thread/1405937

Thanks for sharing the link. It looks like that guy was using different investment methods for the most part, so I'm not sure I'd run into the same problems. I'll be researching that more, however. I may even reach out to the guy to see if he's got any useful feedback or advise.

Also, you can fuck right off with your grammar snark.