Why the examples are not well connected to reality
The preceding posts give examples. In one of them I refer to windspeed at the north pole affecting price, which is a slight exaggeration. There are factors not included in the examples though, as if the unpredictable nature of the idea holders wasn't enough. (For those who missed it, all those price and quantity changes were based on a market condition of constant buying keeping the market clear.)
So what else isn't considered in the examples? Those numbers at the top of each example are there to be drawn by the pricing equation, and for the purpose of my excel spreadsheet they are constants...but they are not constants. They are fairly constant over the one to two day span of the USA example...far from constant over the month and a half of the Africa example, and even further from constant for the long term of the rare industry examples.
Those are the factors that tie idea pricing into the total value of the game. They are the total value of all ideas in the game, the total net worth of all the players in the game, and the total number of industries in the game...at least they were at some point this afternoon when I plucked them. They change, pretty radically. Over the long term that change is what will really drive idea values. I don't have any examples, because there is no way to factor them in against the already nebulous market forces that will be exerted by the buyers and sellers, but they are there.
So what else isn't considered in the examples? Those numbers at the top of each example are there to be drawn by the pricing equation, and for the purpose of my excel spreadsheet they are constants...but they are not constants. They are fairly constant over the one to two day span of the USA example...far from constant over the month and a half of the Africa example, and even further from constant for the long term of the rare industry examples.
Those are the factors that tie idea pricing into the total value of the game. They are the total value of all ideas in the game, the total net worth of all the players in the game, and the total number of industries in the game...at least they were at some point this afternoon when I plucked them. They change, pretty radically. Over the long term that change is what will really drive idea values. I don't have any examples, because there is no way to factor them in against the already nebulous market forces that will be exerted by the buyers and sellers, but they are there.
posted by Tim at 4:18 PM
3 Comments:
50% in 15 minutes?
The only ideas you can count on appearing in the very first drop are ideas like English and Internet, and they are so low priced that they have basically no effect on overall value.
Even for the seriously expensive bloated industries I see no way to generate anything like a 50% price drop. The most radical changes I've seen in all the data I've run was about a 75% drop in price over a period of ten extraordinarily small drops in a row. Clearly that won't occur in fifteen minutes. The bloated false rares have, in general, very few producing blogs, so ten drops is usually at least ten days.
Got it. In general you may well be correct.
I actually ran some U-OH data at one point, and it was surprisingly stable. Sort of 'at the cusp' but not really turning down yet. Clearly some are not as bloated as I thought.
I'm wondering if you would put into a simple statement what is so bad about cash? If people shift out to cash they will shift back in to good investments...of which there will be plenty, so I really don't see the problem.
Although there may not be great tools available there is enough data accessible to make some predictions, and I myself have started doing that. You would probably be surprised at just how many very expensive idea industries are not really bloated...I know that I am. I may not have years of accumulation, but I was in top 60 prior to black Friday, so I have a substantial pile of ideas, and many of them I expect to keep, at least for a while.
As to not having enough value in ideas available to absorb all the cash...at present it takes about 2225 drops to reach the break point following a 'revolution', and many industries are going to 'revolutionize' shortly after implementation. Whoever grabs the first drop, priced at B$10, will obviously make the most, but the upward pressure during the first few HUNDRED drops is going to be substantial. What will price be after 500 drops? I'm not sure, but it will have risen to a pretty substantial level...though still rapidly rising and well worth buying. 500 drops in 'internet, or 'english' is about five days...so how much cash do you think you'll need to buy the 500th drop in those industries? My own guess is that within a week after implementation people are going to be having to pick and choose among the good investments even after liquidating all the bloats, because there will be too many good ideas to choose from. Of course high productions of all those big ticket ideas are going to be seriously boosting the downforce term...so watch your step. The balance in the equation is designed to keep ideas approximately equal to cash and shares, and I think it will respond pretty quickly.
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