Second Life Stock Market

Use the money to teach yourself how to invest wisely in RL stocks; this will have lifelong value. Also, despite having money to "throw away", never, ever do so without a reasonable assurance that those receiving it use it for the purpose stated -- there are no checks and balances in Second Life, none. I don't give money away ever; when I have money earmarked for entertainment I still expect certain value still from it.

At last somewhere i can learn about stocks and shares and investing at very little cost in a sort of real world way , I knew i would have use for that "Successful Personal Investing" manual i have here that i brought a while back to read up on and learn sod the risks i wont play with more than i can afford and what a great way to encourage real growth within SL.

Its more projects like this we need started and i agree theres loads of risks but hey wish i had of invested in the early banks and its got to be a better risk than the slot machines!

Good luck in the venture to all concerned.

You know as much as I do about the future, no matter how good you may be, or how much influence you may have (we both know that only a handful of individuals can add/remove significant weight to the the market) No one can truley attribute a timeline when underlying factors are out of their control, and they are out of your control (Unless your God, or the owner of the WSE posting as an alt), so "lifelong value" is a personal opinion or possibly an educated guess, that we all are making.




What, like the SEC...? As I have stated, when underlying factors are out of your control all you have is an educated guess, several examples can be pointed out clearly indicating that even in RL, reasonable assurance is not always what it seems.
http://www.sec.gov/news/press/2007/2007-53.htm
http://www.sec.gov/news/press/2007/2007-51.htm
http://www.sec.gov/news/press/2004-141.htm etc...




Wall street wasn't always Skyscrapers, Java, and Armani suits my friend (I recollect it all starting at a tree) Second life is just 5, give it a chance, their are already plenty of traders/scriptors attempting to address this very issue (SIC), I agree that some may get away with malice, ultimately, as history has demonstrated, the scales will tip in favor of the good natured.



Well I do agree, if you have no preconception about what you are doing, then you will fail and will continue to fail until you learn, in the meantime I will continue to ENJOY myself doing what I know how to do fairly well, it's also a shame you have to be so pessimistic about an exchange that has been operating for just over a month.

Tell you what, I'll even open a seperate account for you and throw $1000L towards the SL stock pick of your choice, just so you don't have to skip out on popcorn at the movies this weekend, or feel bad about "throwing away" the equivalent of a value meal at BK. If it does well I will split it with you 3 months from today, if you turn out to be right, and I lose my (ahem) virtual shirt, I still would have enjoyed the entire process and would not have missed it for the world.

Que the witty replies...

Oddly I mostly agree with your arguments, just not the conclusion. I'm not suggesting investing is without risk in any context (even U.S. Treasury Bonds carry the risk of a quickly devaluing U.S. dollar).

You can, however, minimize the risks involved, and I am asserting that the risks in RL are lower because of governance.

I am also asserting (and yes, it is my opinion, but a sensible one) that learning about RL investing is of greater value to the individual than "investing" (gambling really) in Second Life. Think SL will fund your retirement? Think SL will even exist when you go to retire? Even if you earn your primary income in SL now, this statement is just as applicable (more so even, because you need to diversify).

However, for popcorn and amusement, I will take you up on your offer. I am not poor by any stretch, but I am philosophically opposed to using my money in this fashion. I will contact you in-game, and peruse the available options. For fun and popcorn, of course.

IT'S A PARTY AND EVERYONES INVITED!!!

So how many shares do you think i can get in RL for 10000 lindens?

not even enough to cover my brokerage cost.
In SL i can 10000 shares for that price minus 3 percent.

1. I'm holding myself back from getting into an untenable position financially because these are boom times. We aren't going to have people looking at the Second Life grid at rates of a million a month for too much longer. Not overextending your business such that it doesn't blow up later, is common sense.

2. There is a lot of hype and interest out there now, the grid is the media's Next Best Thing at the moment, but by definition the media will move on to the next Next Best Thing and something else will be hyped. Then we'll see how stable the grid actually is for business when it's not shiny-new any more.

3. If you are relying on *anything* that counts on users entering the grid like they are coming out of a firehose, you are gonna be in trouble long term. Right now we have noobs, noobs and more noobs coming inworld and beginning their Noob Spending Sprees to get established. Count on this lasting forever and your business will *not* survive long term. Repeat business from established long term users is critical. Repeat business is how I intend to survive.

4. I forsee the near future as more of the same - boom times, at least for several months. The average new, staying player will take as long as two years to get established.

5. I think the Virtual Comex is such a tiny drop in the ocean compared to general trends it won't do anything noticeable at all, regardless of success or failure. One day's worth of economic expenditure on the grid is probably far more volume than these exchanges will do in a year, for a long long time if not forever.

Just my opinions, take for what they are worth.

I will add a brief comment on volume, of which other interested people can check independently. The link is here at www.wselive.com

Today for example over the previous 24 hour period the Exchange is reporting share volumes traded of 2,187,164 at a Linden dollar value expressed as $L4, 226,218.

I have yet to see it drop below around $2,000,000.

So okay that’s not earth shattering when you compare for example the almost constant average of 8 new Sims per day being moved on line by Linden Labs at an average purchase price of plus $2,000 real US, BUT WSE total market value traded might currently equal around $7,500 real US or say 2 to 3 new wholesale price mainland Sims per day or around 4 to 5 Island Estate Sims.

These figures are only estimates at this stage, they assume the WSE web page is accurate and do represent both buying and selling with all transactions counted. For example I assume that if (abc) avatar sells (xyz) shares for $L1, 000 and (abc2) avatar buys (xyz2) shares for $L1,000, both transactions will be counted when in fairness zero fungible money has either left or joined the exchange.

What will be far more meaningful is the development of a software tool that measures individual share capital and total market capital of all WSE traded shares. You could then take a view on the growth or decline of the WSE measured by both trades and market capital. I could personally develop a spreadsheet to analyse this but I confess the time involved in both coding and updating the data is several steps beyond what I can currently justify in real life terms

I am going to try to keep posts down to one or two a week on this thread, maybe one over the weekend and one like this to reply to specific questions.

Finally I believe this thread does sum up collective thoughts to date insomuch as the WSE is a PUNT not a real life investment, AND if interested, people should only go in with their eyes wide open with a few dollars/pounds they can absolutely afford to loose totally without a moments regret.

Regards John

We (Darius and I) have entered a friendly bet, 1000 shares of his choosing was purchased at 1.72 (I will neglect to mention which one was chosen, for good reason), we will monitor it's progress for the the next month and if I am correct and their is at least a 10% increase in that time frame or 20% in three months then I have won a choice of 1 of 2 of his very cool products, or in the case of a 20% gain, both items. I in return will keep my promise and split the pot. The money is not important as it's merely a few bucks, all in good fun



We will post the results in due time.

Word!

Ah, I love friendly wagers such as this!

Do give an analysis after it's done? I'm curious what you chose and why, what that company did in the time period and why its value changed, &c &c.

Of course, best to say after-the-fact, not now.


~ Monday ~

Rich Gridmerchant: *reading paper* - Jeeves, Amalgamated Prims is looking bullish at only 1.72, get me 1000 shares.

Jeeves: Very good sir.

~ Tuesday ~

Rich Gridmerchant: Mmm, look at this. Amalgamated Prims at 1.84. Interesting... let's get another 1000 shares!

Jeeves: Of course sir.

~ Wednesday ~

Rich Gridmerchant: Hoo, look at this, boy! Amalgamated prims at 2.35! Get me ten thousand shares!

Jeeves: Right-o!

~ Thursday ~

Rich Gridmerchant: *sweating* Jeeves... Amalgamated is now at 6.73... let's... sit tight.

Jeeves: Absolutely. A wise decision. Tea?

~ Friday ~

Rich Gridmerchant: I can't take it any more... too much invested... let's sell at 6.87, I believe it's cresting.

Jeeves: I fear I cannot, sir.

Rich Gridmerchant: WHAT!?

Jeeves: Well. You were the only one buying, as it turns out...

lol

As a weekly update mentioned in a previous post by me, the WSE in general appears to be holding up fairly well although it must be said rumours circulate about the ownership situation following on from the resignation of one of the founding avatars.

Both exchange volume and depth appear to be fair, as an example at the time of this post there are 18,000 share posted on the buy side of HCL's order book. For the benefit of those who may not understand how a stock market order book functions this means that anyone holding HCL shares could sell up to 18,000 at the posted price while the exchange is open. That's more than $L62, 000 linden dollars or $231 US dollars. For a virtual market such as the WSE that is fair support.

On this former point I am advised the external software powering the Exchange is moving to a new high-end server in Sidney Australia, this possibly reflects the owners real life location which is "open" in the media. Again I was advised on Friday night trading would be suspended to enable this move and would recommence on Monday the 2nd of April.

I have picked up a comment from another BB that indicates stocks paying dividends are more favoured by traders, this I pass on for readers to make their own judgement. My own personal experience is that land, some financial, and gaming related stocks appear to be both fairly liquid and understandable by many traders.

On a personal note I disposed of all shares I held in one mutual fund, following on from an in game interview with the CEO. I was of the opinion the prospectus did not represent what I believed to be a credible snapshot of the real life experience of the management team. I have added to another financial stock that pays dividends.

My core holding on the exchange is the emulated exchange traded fund GIF. I remain fully invested here and as far as things go am satisfied with the very open disclosed NAV reports issued more or less every day. If I dispose of this fund I will post here to declare that material fact.

Finally prospective investors are reminded my own views on this entire venture should be considered a punt with money that you are prepared to loose absolutely without regret. No part of this post should be construed as First or Second Life financial advice and everyone should do his or her own research. I may have stakes in sectors mentioned in my posts, which would constitute a declared position giving a financial interest.

Regards

John

There are currently 4 stocks suspended; PCL, TSF, SEX and WED. I have seen no announcement by WSE. The WSE is now open, can anybody point me in the direction of a WSE statement? It is inconceivable that they can suspend 4 stocks without making one.

There has been a clear statement issued by the WSE on this issue.

It appears that all four stocks have been suspended due to either non-compliance of the listing rules, fraud, mischance, or business failure. The statement was issued by the main WSE Group.

I do not hold any of these 4 quoted stocks.

It was very clear to me right from the word go that there was a chance this would happen, that is one of the reasons why I suggested that any investment here be by way of a punt on the basis that any money invested could be lost without regret or hardship.

This issue I think goes to the very core of the Second Life platform and the ability to use SL as an enabling platform, RATHER than that of a game and/or pure entertainment without any real first life relevance, apart from that of a type of remote branding of which many avatars do not like or want.

If first life commerce (apart from pure game related services) cannot work here in Second Life, then Second Life has no economic or first life significance and it is a game in practice.

John,

Where was this statement issued? I intially looked but couldn't locate it. I've tried again without success.

Thanks,

CB

Is the WSE even back up? Doesn't work for me....

I have made a reasonable review of my WSE holdings have cashed them all in apart from a pending IPO. The losses are around £200, not an undue amount for a pure punt

Its a shame, the WSE is still a good idea but fraud prevention is almost impossible under the present system within Second Life and I cannot see what either the Exchange or even Linden Labs can do about it.

What is to stop a few bad apples reappearing in a new ID and completing the same fraudulent IPO process over and over again? I think on these four suspended companies people have lost money and they will not be the first.

However the clinching argument to withdraw is the news via Reuters that the FBI has been reviewing Casinos within Second Life. The comments within Reuters make it clear many lawyers consider SL gaming to be illegal, and without specific legislation by the US Government empowering on line gaming within Second Life, it is inevitable these businesses are at big risk.

If you review the Second Life economy in first life terms and if you are looking for a return of several thousand pounds a month plus, to make your time inside here worthwhile in first life business terms, there IS only one business that can achieve this and that is the Island rental business (I exclude sex as a business on moral grounds)

Even land trading will grind your profits down due to tier levels unless you do it by multiples of Sims at very small profit margins

Anything else is either virtual pennies or extremely risky.

Shame really, but Second Life is just that, a fantasy world for people with no real interaction with first life economic gain, except for the Island owners and potential investors/shareholders backing Linden Labs.

Only my own views of course

I agree with all John has said here, and would add only one thing: there *are* content creators that can make reasonable amounts of first life money - particularly animations creators and so forth, and perhaps region developers for first life corporations.

I especially agree with the potential for fraud investigation. Over a certain dollar amount of value lost is considered Grand Theft if the United States courts can touch you, carrying criminal as well as civil penalties.

And the money trail is very, very well documented in electronic form, as well as a history of all chat. I remember there was a case involving a cellular phone provider and text messaging - as it turned out, the phone provider simply archived *all* of the text messages ever sent for all time. It was just too easy to do, and less trouble than picking through them. The grid is a really stupid place to commit a crime - literally every transaction and conversation is recorded.

I wonder if some brave souls could set up a clearing company that would provide insurance against fraud in exchange for some large sum of money help in deposit.

You would trust the clearing company to cover losses in the case of fraud or corporate misdeeds and in exchange they would actively investigate the companies they represent and require fairly substantion sums of money as insurance payments from them.

only one problem, all the parties lost was Lindens, which according to LL is a license, not money. Is it still considered fraud if no 'real' money was involved?

Absolutely.

Steal someone's car, and no 'real' money is involved. Because it's a car, and not a pile of dollar bills. The question is: does it have value.

$L can be said not to have value, but we have years of historic record indicating exactly what the market value of $L has been for years and years.


At this point a judge in a courtroom has a choice of:

a) listening to what a random California corporation says their $L are worth,

b) looking at tens of thousands of $L transactions per day at specific dollar values

...and applying common sense.

We can argue all day as to what common sense is, but I'd sure hate to be the guy who blatantly stole that much $L while a judge calmly considered the question.

In fact I gave some consideration to telling my credit card people the transaction purchasing Linden Dollars to "invest" on the WSE was blatantly fraudulent, and asking them to recover the money from Linden Labs.

I am reasonably certain such an action (in the UK) would be successful. Possession in these circumstance (a reasonable belief backed by documentation) is 9 points of the law

The only reason why I did not was I have no time to argue the point between Linden Labs debt recovery people, and for the sake of £200 it is better to accept a loss and walk away.

However, I would be amazed if other people did not consider this as an action plan and I wonder how Linden Labs would react if thousands of people did this.

notes that those four stocks represent 13 percent of the total number of "stocks" available on this "stock market"...and that two of them...are the same person, using two different names...yet the prospectus shows two different "real life names"..in two different states...

additionally, the owner of the stock market is aware of that..since I told him so myself over a week ago...

thirdly...notes that "companies" that have income of less than 100K lindens a month, are being valued at 20 MILLION lindens...based on what?...when I spoke to the WSE owner about one in particular...he said it was based on the value of the person's website...so his website is worth 75000 US dollars?...time to start churning out websites..who wants to buy one????

Personal feeling are that this is that since there is no regulation on this..and the owner of the exchange has choosen to consider any lindens invested as "fictional money", yet by his own statistics on the site, has traded enough lindens to represent half a million US dollars in the last 30 days, so suddenly the "fictional money" is not quite so fictional...that it is exceptionally risky. Interestingly, it has all of the aspects of a classic grifter scheme....but..those of you who want to try to get money for nothing...just do this before you do, examine the statistics on the site...see how many companies have done any kind of return on investment....I see that most are paying dividends of approximately 1/10 of a linden...so...you get a ten percent return per month...but you also have a 13% fraud rate...most interesting

If a player IN second life does a patently fraudulent thing...there is some tiny expectation that the lindens can help you recover your loss...keep in mind that off-grid endeavors, meaning that the WSE is NOT transacting on the grid..they are doing trades on their own website, so the lindens cannot do anything to help you.....again..most interesting...