This weekend wasn’t so good on the trading front. For the first time, I’m looking at significant losses on some of the commodities that I ventured in. Now that the market has pretty much collapsed, I can safely post about it without tipping off others 🙂
It all started when I decided to take a peek at the market for POS modules, specifically control towers. I was curious to see whether Tyrannis had affected the market to any extent, despite PI not really being fully deployed yet. Letrange has predicted that there might be a good market in these towers in the long term, due to the fact that towers are used for everything in 0.0 and they are constantly getting destroyed. Previously, NPC sellers provided a limitless source of supply but with PI, these will have to be produced by players. And they are pretty far down the production chain, so it’s not like every noob with Industry level 1 will be making them.
Not so surprisingly, at that time the market had not even twitched. What was surprising was that the margins between the buy/sell orders was actually decent. Not fantastic, but ok. I have a personal guideline that I don’t trade in an item unless there’s a 10% margin. I don’t have any of the trading skills that reduce taxes and broker fees, so that means I lose a further 3% on every buy/sell pair. The small control towers had buy orders for about 90 million, with sell orders slightly below the NPC price of 100 million. So that barely makes my personal ROI threshold, but volumes seemed decent and best of all, there didn’t seem to be an insane and clueless undercutter like Mr 1111. He had seemingly taken a vacation, but now was back and happily suicide bombing the same markets again. Great job at “market PVP” there, enjoy your futile attempts to control the market while constantly getting undercut.
So I cautiously tried setting out a couple of buy and sell orders, and to my surprise sales were decent. I could sell roughly 1 a day, which is about 7 million profit for 2 orders. So I decided to buy more, including Gallente and Amarr flavours. These sold decently at first too, so I thought I was on to a good thing here.
And then on Saturday, CCP pulled all POS modules from NPC vendors.
I didn’t really notice it at first. All I noticed was that buy orders had suddenly dropped from 90 million to 60-70 million. The sell orders initially stayed stable, but then one or two crazies suddenly dropped the price by a million. Then 5 million. Like a herd of lemmings, the selling frenzy began.
It’s actually funny the way it mirrors a stock market crash, where it’s the stockholders themselves who hurt each other in the mad rush to sell NOW NOW NOW at any cost. When you really think about it, the people holding inventory in control towers are actually an absolute monopoly right now. There are none sold by NPCs, and PI isn’t up yet to get the materials for players to make them. Players can reprocess modules to get the materials (which was why the modules were pulled in the first place) but I seriously doubt you can make a control tower for less than the cost of reprocessed modules anyway. At the same time, players have no choice but to use these control towers. There are no equivalent substitutes. Somehow, in the absence of a baseline value provided by NPC vendors, the value of these POS modules goes into freefall. If players were trying to clear inventory before PI really hits, I would have expected to see this sort of crash earlier once it became known that the supply would shift to players in Tyrannis.
In any case, I am stuck with stock that is now selling for 10 million below my purchase price, even before considering taxes and fees. With the way the market is crashing, I have no choice but to try to liquidate as I have no idea what control tower prices will be like in the future. It may or may not be higher than the NPC price once PI settles down, but I don’t want to risk my losses deepening even further. I’ve tried to transport the Amarr control towers to Amarr to try to sell them (the price has yet to collapse as fast there). Hopefully that will mitigate my losses.
On the bright side, despite there being losses on an individual item level, overall my trading is still doing fine. There has been a particular market segment that still does well and the profits from that are very likely to exceed the losses from the small control towers, so there is still forward movement. Depending on the eventual butcher’s bill from this fiasco, I’m somewhere between 4.5 to 4.7 billion ISK. So there’s still plenty of ISK in reserve, greatly exceeding my expectations from when I started about 3 months ago.