Wednesday, February 18, 2009

Mystery post

(The picture for the next post. Can you guess what it might be about?)

Morality is the only hint I'll give. But what does morality or ethics have to do with water, or islands, or possibly the world?

Stay tuned to find out :)


Tuesday, February 17, 2009

The Value of an Item

(A shirt can be made for 10 dollars and sold for a million dollars, as long as people are willing to pay that much for it)

It took an online game to teach me what the value of an item was.

It's one of the most valuable lessons I have ever learned and that is both because of it's significance and because of the fact that I learned it on my own, it wasn't refined from a book or word of mouth.

People always say, "Something is worth what someone is willing to pay for it".

In essence, that is what I figured out. Even after having left that virtual world ages ago, these small treasures remain with me.



The game I was in was simple. You go out and kill animals and gain loot. You sell the loot for money and you buy items and upgrade your stats to kill more efficiently.

There was one problem though, everyone needed weapons but there were no dealers around.

Not only did that make things worse, the only people who could help us with a price were NPC's (Non playable Characters, essentially robots) who would offer to buy our weapons from us.

Everyone in the game agreed on one thing though, the price the robots paid for our weapons was significantly undervalued.

Weapons that were very hard to obtain would sell for next to nothing.
These highly sought after weapons also dealt much damage and anyone would be crazy to sell them to a robot.

So what were we to do?


Following new paths untraveled, The Rangers way

So like a lot of people in the game, I had a lot of weapons to sell and wanted to get rid of them to train my character faster.

What would I sell them at though, and where would I start?

Here is what I did:

1) I guessed: I literally one day went up to a person, gave the strength of a certain weapon, and asked him if he wanted to buy it, for 4,000 of the currency we had available.

I had very little information at the time and there were literally no other weapons dealers to consult with, so pricing the object was as simple as a guess.
The particular customer above was overjoyed with the offer and quickly purchased his new weapon.

2) The economy's response (Money Supply): At the time a lot of people had money but the exchanging of weapons was pretty rare. When I offered to sell that item, an above average loot, people could afford to lose a bit of money and invest it in a better weapon.

I noticed after time, as people had less money, the amount I could charge for a product fell.
After a while I changed the price a bit to correct for demand and total population wealth.
Those corrections kept my customers coming back, knowing I'd be a good deal.

3) What you expect to get: I didn't do what you might expect in a normal business scenario. 4000 of that particular currency was a very good amount for that weapon. I could also get the weapon back with an average amount of work. So I didn't raise my price much. As long as I was getting a pretty good pay off and unloading my supplies, I was happy.

Possibly a better entrepreneur might have grabbed that chance and increased prices, but like i mentioned above, I was more than satisfied with what I had received.

4) The Market: Other dealers soon started popping up and everyone had the same question I had. I was asked what they should price their items at and regularly gave them my store prices.

As new dealers entered the market and competition started looming pricing became more and more variable.

5) Demand and Math: I noticed something odd in the economy and basically it was that certain weapons would not be bought, regardless of price.

Certain weapons that were of average efficiency were not selling and I never even bothered pricing them because of this lack of demand.

You could probably graph the efficiency of my better weapons and their price then graph these weaker weapons and the math would give you a good average of what these weaker weapon's price should be around, but the problem is, if i offered this price, no one would buy it.

There were a few reasons for this:

Why pay 500-1000 for a weapon that is average and won't help you fight much, when you can easily afford 4000 for a nice and strong weapon that will eventually pay back it's cost?

So the money supply was high and the supply of good weapons was good, in essence destroying any need whatsoever for these average weapons.

Don't be fooled though these average weapons would still be good and useful, but everyone always said, "Why pay 500 or 1000 for them, when 4000 will do for a very good one".

Also our weapons didn't degrade, to buy a good weapon was to have it for life. (They degrade now though, and it would take a long time to explain this new factor in our economy)

I just found it odd that a whole range of decent weapons were essentially wiped out and any mathematical price you could put to them would not meet the test of the market. It was eye opening for me, a lesson I hold to this day. It proves that everything is worth what someone is willing to pay for it, not the mathematical figures of an Economics Professor. I think the best example of something being worth more than an Economist says it is, would be the concept of Book Value.

I can understand that concept a lot easier now thanks to my experiences in this virtual economy.

6) Maturity, the Middleman: After a bit of time I found that competition in the market was very fierce. It was harder to sell weapons with people under selling you and customers always questioning your price.

After a while most customers felt they knew the price better than you, even if they had never sold weapons in their whole life.

As time went on I found a new business, something I was sort of forced into and something that flourished within me because of my networks. By now I knew a lot of dealers and a lot of customers and one day my friend comes to me telling me he needs a very very high quality item sold.

This is an item that i had personally never looted. This item existed in very low quantities in the game and therefore was extremely hard to sell.

Price wise it was about 250,000 of the above currency I mentioned. Just to give you some perspective, most people carried about 10,000-20,000 and I personally stayed at about 40-50k. So 250k was A LOT of cash in that game.

With a bit of work, I found a buyer and I charged the seller a fee for my service. This was a totally new industry for me, one where I could make large amounts of cash for a minimal amount of work.

I started charging static percentages for items that I helped sell and I ONLY dealt in high price items. It was a great market because I found out that a good number of people could afford these very nice weapons but could not find anyone willing to sell them.

I also found a good number of sellers who just wanted cash quick. Together I helped initiate a number of transactions and I had started making more doing this than initially selling weapons to begin with.

The Real World

I learned to look at the real world differently. Everything seemed to look different, every object seemed t have it's own story, and brand new markets starting appearing before me.

This virtual game had in essence forced me to move with the market and understand it's workings.

That was something that would have been impossible in the real world.
I wasn't selling any products in the real world, and I had very small networking capabilities.
But in this virtual game I connected with scores of people and inquired into their needs.

Strong lessons

I found the Value of an Item truly is just whatever people will pay for it.
  • What they will pay for it is affected by how much cash they have.
  • What they will pay for it is affected by how badly they need it.
  • What they will pay for it is affected by how rare it is to find.
  • The most important lesson though was knowing that NO one could accurately price anything.
  • Everything is mispriced. Why?
  • Because everyone has a different price they are willing to pay for something.
  • Even with a small degree of difference, that means a huge shift in profits and returns, especially as you increase your volume of buys or sells.
Maybe that is why the stock market is so powerful in creating wealth.
Knowing how the price of an object will shift can create a millionaire overnight.
You have to remember though, even if you perceive a company as being strong, if the world continues to disagree with you, and even if you are right, their stock price will never go up.

That doesn't necessarily mean though that you should usually go with the market because the market has shifted in favor of companies that you knew were strong from the beginning.
The market is also infamously random.

But what it does mean is that you should stay open minded, so as not to build your pride to a hurtling and devastating collapse.

Things aren't worth what you think they are, they're worth what people are willing to buy them for. Something I didn't just read, but lived, and therefore appreciate more.


Monday, February 16, 2009

Donating 1.5 billion per year

That's the estimated value of the amount of stock Warren Buffet will be giving to the Bill and Melinda Gates foundation.

Also here is an interview with a little more information about the largest donation in the history of Mankind, especially by a living donor.

Would most people give 1.5 billion dollars, in stocks of their own company, away to a foundation?
Sure he is giving it away at a late stage in his life, after his wife's death.
Death is interesting, in that it gives you the proper perspective on life.

As Andrew Carnegie once said, "The man who dies rich thus dies disgraced."

Or as Islam says(paraphrase), It would be more beneficial that a man give an apple of his orchard while he lives, than give 1,000 trees away after he dies, when they are no longer useful to him.

Warren Buffet, the second richest man in the world, thus will be giving away nearly 40 billion dollars, almost all his fortune. Yet, if you had read my last post, you would have read that he would not have fully actualized himself.

The fully actualized person, would never have had that high of a net worth, and would definitely not have sacrificed nearly as much of his life for wealth.

So in essence, he will die a second class citizen, because of his wealth, and the sacrifices he has made for it, and the desire to satiate his unending greed.

That said, he will still die with more dignity, than most of humanity will.


Infatuation with Wealth

(Happily ever after seems to come with a mansion nowadays)


A record of our time

I think when people look back at this time in history, they will look on with amazement. Not because of the technology or the people, but because of the decisions we made and the infatuations we had.

I've hinted before that this blog particularly serves as a window into the mindset of my time and my people, for future generations to poke at and analyze.

It also is used as a tool to analyze the philosophy behind a number of commonly held beliefs.

Today's topic stirred the inspiration in me like I haven't felt in months.


What brought on this surge?

(If you haven't seen the movie, stop reading now, Spoilers ahead)

I had read the summary for this movie a million times and it completely turned me off.
The summaries on Imdb and all the other popular sites are horribly off. By that I mean they barely touch on what the movie is really about.

Regardless I finally decided to see it today, especially after seeing so many positive ratings on a number of sites. The final blow before making this decision was my favorite movie rating site, which gave the movie a 96% approval rating.

So I watched it, and I enjoyed it a lot. The themes it hits on were amazing and not even hinted at in the summaries of the movie.


Philosophy finally starts here

So where did that magical inspiration come from? Why was so much background given?
What exactly brought on this particular surge?

A simple theme; Our infatuation with excessive amounts of money.

A lot of stories nowadays it seems, are riddled with this theme. The 21st century theme that The hero or protagonist becomes immensely rich and they live happily ever after thanks to this new found fortune.

It's so prevalent that we're seeing this trend start in societies and cultures that expressly FORBID this form of greed.

A religious movie, that I was invited to see ended with this exact theme.
Somehow the main character couldn't continue living unless he inherited a huge amount of money by luck or chance or destiny.

What is it with our society? Why can't we have a happy ending without someone becoming rich?
In the Days of Walt Disney, finding your true love or finding true happiness was the goal in the story. With Disney, when you had reached that peak, money was of no use to you.

What has happened to our goals? Why must our happiest endings today come with a rich bounty?

(I've touched on this topic before btw, in more detail about the greed part. Click here to read it)

Greed (Avarice)

Time and time again we've been warned by millions upon millions of people that greed is bad.
We've lost touch with that.

Here is a small window into the mindset of Wall street and mandatory bonuses given at the expense of the American tax payer:

WSJ Article "Greed is good"

TYT Discussion about it:

An eye opener:

I was told for the first time in my life that the never ending struggle for resources is not the way to ultimate actualization(Being the best you can be).

It's sad that my religion teaches this but our followers are so blinded by the need for resources, that they don't feel the need to rehash this point. They will rehash a million other things, but they seem to neglect their duties when it comes to greed.

I was reading the commentary(Tafsir) on the Quran when I came upon a passage said to have been narrated by the Prophet. It had to do with a particular verse asking Muslims to not desire this world too much. The Prophet reiterated this point in his narrative.

To summarize; it stated:

There were three people in this world (Ranked from best to worst)

1) There are those who only made enough to sustain their lifestyle without going into debt or making a lot of profit. These are the best of people, they find satisfaction with their life.

2) There are also those that are on this run for resources, will gain as much wealth as they can, but will also scrutinize every penny making sure it goes to good causes.
You'll routinely see these people donating to noble causes or financing other projects. They will be rewarded for the good that they buy and punished for the bad that they buy on Judgment day. They actively strive to do good in this world.

3) There are those that are also on the run for as many resources as possible. Yet this group will spend it how they like. These are not philanthropists and if they are, they are so in money only and will never give their time to good causes. They will spend how they like on what they like in exorbitant amounts.

My eyes had opened to a new reality:

  • Surely it had to be those that paid millions of dollars to charities and worked hard for them, that were the greatest people on earth.
  • Surely because I was in America, I was expected, more so than anyone else, to succeed where millions of others did not even have the chance to fail.
  • Surely I was to try and make as much money as possible.

Yet here i am, being told, that the greatest of people make modest amounts, are not accruing debt, and yet are also not rich.

If you are not American, you might not be able to grasp the severity of this problem because from the moment we start walking, we are told to make as much money as possible.

It is a constant run for resources, so much so, that some people forgo honest work in order to take less righteous paths to fulfill this goal.

Yet here we are being told, if you want to be the best you can be, do not run so hard.

What I took from the passage was:

1) Pay off what debt you owe and try not to go into debt.

2) Buy what you need to buy, that isn't exorbitant(excessive).
  • Home worth less than $400,000
  • Car worth less than $15,000
  • Computer worth less than $1,300
  • Make sure your normal bills are not extreme(example: buying $500 worth of clothes a month is too much.)
3) Be satisfied, don't want or act like you need to obtain large and insane amounts of money, especially to be happy.

I had never hungered for being rich before, so this idea wasn't a hard transition for me.

But I was now being told to specifically NOT go for large amounts of money.

Before it was, Do it if you can, but don't be so greedy, money in the end is worthless.
Make sure you use your wealth wisely and not at the expense of others.

Now it is, Do not strive for it, do not want to be excessively wealthy, and never worry about it.

Yet what is funny and truly ironic is that a religious movie I saw, matches the ending with Slumdog Millionaire.

An ending that does not walk toe to toe with the religion the movie was made for.


Computer Status update

This really shouldn't be a place to rant about my computer, so i basically held off.
A small summary though, should sum up some explanations.

It is impossible to describe how hard it was being inspired and not being able to take it down as i normally do.

Windows restore eventually failed, and 2 incompetent technicians later, I'm left with 2 ghost users on my computer and my original user profile.

Why the ghost users? A few HP restores, that went terribly wrong, that is shielding 80 gigs of files, unable to be deleted, with a number of unusable programs.

Solutions? Full format and reinstall, hopefully finished by the end of this week.

If you don't know about hp restore, be thankful. It promises to restore your computer, but gives you a ghost user account, with all your previous programs corrupted, most of the time being unable to uninstall.

Anyways, that's the update, and the next post is the real reason why i logged on here.

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