The Dragon's Bite

SL as a predictive market.

noreply@blogger.com (Maelstrom) — Tue, 28 Oct 2008 07:18:00 +0000

I know I've not posted anything about this in a while, but it occurred to me that the February crash of the institutions of SL, partly caused by the Linden crackdown, occurred almost perfectly 4 to 6 months prior to the beginning of the most recent major market meltdowns.

I had in August of 07 stated to a few friends and in a class that due to SL being based on extra derivative income from the North American market that the in-world markets and retailing would be highly affected by an economic crisis, but I had not quite expected it to be as predictive as it has been.

In hindsight, I almost wish I had given myself more credibility in this theory and sold off my real portfolio based on those indicators. I'd be a few thousand richer.

Additionally, I once stated that the Virtual Markets probably would hold about the same level of risk as actual markets. Due to the rabid mismanagement of wall street what was a half-hearted estimation of the bureaucracy in this nation responsible for providing for corporate governance.. proved deadly accurate.

I do not expect the predictive nature of the SL markets to continue since the Linden Crackdown practically destroyed the net worth in those markets, but I'll be watching this for more correlative indicators.

Markets in a quagmire.

noreply@blogger.com (Maelstrom) — Thu, 05 Jun 2008 04:39:00 +0000

The markets of the past 2 months have been significantly depressed. Most issues are trading flat or lower with few shining stars and minuscule dividends and EPS results. At this point I'm unenthusiastically bull merely because if things get much worse I foresee a market wide devaluation to next to nothing. This is one of the reasons I've been relatively quiet. There's not much to be excited about and I think it's the primary symptom of how deflated these markets have become since the big February Bank Bust.

LNL is leading the charge in that regard with the recent mess and drama related to it on the CAPEX exchange. Some would say however, that it's pretty typical of the CEO of that corp to be immersed in drama of some form.

Is WSE ever going to wake up? I was told they may open in February.. It's June now. Knock Knock Luke? Anyone home? Updating SL. I may walk around and talk to a few old friends. Amazing that if you don't see the metaverse in 1-2 months and you're behind 2-3 updates. Hope to see you in game old friends.

Back, as a private investor.

noreply@blogger.com (Maelstrom) — Wed, 30 Apr 2008 07:18:00 +0000

Well folks. I didn't know how far that LL would take the new banking policy, but the virtual stock exchanges are still here and I still enjoy the concept of virtual commerce in virtual realms. That said, I'm back to doing business with the exchanges once again, but I'm only risking my own cash this time and on a much more limited basis. I'm also taking a far more off-hands approach. Even though day-trading in such volatility is extremely lucrative, I'm actually holding for the long term and using a dividend reinvestment method. I still intend on operating on all exchanges. Just waiting to see if WSE will ever open it's doors again. If it doesn't, it could still be the one loose card that brings all the houses down in the virtual exchanges. I hope that doesn't happen. I like this micro-market experimentation and think if it properly polices itself it could even be profitable and beneficial in the future of the SL meta-verse, but I'm not yet sold that it's fully at that point yet.

That said, if you're putting money in here, I hope it's what you can afford to risk and that you risk wisely. The old important tips apply to game-world relations.

1. Know who you play with as well as you can.
2. Keep up on what's happening with the in-world businesses you court.
3. Remember it's an intensive hobby. You can't go months without checking in on it. The market's highly volatile and a month is like a year in Second Life.

DGD officially shuts down..

noreply@blogger.com (Maelstrom) — Fri, 18 Jan 2008 09:53:00 +0000

http://www.freewebs.com/maelstrom79/DGDRecoveryAssessement.htm

The final closure wrap up report.

It's been a long and profitable run for those with me since IPO, we're up 25% on 9 months with a liquidation value of 1.25 from an ipo offering of 1.00. A fairly proud return on activity. Imagine if we'd gotten out at market value.

Crisis in the Private Estate sector.

noreply@blogger.com (Maelstrom) — Thu, 17 Jan 2008 16:07:00 +0000

Unless you're highly specialized or your sim has a special purpose, if you own your own sim for the purpose of rental there have been some major changes the past several months which have likely had significant negative impact on your business.

The amount of USD being spent in the SL economy is declining, meaning less demand for private sector estates as most folks really have a strong preference for main land unless a strong theme or high quality is maintained with a private estate. General sales of land which directly competes with Linden Lab has no hope at all. With Linden Lab persistently providing new land for newcomers to SL, the private estate market cannot be maintained without constant diligence by sim owners to induce real traffic and attract spending.

The Gambling ban destroyed a large source of revenue for many private estates. The banking ban made an already rough financing market for new private estates practically non-existent so that the few good institutions went out with the bad. With the real world economy in the main user areas, notably North America, in a spiral.. the extra spending coming from most folk's wallet for entertainment will be in severe decline if they can even afford the internet access to get on Second Life at all.

This has generated a nightmare for what was once a reasonably fair market. I expect very few non-specialized private estates to survive if any. After all, who can compete with the megalith of the content provider Linden to whom Tier for private sims is also directly paid.

Such is the power of a monopoly; that inefficiency in the markets results and the intentions of many productive individuals destroyed.

I even have a lingering worry about the survival of Second LIfe in its present format.

LL moving towards Linden being real currency.

noreply@blogger.com (Maelstrom) — Fri, 11 Jan 2008 07:56:00 +0000

Tell me, why is it that you need a real life bank charter.. to play with game currency?

Linden lab insists that the Linden is not real currency, yet here it is forcing numerous game world businesses to register. If the Linden is real, then LL is in violation of NUMEROUS rl securities statutes.

If it's not, how can they force these banks to get registered or stop operating in the manner they have stated including the requirement of an RL banking charter to allow them to operate?

Anyone smell a fish?

More symptoms of a coming end?

noreply@blogger.com (Maelstrom) — Fri, 11 Jan 2008 00:20:00 +0000

Will this economic event, lead to the fulfillment of.. this?

Here's the old article in full since it's now only on google cache:

Saturday, 22 September 2007

Oh well.. And here I was hoping confidence was coming back to this market. The second half of September has been a perfect storm for the market. With VSTEX having 3 companies simultaneously default on shareholder trust and The Bank folding. What’s the relation? All 4 entities were strongly tied to the management and directorship of one Jasper Tizzy. Fortunately, some of us had insurance on our Deposits, and if Eliale Morigi of The Rock Insurance honors the claims then DGD’s going to be saved a pinch, but I can’t help feel concern for the hundreds of other investors undoubtedly uninsured and stricken by the incident. AIG, formerly the bank that backed the old AVIX exchange, has also highly restricted and appears to be defaulting on some withdrawals. The issue is so severe AIG was delisted from CAPEX for TOS violations under the new management’s guidelines.

Since June, Second Life has been averaging 1 bank default or failure a month. Are they all frauds or is there something much larger and more sinister at play on the horizon? Maybe there is more to this than simple fraud. I’ve done some analysis of the Second Life Economy and the results are very disturbing. It may even be pointing towards the potential end of product life cycle for Second Life as an entity... or that the virtual economy is about to hit a sustained depression.

Sources:
http://secondlife.com/whatis/economy-graphs.php
http://secondlife.com/whatis/economy_stats.php

I cite those early because I wanted you to get them up and review them with me as you read. There are some numbers in there that I view as critical landmarks that indicated the start of this economic crisis and the strength of its potential for deepening.

First, on the stats page you would note that from July to August in world business owners has declined. Secondly, land sales values are in steep decline. An average .5/acre drop is a huge move and likely to continue as LL continues to add land to the system. The rate of sale has also almost halved.

On the graphs page, and this is perhaps the most disturbing of all the data. The beginning of 2007 marked the largest recorded decline, which continues, in USD$ traded on the Lindex in over a year. This means fewer people are buying lindens; less money is coming into the Second Life virtual economy. Will this reverse? That depends on how LL manages their marketing but this event can be traced back to the changes in gambling policy and to the largest bank failure (Ginko) in SL. That chart is akin to the Virtual GDP. It marks the entertainment productivity of Second Life. When it goes in reverse, business will start to struggle and the magnitude of the reversal was not small.

What does this mean for your investment portfolio? It means that you have to be much pickier than usual. It means that you must watch even the most honest CEOs as a troubling environment can encourage more desperate behavior. It means more research time to make sure you’re not ripped off. It also means if you’re not diversified you’re welcoming a bullet to your virtual finances. Diversify even among banks.. and look into insurance if you can with someone with an established reputation of trust in SL insurance. Usually insurance will only take a fraction of your returns on a bank deposit and if the bank defaults it can be worth having assuming your insurer is a reliable vendor of such protection.

Risk is higher than ever, remember to be very careful about where you put your money and whom you trust. A key point to look for to measure trust is disclosure levels. An open book is much easier to discern the content of than a closed book. Find folks willing to talk about their corporate finances, which post clear reports consistent with their business operations. Also, remember that buying at any price is a sure way to lose, be very picky about your price targets for shares if you buy stock.

*************************

Note, at this point the situation is now so severe with the policy, I advise against buying any stock or depositing in any bank. In fact, I'm going to start disassembling my links to prevent accidental deposits or investment encouraged by me.

Death/Rebirth of Capitalism in SL? Welcome back feudal era?

noreply@blogger.com (Maelstrom) — Thu, 10 Jan 2008 23:25:00 +0000

The economy is going to consist of mostly land, fashion, and clubbing. No more banks, no more stock exchanges or financing mechanisms in world for community development that do not have expensive real world licenses. Will it be the death of SL capitalism given the expense involved? Or is this a pre-text for something larger?

With the in-world only financial institutions out of the way, it paves the way for real legitimate institutions to move into Second Life, assuming they want to. I've heard some RL banks with limited in-world presences are having parties the day before this massive shut down event.. coincidence? .... I always have been one to say nothing is coincidental.

With the clarification and confusion that may result for people out of the way, the interface for real world business into second life will be much more clear. The question is, are people's rights being trampled? Second Life has yet to really define itself well. It exists somewhere between a game and reality. I think this decision represents a fundamental shift in the Opinion of the Lab in what they want Second Life to be. They do not want it to be as much a game as a Secondary Reality with expressive capability. But this opens other potential nightmares.

What does this decision mean to overall gaming programmers and the gaming community in Second Life? If SL finance is too risky, will Linden Lab ever decide first person shooter sims are "too violent"; for instance?

Some SL banks, which were not frauds, but had the trust of their depositors and were doing legitimate in-world business will not go without a significant cost to some in-world communities. I can't tell you how many people I know were relying on interest to pay tier. The financial cost goes far beyond the shut downs, we're looking at a large creative cost.

I do not foresee many SL banks or exchanges being able to act quickly enough to get real world banking licenses; especially with the cost involved of such licenses. And the time frame is so short that few will have enough time to import the funds to pay their depositors. One months linden purchase allowance is like 25,000 USD from my understanding. If this is true, getting enough cash in to cover the massive sums in some sl institutions is going to be neigh impossible. I hope the bank owners are getting on the horn with Linden as quickly as possible; otherwise the people most seriously hurt by this will be the ones who trusted the banks to hold their cash for them.

LL Pulling the Plug on all Virtual Banking/Trading.. etc.

noreply@blogger.com (Maelstrom) — Thu, 10 Jan 2008 13:25:00 +0000

Here's the policy link.

Wow, look like my blog is going to be short, brief and soon to be dated unless I cover land or fashion as it won't be long til no SL financial market will exist at all save the one in player's personal accounts. After all the rampant fraud in the SL financial community,LL has stepped in and said "sorry, no more banks". The unfortunate problem is that this mostly likely will impact depositors at those institutions far more than the bank operators themselves.

Personally, if I were LL, I would have opened a central virtual bank and regulated the markets so as to make more money off the venture and try to help improve sl communities, but that's not what happened. Of course, cost considerations had to be included so it's much easier just to say, "get rid of them all."

That said, it was a fun streak and if you knew who to invest with and did the safe smart thing you could make a profit; but most people are honestly clueless on how to judge such things in a virtual environment. It's so much more different than the real world and takes a lot of expierence so I can see where the Lab's coming from in their actions.

Anyhow, on 01/22/2007 every link and location on this blog will practically cease to exist because if you read the verbatim terminology of the disclosure anyone paying interest or offering a return on investment which is processed through an ATM for linden or any other currency would be shut down on that date; this would include any incorporated company on any sl exchange that paid a dividend. I'm even having to close up DGD, which is a bit painful, it had so much potential and the loss on investment value of the companies at liquidation cost is not a pretty picture at all. But one thing I can say, I'll be closing at higher than IPO value, and it makes me proud I can at least return some value to the SL community in less than 1 years term of operation, most real companies fail in that time.

It's a sad state of affairs that has lead to this day, but if you read my backlogs you can see that fraud is perhaps one of the most rampant dangers inside of second life. There's cheats and scams everywhere and many are not skeptical enough to dodge them all.

Hopefully things will change in time and virtual investing will become a way of the future, but for now... LL has deemed it just not plausible or viable, especially at some of the ridiculous rates promised.

If things change, of course, this blog will continue, but if it doesn't, this may be adieu.

Linden Lab instituting bank shutdown.

noreply@blogger.com (Maelstrom) — Thu, 10 Jan 2008 10:02:00 +0000

I just got back from a short personal holiday to discover LL is in the process of shutting down interest bearing institutions in SL that are not registered with a real world government, a bold move from being a a game to what I imagine is what LL is trying to achieve: the status of being a secondary reality existing atop our own. More news will be forthcoming with links as I uncover the details of what is hapening, but needless to say, market volatility will likely be at an all time high and as of yet, I'm not even certain the exchanges will survive.

Welcome to 2008.

noreply@blogger.com (Maelstrom) — Tue, 01 Jan 2008 10:11:00 +0000

I sat on my couch with my wife Koudoawaia Menatep (Her SL name of course) throughout the duration of the dropping of the great ball at Time's Square watching it on MSNBC and CNBC, yes.. NBC has me cornered as a viewer. While I sat there, enjoying the warmth and coziness of her snuggled to me, I kept thinking about all the magnificent structures in New York, and how much it must have taken to build them.

Someone had to take great risks, expending monumental amounts of resources, to build the icons of that landmark. They gambled a lot on their location and the features of the land. I'm sure not a few were scammed and cheated along the way before our society matured a little more from its pre-Black Friday dreams in the 1920s. I also think about how today I can't help hearing on the news about how sorely my nation (the United States) is burdened with debt. Consumer debt, National debt, mortgage debt. What happened to the good old Wealthy United States? The ones immigrants dreamed about with streets of gold and lady liberty shining in her brightness in the harbors of New York? Are we seeing the corrosion of the American Dream just as her copper was blighted by oxides?

I can't help feel that all this is tied into the failing moral fabric of our society. Traditions abandoned, rebellion against parents and guidance gone unchecked, a general lack of discipline in all mannerisms of life in the pursuit of ultimate freedom, which is supposedly meant to make one... "feel free." Yet to me, debt is a shackle. A shackle snapped on my wrist by a lack of discipline with my wallet.

Businesses are supposed to encourage you to spend your money. Advertisers are supposed to encourage you to spend your money. Predatory lenders love it when you spend. Tax collecting political stooges are supposed to encourage you to spend money for their special pet projects that you don't care about them appending to every pork barreled bill that passes through congress. Economists encourage you to spend money for the economy's sake so their historical record looks like a boom, not a bust. Your parents are supposed to teach you to survive the baiting of all these hawks by saving enough nuts in the tree for any harsh winter that may upon you beset. What happened? I think it's obvious. Rampant divorce rates, inattentiveness of modern parents to their children due to lifestyle and business changes, the continuing strain of the average American under the slaving collars of our corporate masters who have not put the breaks on spending regardless of the fact their customers may soon well be penniless.. and then where would that leave their profit margins? (I think Goldman Sachs, Citigroup, and a few other corporate giants are finding out the hard way.)

And with National Debt at an all time high, what happens.. when the economy suddenly runs into the wall of creditworthiness? What happens when there becomes a significant risk the U.S. Treasury Bill may actually fall out of the beautiful AAA status it has set upon so long? Okay, perhaps it won't get that bad, but it sure will likely feel that way with the mint printing money to try to keep up with obligations and inflation soaring to such levels that would make pre-world war 2 Germany look like an economy's safe haven... and all this at a time when fuel prices are hitting record levels.

I've made my New Years resolution my friends. Save.. save a lot. The winter upon is dark and I don't think there'll be many of us able to entirely escape the effects of the coming years.

I hate to be gloomy on the New Year, but when I don't think of the Financial world.. I have a lot towards which to look forward. After all, I have her, and she's worth more than all of Fort Knox. (*Hugs Koudoa softly..*) There's also technology and other sectors which are promising, but what is technology if there's a shortage of financing but an exercise in futility?

To you and yours, a safe, happy, spiritually, and financially sound 2008,
Maelstrom

PS. Getting National Debt down so that way pay less interest and then in the long term can have even lower taxes is a good thing, get your local political stooge to look into it or be very concerned about long term national and global security. A nation that saves and builds great works on the savings, not debt, will outlast one which does everything on the back of future cash flows. (Ask China, they're really good at this. Scares me sometimes; to the point in fact it's how I know the Pentagon has absolutely no say in how the civilian sector really runs save for their personal votes because our spending policy is very strategically unsound.)

PSS. Find a way to do this without the unbelievable bureaucracy and partisanship of the U.S. Government getting in the way in this day and age, and I will put you on a Plateau that surpasses FDR,Ike, and Lincoln, but not George Washington, in your abilities to Govern.

Back from the Holidays.

noreply@blogger.com (Maelstrom) — Sat, 29 Dec 2007 01:50:00 +0000

Here we go, back to work. I am seeing a lot of good potential for the SL economy this coming year. User rates are rising. The problem we will continue to face is a lack of sincere honesty and regulation in the markets with a Linden Lab nervous about playing Global Cop after a couple of courtroom fiascoes. I continue to expect that land will stay a relatively flat market with land providers continuing to up supply with the rising user rate. The great concern is will it out-pace the rate of user acquisition where the users can be valid participants in the land market. What does this mean? Well, basically we need more users with money wanting to buy land and merchandise. I look at SL as virtual tourism, if you don't have the flow, you don't have the dough.

Merry Christmas.

noreply@blogger.com (Maelstrom) — Mon, 24 Dec 2007 23:37:00 +0000

I will be notably absent until approximately the 28th, at which point I'll probably begin a review of VSTEX ipos.

Here's wishing you and yours a very Merry Christmas. Peace on Earth, good will to all. Make sure you remember the true reason for the season does not come with a bow. Hold your family close, keep them warm, and count your gifts from God which will vastly outnumber any quantity of packages any person could purchase. (Especially if you include each star or grain of sand in that count.)

IPO Review for the Ancapistan Exchange.

noreply@blogger.com (Maelstrom) — Sun, 23 Dec 2007 00:23:00 +0000

A prior commenter brought to my attention an observation about ACE, that many of the IPOs appeared to them to be fairly untested and the standards of the exchange to be at risk. That said, the asked me to comment on my thoughts of the companies, their prospects, and their business propositions. That said, I am now going to begin an alphabetical review of the IPOs currently listed on that exchange at this time.

Disclosure: As policy, DGD buys a small amount of all ipos, larger amounts of promising IPOs, and day trades the one that it buys small amounts of. Therefore, DGD already has at least a minimal interest in all these companies. However, I have never let that skew my presentation of judgment to the public.

In alphabetical order they are:

ACE:Prospectus. Value Proposition: Exchange operations.

Shares to issue publicly	7,700,000
IPO shares sold to date	816,565
IPO shares remaining	6,883,435
Total shares in company	16,000,000

ACE is an offering of ownership in the exchange operations themselves. It is not uncommon for stock exchanges to raise funds initially, the purpose of the funds is to establish a bank on which trading can take place and to allow for ease of deposits and withdraws of new clients as well as to cover some moderate expenses the exchange may witness during the initial stages of operation. The IPO is well written and recognizes the weakness in the exchange market with 4 pre-established existing competitor exchanges. Typically, a well managed exchange is a stable investment. The risk is that poor management will allow anyone access to the market's capitol, subjecting it and shareholders to fraud that could potentially break the value of hte exchange itself and drive its clients away. Though ACE is a strong offer being the operations of the exchange itself whose revenues would be obvious to the public in the form of the commisions on trading, it could be undermined by the operations and management of its landlord BNT whose CEO, Intlibber Brautigan, co-owns both ACE and BNT. Proper management, however, could bring both companies to extraordinary prosperity since BNT has a large asset base. Time will tell where these futures will go but BNT has greater freedom of action trading on its own exchange. However, with greater power and ability comes greater responsibility. Abuse and mismanagement or over-reaching.. can be lethal. Slow and steady is the course to progress.

BAM:Prospectus: Value Proposition: Acquisitions And Mergers, rebuilding broken companies after buying them out.

Shares to issue publicly	1,000,000
IPO shares sold to date	25,981
IPO shares remaining	974,019
Total shares in company	2,200,000

Travis Ristow is the CEO of this company and in my eyes the CEO is and makes the company in Second Life. He's been a friend of mine and pretty reliable when it comes to the operations of his existing company on ISE, BCX Bank. DGD also owns property on one of his estates and it turns a steady profit running a vendor booth next to his banking operations. Travis seems pretty business savvy, but a business in Acquisitions and Mergers within Second Life exposes itself to a lot of risk. At the same time, there is also a significant amount of room for reward. Time will tell if this venture is profitable, but there is potential here. It all depends on how the risk is managed and that is true about any investment firm. I can't help feel slightly skeptical though for business operators who have more than one operation listed and their ability to keep financing separate. You would imagine they could use the strategy for the new business for their existing operations. That said, I still think this corporation may have a future if it is executed on correctly.

FWD:Prospectus: Value Proposition: Content and Marketing Information provider.

Shares to issue publicly	800,000
IPO shares sold to date	12,597
IPO shares remaining	787,403
Total shares in company	2,000,000

I do not know much about the insiders of this particular company, Never met the CEO or any of their staff in second life. This worries me. I see a lot of folks around the SL Finance communities and I invest with only who I trust or who I've seen running existing business operations and am aware of their ability to manage their operations. That said, I can't make a judgment on this company much based on its leadership. However, I can say that the value proposition is potentially viable. The idea of providing a "Newbie Haven" in order to exploit marketing contacts and collect data as well as to attract vendors is far from uncommon in Second Life. The real question about this company is how will it distinguish itself from its many other competitors? What will make it succeed? How motivated are the executives? I've only seen a few operations like this last any amount of time and I'm very skeptical about its prospects, but at the same time I feel compelled to give people I do not know an opportunity to prove themselves. This investment has a significant risk, versus reward factor and may not be for the faint of heart.

OIG: Prospectus: Value Proposition: Various investments including those in real life.

Shares to issue publicly	7,000,000
IPO shares sold to date	61,619
IPO shares remaining	6,938,381
Total shares in company	12,000,000

Basing a company on RL investments has repeatedly proven catastrophic in Second Life. DGD has a policy of avoiding them because of this, and because of the potential for basing your security's performance on RL securities risks breaching REAL UNITED STATES SECURITIES LAWS which clearly state that any asset that is "fungible" is no longer just a game, but a real.. trading security. I cannot trade my DGD stock for cash at the cashier's counter or barter it for food. I could however, take my ford stock and theoretically sign it into my grocer's name for food if I have the certificate and they're willing to accept that trade. That said, I would not be surprised if this company is not shut down.. or does not even get off the ground. If it does, I'll day trade it, but won't likely own much of it for fear of the U.S. Attorney General's office shutting it down and I losing all linden value. Also, the biggest bank collapse in SL history (Ginko Bank) resulted from a Brazilian that was trying to make revenues from his deposits in RL securities. It amazes me that this CEO account is listed as being registered from Brazil. Same person? In SL, how do you know? I'd advise most investors to avoid this issue like the plague unless you're just day trading. Long term positions are at significant risk of catastrophic loss.

OMG: Prospectus:

Shares to issue publicly	1,200,000
IPO shares sold to date	154,887
IPO shares remaining	1,045,113
Total shares in company	3,000,000

This prospectus was generally okay with me as there are many successful clothing entities in SL, just depends on the talent of the artist. This is what changed everything:

Use of Capital

Use of Start-up Capital
L$700,000 - Labor for designing clothes *$2,777 usd*
L$350,000 - Strong Marketing Campaign for months 1-6
L$150,000 - Misc. costs (land tier, events, prizes/camping, etc)

If anyone tell me why in Second Life anyone should be paid up front $2,777 us dollars for the design of clothing when I can make a sweatshirt for free, I'll reverse my decision that this is a scam.

Shortened Product line description:
Lines of clothing equalling around 140-150 different outfits.

So they're charging shareholders 20 USD per outfit that may, or may not sell. I'll let the investors make the decision on this one, it could pay out, but I don't anticipating that recapping its initial investment value any time soon especially with the added costs listed that are not one time, but sustained long term costs.

"Someone pay me 2777, I'll make 140-150 lines of clothes for 2777!!! And then put them in shops for you.. and they'll sit there.. and they'll stare at you.. and they'll stare at you.. and you'll own it all! And you'll have to pay for its rental spaces each month so you won't really make that much money on it. Oh, and thanks for the 2777 USD!"

Sorry. Have to mock it just a little.

The use of capital needs greatly expanded upon and I think investors deserve more.

Summary in response to the comment here by an anonymous user:

Is ACE rushing IPOs out the door for growth? Out of these 5, I'd strongly question 2, and have some clarifications to ask of a third. I'd say, yes they are pushing things a bit and allowing their standards to slip? Yes. I believe they are. If they want to be anything as successful as their predecessor exchanges they must be more selective. In my time allowing IPOs at AVIX (what CAPEX was before it was purchased). I eliminated at minimum 90% of all IPO proposals. Of the few listed on CAPEX now, several were not even approved on my watch and only one company has ever failed that I allowed to list, (CYB). Skepticism is healthy, an exchange showing a lack of it, is putting themselves and their clients at significant risk of permanent, bad will and loss.

Thank you for your inquiry Anonymous. Anyone whose corporation is listed in this blog who would like to clarify their position of their company in the comments, please feel free to do so. We all know I am not a Nazi, I encourage free speech 100% so long as it is constructive and non-derogatory dialogs.

RLX of the WSE is dead.

noreply@blogger.com (Maelstrom) — Fri, 21 Dec 2007 23:23:00 +0000

Another company on WSE, which continues to trade, has collapsed within 4 months of opening. RLX no longer holds any land, It's CEO has been absent for a long period with the last posting date before the most recent December announcement being the only since October. It has no means of income. Company communications are practically non-existent. Most employees have moved on. If you have investments in this stock; selling now will save your shares from being WTF'd to 1/4 value possibly even less.

I come to this conclusion after talking to former employees, researching the CEO's landmarks to the land holdings for RLX in world and researching the financial details of the company which have not been updated since October. It is possible the company may be reorganized, but I've not seen this occur often on the WSE.

Additionally, another symptom of decay is the state of the maintenance of the company's main web page. It does not appear to have been updated or posted upon since August, which is the very month the company listed.

Interestingly enough, the WTF fund of the WSE actually owns 20% of this corporation. I am relaying this information to WSE administrators and requesting an investigation.

DGD expands operations

noreply@blogger.com (Maelstrom) — Tue, 18 Dec 2007 21:58:00 +0000

It's been a while since I've tried a land venture in the SL markets because land has been rough, but I found a pretty hopping club next to some cheap land today, called Club Wolf.

The experiment is inexpensive, 1366 to buy the land to get started, 2611/month to maintain if all goes well.

If you're interested in seeing DGD's new startup location, just drop by Mark Edge.

The shop's already set up and ready to rent!

Happy Holidays Everyone! Merry Chrstimas, Happy New Year!

noreply@blogger.com (Maelstrom) — Sat, 15 Dec 2007 19:38:00 +0000

There's not much to say about the market this part of the year as it tends to get slow and sluggish as not to many people bother with their investments or tracking the market around the holidays.. at least, I don't. However, there's a lot to be said about the WSE which continues to generate controversy about the numbers that it posts concerning its own data and competitive stature.

As Aldon Hyne has so clearly pointed out, there's little chance that WSE now contains over 90% of the market volume. There's just too much trading on the other exchanges. I am concerned that the Dreamland Stock Exchange(DSE) may no longer be a valid investing exchange for Second Life. If they cannot get their PED to Linden transfer tool working once again, then there would be no way to buy some of the companies listed on their exchange or to convert PED investments into credit that would be usable in the Second Life world. Contacts with Support ACS of Anshe Chung Studios and the Dreamland Estate have resulted in consistent apologies for the lack of functionality and a promise for a return to normalcy as soon as can be provided. I have no choice but to wait patiently to see if the matter resolves, but hopefully they've learned from this and it's one more vulnerability they need not worry about being subject to in the future. I hope they're being honest with me, because I don't think Anshe could afford verifiable bad press concerning in game business ethics but would reap bounty from verifiable good will and solid business practices. The Support ACS personnel were even kind enough to offer to contact me soon as they know the converter was functional once more.

Intlibber's BNTF also continues to have me concerned. Their atms are consistently off and their web page is now employee access only. It's a very disappointing situation as I thought they would be able to maintain a far more stable interface for their clients given the size of their other operations. I mean, if we cannot trust BNTF, how do we trust ACE? They're owned and operated by the same person. I'm willing to be patient, but the question is, how patient must a depositor be for reliable account access. This is not the first time the bank and exchange combination above has had "interface problems." Sorry I'm so critical, Intlibber, my old friend; but I have to keep to the observance of the truth of the matter and truth is that this pattern is very worrisome to anyone who has funds in your institutions. Feel free to say something in comments about whatever progress or plans you have to remedy the situation to your defense if you like. Their web page is still down as of the posting of this blog, I will be checking their atms again later today. At this point, I have no intention of withdrawing from either institution; I am simply on edge.

I am hoping the holidays will start an influx of funds into the markets of Second Life and that part of those funds may see their way to the exchanges. The economy of Second Life is, after all, simply a derivative of the extra spending money of all the people who use it around the globe. Most users are probably from North America and the U.S. So it leaves hope for a slight boom of profitability.

Congratulations to CAPEX on exceeding the other exchanges in Market Volume dominance according to independently observed measures. Let us hope all exchanges continue to see growth, strength, and a continuing push towards good will towards investors.

Note to self, Login before you blog:

[12:14] Nancy ACS: (Saved Fri Dec 14 21:31:45 2007) Hello:)
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:26 2007) You can transfer PED into L$ in our website now
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:27 2007) :-)

DSE on the ball. Go Anshe? I feel so wierd saying that.

Of management, exchanges, and risk.

noreply@blogger.com (Maelstrom) — Wed, 05 Dec 2007 09:31:00 +0000

I've been quietly pondering something the past few days. The risk of exchanges are directly tied to risk of management. Many exchanges have leaders who have a strong ideological sentiment. Sometimes these sentiments disagree and verbal barbs are traded. The problem is that over-asserting moral authority can be as devastating as letting crooks go. There's a right and a wrong way to do everything..

Do exchange heads have a right to assert their ideology? Doing so can potentially put their own exchange and assets at risk if third parties, that mainly being Linden Lab disagrees with the intent of the message and thus exposes their investors to additional potential risk.

A lot of recent argument has risen over the products SL Capex's real life company produces and the legal risks involved in that product. Some assert the Sports Arbitrage product is legal, others illegal. Though the product clearly does not list itself as a gambling instrument, its links to gambling can easily be seen. If it's not a matter decided in the courts because it has no legal grounds, does it become a moral issue? Do exchanges have a right to claim moral authority?

To me, the exchanges have been and always will be an instrument. The only real measure of "morality" is whether or not they operate a system of fair and equitable trading. To me, anything outside is external to the game; the content of real courts and greater powers. Besides, games of chance can be moral if not abused and simply a form of entertainment in some jurisdictions. The problem is the moral fabric of society is so weak that in most cases it must be illegal or severe consequences result because addictions are not overcome. Linden Labs has dictated that inside their world all gambling is illegal, but the applications in question have nothing to do with second life and in fact are sold for "information purposes" only according to the terms of service.

Do the heads of exchanges have the right to take such moral risks with their operations given they have such a great power and sway over the operation of the platform on which so many investor's investments ride?

To me the answer to all the above questions, are no.. not really. But I don't have much of a choice in the matter. Exchange heads will continue to attempt to assert "moral authority" due to competition. Exchange heads will likely to continue to sell their products despite what I may say perhaps.. or perhaps not.. to legal regret and potentially market wide regret. Personally, I don't see much coming of this discussion that will benefit market investors at all on any exchange. All I see is greater risks, even as more information is uncovered and more rhetoric is thrown about.

SL CAPEX stealing the show.

noreply@blogger.com (Maelstrom) — Wed, 05 Dec 2007 06:37:00 +0000

It's officially up over 20% from the past 30 days and no one else is even close to the incline. The real question, is this a long term gain? Are we seeing a capitol migration from other less savory markets or is this just a statistical burp? Time will tell. Without some solid foundations I can't begin to predict the future, but consistent dividends on many CAPEX issues may be what's the driving force in this market.

The Great Stage (the media). The War of Words. Don't be Duped.

noreply@blogger.com (Maelstrom) — Wed, 05 Dec 2007 06:21:00 +0000

This entire post is basically in response to this article and the basic fact that ACE and SLCAPEX are once again involved in a war for the hearts and minds of the public.

Unless you're on the inside and know something the rest of us do not, this is an examination of what you need to know about the exchanges. Lets review the facts.

1. Both exchange operators have support line access to Linden authorities. If they suspected anything that could be proven either exchange could/would have been shut down by now.

2. It's very rare for any accusations thrown at any particular exchange to have any evidence, besides a hacked up blog or sl log, to throw against the other.

3. The exchanges are enhancements to the game Second Life, they are market simulations that operate based upon businesses operating within the virtual environment and operated by third parties of which few know anything about (unless investigated) and could fail at any day.. including second life itself.

I have consistently operated under these assumptions with my fund. You should to if you want to know what's safe for your virtual wallet.

The solution to a market where risk is maximized and returns are potentially robust but also spread thin, is obviously diversification. I encourage you to ignore the press unless there's a bit more to it than snippets of blogs unless you have someone's trust. Ignore the reckless claims of giants with only the attractiveness of their trading platform's interest at stake. Investigate the companies you invest in, make sure they're real and not just digits on a board. Be wary of the ones making frivolous claims, it's often a sign of desperation and may in fact be the clearest way to decipher the risk of any individual institution.

That said, Market Dragon signing off, happy holidays all.

11/30/07 Market Report

noreply@blogger.com (Maelstrom) — Sun, 02 Dec 2007 18:18:00 +0000

Slow Growth amid bank carnage.

The second life equity markets seem to be stronger, even after the banking disasters. This could be because the bank that did actually fail was not directly related to the equity section of the SL Financial Community. The bank that was saved, Lindsay and Luke Bank, could have easily tanked the entire market if Linden Lab had not stepped in. I think that's the big story for this month also, Linden Lab actually moved to protect a failing institution. It makes all bank stocks a measure of a degree safer so long as you're sure their CEO is on the ball because it shows they can get help with enough persistence, diligence, and probably if they can show Linden Lab their paperwork.

That said, before depositing or investing with any bank, make sure you test their atms thoroughly to make sure they're not exposing your money. Something as simple as the withdrawing of a negative sum could tell you worlds about your levels of risk at the institution in question.

This month most exchanges have been moving relatively sluggishly. The 30 day chart on the WSE looks like the pulse of a dead man with only a slightly positive jog of 5%* which may only be temporary in realization and just by chance.. up while I'm writing this report. CAPEX has been showing some strength, it appears to be on an upward jog and has inclined by 10%* for this past 30 day period. The International Stock Exchange is in pain, losing over 18%* for the past 30 days. It makes me wonder what's going on over there that has investors in such a lackluster mood. My assumption is there was that the prices appeared briefly inflated on the ISE which is usually symptomatic of a large manipulating investor behind the scenes. That said, prices may have normalized and it may be time to evaluate for potential purchases. ACE is starting to pick up steam, offering 3 new ipos in addition to its current listing. The same concerns apply to this as with VSTEX's rapid expansion. VSTEX's index has been rising also, so most markets are flat or higher. I'd say that constitutes a pretty reasonable month. I hope they're dotting their I's and crossing their T's in security. The Dreamland Stock Exchange has also been its usual sluggish self with low volumes and mild price changes.

* % in market value changes are courtesy of http://www.slquotes.com

Launderers gone riot.

Something interesting about Dreamland Exchange, its currency converter from Entropian PED to SL Linden has been temporarily and perhaps permanently shut down due to an exploitation by money launderers. Any investment that is in PED sums is currently at risk of not being extractable within Second Life. I've been assured they're working on a resolution of this issue with the Lab and Entropian authorities. That said, it could also explain some of the lackluster behavior of the exchange in recent days. Until the shut down, I was pondering actually looking at the banks within Entropia as investment venues to help drive more revenues.

Reserved optimism.

So am I bear or bull on this coming month? Well, there's a lot of new strengths showing in the markets including a market element which has behaved in an unexpected and positive manner. I guess you could say I'm leaning towards the bull side of the fence a little but my constant conservatism inhibits me from taking aggressive action until I can see real strength. I am looking at the new IPOs on all the exchanges carefully and adding a small sum of each to my portfolio so that they can be traded and profited from.

.

The Drama from italy continues.

noreply@blogger.com (Maelstrom) — Thu, 29 Nov 2007 18:24:00 +0000

I've no longer access to their website, login no longer functions.. but this is the google translated text of their new main page:

###################################################################

Consequently, the occurrence of unexpected situations and not plannable, we absolutely unintended and therefore independent of our intentions BISL temporarily suspending its activities. The over-mentioned reasons relate in particular the priority by our staff to solve the problems posed to us by Linden Lab's own initiative and arbitrarily proceeded to withdraw large amounts of Linden dollars by our avatar claiming justification at all matching truth, specifically purchases NEVER occurred lindens through online auction sites. This has been added to the suspension of some of our avatar from Second Life therefore now unusable because, we believe, reports of a third party. Pending resolve the incident Bisl will resistuzione manual part of the sum from us in committing deposit within a reasonable time, in case the problems with LL were extremely long, to move closer to 100% of the total hoping that Linden Lab allows us, if, to use our people at least to sell the land we owned. All this with the will to demonstrate once again our good faith even with the awareness not to be forced also, and above all according to what is expressed in, and used "notecard" present in our ATM at the acceptance of our services, Notecard here for completeness of information included in his "General": GENERAL • Bank of Italy SL allows users of Second Life to open current accounts with a daily interest that can earn on their savings rather than leave them to stop lying in their account. Bank of Italy SL takes the total deposit and reinveste or to various entities and persons in order to obtain the needed to pay interest daily. We always keep a reserve exist in "linden dollars" to allow customers to withdraw from their accounts most often instantly, sometimes after a few minutes per hour. We must clearly underscore that, as a result of interest payments per day, the Bank of Italy SL has the absolute need to capitalize on the "money" deposited. By virtue of the above, therefore, we can not guarantee that payments will be made in quickly, it being our absolute commitment to pursuing this goal. This type of activity is obviously subject to obvious risk. Those accounts are not insured in any way by any government, as in the case of many current accounts in real life, as we can not guarantee not to ever go into a bank route. Certainly Bank of Italy SL does not want this and we will strive to ensure an always solid and reliable, but is fair and honest to be aware of the risks described above. We apologize for any inconvenience hoping in more quickly as possible to resume our activities. Bisl Staff

##################################################################

Unedited. Looks like my decision to contact Linden Labs regarding the vulnerability lead to some more research on the part of the Lab into how this institution operated with unexpected results. I don't know who's telling the truth, so I'm not going to step into the conflict as a banner carrier for the Lab or for Banca D Italia. What I will say is that extremely high returns on interest have to come from somewhere and usually it's not entirely legitimate.

New Blog Functionality! Index Charts.

noreply@blogger.com (Maelstrom) — Wed, 28 Nov 2007 17:10:00 +0000

This is just a thread to allow my visitors to sound off on their thoughts of the appearances of the Indices on this blog. I'm trying to find a DSE index, but have had no luck yet. Also if you have any other comments on the appearance or the structure of the blog that you'd like to voice an opinion on, feel free to do so. I'm always out to improve this interface for the general SL Finance market and am trying to make as many resources available as possible without introducing an excess of clutter.

LL moves to save LNL? LL waking up finally? VSTEX growth rate dangerous? WSE wising up?

noreply@blogger.com (Maelstrom) — Wed, 28 Nov 2007 02:22:00 +0000

I had to write about this, because if it's true.. and I stress the if, then it's the best news ever to hit Second Life financial sectors. Lindsay Druart, CEO of LNL, has claimed that all of the funds lost in the banking heist incident has been recovered through Linden Labs (LL).. that the bank has in fact been compensated for the massive hack/fraud attempt.

If this is true it would be the first time I've ever heard of Linden Labs stepping in to help any player involving third party software recover funds due to an abuse or an exploit, particularly on this scale. It makes me wonder why when so many of the other banks have gone down in the past due to similar issues, they had not stepped in. It also is such good news that my speculative nature makes me have to second guess my trust of the claimant, again. I wish there was a direct method of verifying the claim as if so I'm sure a substantiated proof of this would radically impact the Second Life markets in a positive manner. In the past, investors large or small had absolutely no recourse when something went horribly wrong.

That said, I've not noticed significant market activity, that couldn't be associated with insiders on any issue on CAPEX or any other exchange this week. It's actually been rather slow. That said, I'm anticipating business as usual as the holidays approach baring new product ideas or new news. On the other hand VSTEX has seen a flurry of new offers that makes me wonder if the community standards protocols are going to be effective in preventing fraud on that exchange.

When I headed an exchange as AVIX's operations officer, I found that 90% of all proposals were either bad, or fraudulent in nature. Even the ones that passed the screening, of them, 1 went bad.. and there were about 8 other corps that made it through the screening. The bad one was CYB, which is no longer listed on CAPEX. I've been accused in the past of granting bias for the CEO of CYB because their avatar was a dragon lady, which is ridiculous.. given I'm married and that'd be the same premise as granting favors to someone else who is also the same rl ethnicity, especially when the person behind the PC happens to be a male it makes the premise even more rediculous. I knew quite a bit about that CEO, but the parties who make the accusations have no idea of the levels of precaution I took to attempt to protect the investors of the old AVIX exchange. My interrogations tended to be rigorous. I required a method of RL identification. Even Lindsay Druart herself was verified by me at one point, although I questioned her twin exchange listings on WSE and CAPEX. I verified her by tracing her internet account back to its listing source using WHOIS.net functionalities and checking her domain's ownership on several of her internet sites. Some of it can be faked, but it really depends on the ISP and how they do their listings. I no longer trust GoDaddy, anyone can get an account there it seems regardless of proof of identity. I kept my methods secret at the time because I didn't want a potential fraudster to have the opportunity to prepare themselves for interrogation and the best remote background search I could sustain. I never got more adventurous than remote verification because I've always been concerned that anything more may actually be a breach in Linden Labs privacy policy/terms of service and that would end my short career in second life finance.

With that tangent done, back to my point, any exchange witnessing explosive growth will more than likely experience higher than comparative rates of fraud for more cautious exchanges. This has proven true in the WSE/CAPEX comparison. WSE has delisted many companies that have failed or proven fraudulent enterprises.. you just wouldn't be able to tell it because delisting usually means a complete wipe of all history of that corporation's existence. Their monthly rate of delisting has also been higher over the course of history. I'm expecting their rates to fall though. The criteria used on WSE seems to be tightening and I'm hoping that will result in improved performance, especially in the area of fraud deterrence.

Banca D Italia has not paid interest on my account since 11/20/2007, the date I isolated their programming issue. I'm very concerned someone got to them first as, why else would the interest accumulation halt? Thus far withdrawing and depositing has not been effected, but this activity is strange and so far messaging to them via their website and IMs has gone without a response. The day I reported the issue, the owner of the bank said they should be able to isolate any strange transactions and the programming problems with the atm were fixed as far as I could tell. I'm hoping they've not mistakenly pegged their savior's account as an aggressor in their search to isolate any questionable transactions, that'd be a real pity if such ingratitude were mistakenly displayed. I'd hate to have to stop using their bank, the fund's money must work.

Dreamland's Currency Convertor abused on day of bank heist.

noreply@blogger.com (Maelstrom) — Sun, 25 Nov 2007 00:37:00 +0000

I just discovered from talking to a support associate for ACS, after checking on my dreamland account, that the currency converter for PED to linden has been shut down on a temporary basis while a security issue is addressed. Someone moved a lot of money through their currency conversion utility The alleged laundering occurred approximately the same day as the massive SL bank heists. Although DSE was not subject to the same exploits as I've seen at many institutions, it brings to light another problem.

Banks and exchanges with currency conversion utilities; whether it be one game currency to another or game currency to dollar, face many more complications and should be dealt with carefully. If the institutions in question are not properly formatted for use there is a possibility of exploitation for illegal means that could render the institution itself liable. This would have the potential of destroying that institution, so please.. be careful where you invest. I am sure Dreamland will fix this problem and be back up and running in little time. They're all very professional and this is a problem I'm sure that was not anticipated. The support associate told me they were currently in talks with Linden Labs and Entropia in an attempt to solve the problem and nail the perps.