July Financial Report

Overview

June and July were periods of rapid growth, both in terms of buying power and activity spread. I’m now able to have my fingers in more markets and more item types, helping to spread the risk.

Graphs!

Out performing the liner projection the past three months.

My purchase sprees have grown in volume over the past few months. They keep topping out at larger amounts.  18.5, 21.1, 25.2, and now 25.5 B purchased in a single day. I love seeing the holding account balance go up, but liquid ISK is idle ISK. Throw is back into the market unless you are accruing a balance for a project.

Major Points

1. New milestone reached as I moved 103.7 B ISK this month.

Subscribing to the Bulk Trade mailing list has fueled buying in large quantities. Why buy two Scimitars off the market when you can buy 20 and get a discount?

2. Speculation on Cobalt

I logged into Jita about 35 minutes after the Devblog was posted citing changes to Alchemy. At this time the majority of Cobalt was off the market, so I was only able to get 26k units @ 1,580 (41.7 M) and then I foolishly bought 15k units @ 7,000 (110.7 M).

As of this writing, Cobalt is sitting at 2,800 in Jita so I highly doubt that I was turn a profit on these speculative trades. I didn’t run the numbers after the announcement so I’ll accept the loss on this.

Despite the loss, it was fun to refresh the markets and watch the speculation drive prices. I hope for more changes to the moon market this fall.

3. Mobile Application

This has proven to be a powerful way to remain connected to the market. I’m currently able to monitor sales and purchases. This lets me keep mental notes of what needs to be restocked or adjusted. In the future we hope to expand it with more Android style touch options.

Some ideas that we have been throwing around is that of a cart. If you are about to sell out of an item, it will shade the row and holding down on the row will bring up an action menu. You can look up history, item trading performance, or add the item to a restock cart.

4. Industrial Partner

Raath, the author of Staticmapper and DRK Industry Tracker, and I are forming an industry and trading partnership. I’m taking my idle stack of blueprints and putting them to use.

We’re polishing off our invention and Tech3 production skills so we can start to mass produce ships and modules. *sigh* do you know that it is going to take 50+ days to be able to produce a Tengu hull and Subsystems?

Idle blueprints

Invention skills

5. Implants

The adjustments to Faction Warfare rewards killed profits on implants for me for over a month. I waited for the price to adjust and am back to trading these in high volumes again. In the past month implants are back in my highest performing group and I’ve moved 2,880 implants in the past 30 days.

6. Wallet Manager

For those of you that have been asking about my Wallet Manager program I have good news. A group of developers is using inspiration from our team and is coding up a public version for everyone. I chat with them daily on irc.coldfront.net and will have a post about this once we have some public-facing content.

The Future

I’m going to get my new partner, Raath, up to speed on the trade operation. He is bringing a large number of production alts so I’m looking forward to putting all our idle blueprints to use.


Percentage of Items from Invention vs Tech 2 BPOs

A while ago CCP Diagoras posted some statistics on Twitter for the percentage of items that come from Invention vs Tech 2 BPOs to help quell the tinfoil hat theories that Tech 2 BPOs control the entire market. I recorded and sorted the tweets, but never released them.

What does this mean for you as an inventor looking at the market? Well, you will most likely want to stay away from the red items as the Tech 2 BPO owners have a stronger control on the price and can undercut you below your profitability threshold.

If you are interested in further Tech 2 BPO research that I have conducted, take a look at the T2 BPO Returns post.


Tech 2 BPO Returns

Stirring the Hornet’s Nest

The allure of Tech2 BPOs is high and the history surrounding them is very controversial. If you don’t believe me, perform a search on the forums and you will feast on delicious tears. Industry people have been forum raging about this topic since the introduction and CCP has not dared to make any adjustments to them.

Short refresher for non-industrialists: T2 items are manufactured from an invented blueprint copy that, based on success, comes from a copy of the T1 BPO + datacores + sometimes a decryptor to modify attributes of the end T2 BPC.

Owning a T2 BPO means you can bypass the invention process and manufacture with solely the T2 BPO that has unlimited runs.

Why the bitching? The majority of forum posts about T2 BPOs complain that the individuals who won them during the lottery phase print ISK.

Yes, they were very lucky and didn’t have to put down multiple billions for the BPO. Yes, they had a monopoly on T2 production. Had. The invention system, which was introduced after the lottery system, allows many people to participate in the T2 process. More competition, lower prices.

What’s the allure? For you PVP people, think of a T2 BPOs as a Titan — a giant prize that you can show off, protect, and use to enhance your infamy. When I first started getting into industry in 2008, I thought these were the win button of Eve.

Now the only way to get one is to buy one from another player, which brings me to my research. I want to show everyone that even though they do make money, the return on the investment is very poor in the majority of cases.

The Research

Below is a list of T2 BPOs that have sold on the public Eve Online forums. I used a market program to figure out the yearly profit and divided that by the sold cost to get a return.

Though you may be drawn in by the yearly profit numbers, consider the amount of ISK used to achieve that number.

A few of the BPOs seem to have a reasonable return and might even be a slightly reasonable investment if you can keep it producing 24×7. It looks like some Ammo, Mining Crystals, and Torpedo BPOs will start to turn you a profit beyond the original investment in 2-3 years. I would definitively stay away from the 5+ year items as I think a change to the invention, research, or nerfing of the T2 BPOs will most likely happen soon(tm).

A Loss?

Yes, I have found that a few (maybe 3-4%) of T2 BPOs return a loss. The ability of players to out manufacture with the Invention process sinks the profits below that of a researched T2 BPO. Keep in mind that if you own a T2 BPO, you only produce one item. During the build phase you can’t do anything else with the BPO.

The beauty of the invention framework is that you can be more flexible and can react to changing market conditions. The drawback is that there is an increase in the complexity to produce an item.

Better Methods

If you have piles of cash and want to sit idle in a manufacturing station making sure your T2 BPO is constantly in production, you might want to consider buying some. For the average industry person or corporation, it is a very poor investment.

To compare performance numbers, I am making around 8 B a month turning over 31 B. A T2 BPO, equal to around the same amount of capital, will make you 3.5-7 B a year.

Not a solid investment in my book. Put your money elsewhere.

Rage Against the Machine

I haven’t seen an idea to resolve the imbalance that I have liked yet. More on this later.

It does seem that the market impact isn’t as big as the hype indicates according to CCP Diagoras.

[update] April 4 2012

@CCP_Diagoras

The Good

93.95% of T2 Gyrostabilizers produced in March 2012 were from invention.
In March 2012, 90.23% of Hulks and 84.17% of Mackinaws produced were from invention.
89.77% of 1400mm II, 82.00% of Tachyon II, 87.34% of 425mm Rail II, 74.23% of Torpedo Launcher II produced in March were from invention.
55.25% of Improved Cloaks and 91.93% of Covert Ops Cloaks were produced via invention in March 2012.
86.81% of 220mm Vulcan Autocannons produced in March were produced through invention.

The Eh

67.85% of Sabres and 65.01% of Wolves produced in March 2012 were the from invention.
72.27% of the 2,005 Falcons produced in March 2012 were produced through invention.
66.13% of Ishtars and 63.53% of Zealots produced in March 2012 were produced via invention.

The Ugly

27.60% of Curses and 22.16% of Pilgrims produced in March 2012 were from invention.
Only 7.07% of Absolutions and 23.62% of Sleipnirs produced in March 2012 were produced through invention.
44.58% of Cerberus and 6.00% of Eagles produced in March 2012 were procuded through invention.

tl;dr

Post lottery, T2 BPOs do make very passive income for a very large price. For the time it takes to get a return on your investment, the capital could better be spent in other areas.


Building a Jump Freighter

*Warning* Eve Industry Speak Ahead!

I have always been a builder. Even as a young child I would construct elaborate towers of falling water in the kitchen sink with dirty dishes and cups. My parents told me that I would entertain myself for hours with a small stream of running water and some dirty dishes.

There is something satisfying about taking smaller components and arranging them in a way to serve a higher purpose and I have definitely channeled this passion into Eve. Though the T2 production chain is complicated, there is a beauty to it.

I spend a lot of time on the Sell Forum section of the Eve website. Some deals are in your favor, but you have to do your research. One evening I found a person selling some invented Jump Freighter Blueprints and that really interested me. For a while now, I have been looking to put my Capital BPOs to good use as they have been sitting idle in station for over a month now.

The contract was for 6x ME-1 Anshar BPCs for 700 M, so 116.67 M each. I looked at Jita contracts for ME-1 BPCs and they were selling for around 180-200 M.

Perhaps I stumbled upon a weary industrialist looking to sell his inventory? The offer seemed like a legitimate deal so I accepted it. He even threw in two Obelisk T1 BPCs for free which run about 35 M each. Nice.


Channel Name:    Private Chat (Seller)
Listener:        Blake
Session started: 2011.08.15 19:19:54
—————————————————————

[ 2011.08.15 19:19:56 ] Blake > hi
[ 2011.08.15 19:20:00 ] Seller > hey bud
[ 2011.08.15 19:20:04 ] Seller > you into those bpc?
[ 2011.08.15 19:20:17 ] Blake > nice price
[ 2011.08.15 19:20:19 ] Blake > I’ll take em
[ 2011.08.15 19:20:24 ] Seller > i’ll do all 6 for 700m
[ 2011.08.15 19:20:30 ] Seller > ok, contract to you? now?
[ 2011.08.15 19:20:36 ] Blake > yep
[ 2011.08.15 19:20:59 ] Seller > need those obelisk bpc as well?
[ 2011.08.15 19:21:21 ] Blake > not right now
[ 2011.08.15 19:21:35 ] Seller > foc
[ 2011.08.15 19:21:37 ] Seller > you can have them
[ 2011.08.15 19:22:33 ] Blake > foc?
[ 2011.08.15 19:22:39 ] Blake > oh oh free of charge?
[ 2011.08.15 19:22:40 ] Seller > free of charge
[ 2011.08.15 19:24:17 ] Blake > thanks man
[ 2011.08.15 19:24:24 ] Seller > my pleasure
[ 2011.08.15 19:24:26 ] Seller > enjoy :))
[ 2011.08.15 19:24:31 ] Blake > fly safe

Well now what do I do? I also needed to purchase the Gallente based Advanced Capital Ship Components which run 13.5 M each at NPC prices and get them to at least ME 10.

Right, now to build the things! Our T2 production page of the wallet manager is still taking shape, so I had to resort to using Excel to calculate the build costs.


Now before you rush out to get into Jump Freighter production, consider the large amount of time and capital involved.

First you need the T1 item for the T2 production job and building an Obelisk from BPCs kills the profits. If you build them from BPOs, there is about a 110 M profit at Jita mineral prices. Also, in order to timely produce a freighter, you need multiple copies of the BPOs. I found that you need 1:1:3:2 in order to build a freighter every 15 days.

Second, you need a freighter BPC for Invention, which take around a month copy or you can buy one on the market for around 35 M. Datacores for the Invention job cost about 18.4 M and are consumed during the job. For a ship of this cost level, you are going to also use a decryptor to affect ME output of the T2 BPC, which costs about 6 M and is also consumed.

Now stack up the odds of the Invention success chance with a 41.58 % theoretical max success rate, which means that a successful invention job costs around 61.7 M and takes 5 days for the result and you can see why this isn’t a common industry production chain.

Whew, now to put all the items together to make a fancy Jump Freighter!

If you like these type of Industry posts, let me know. I’m not sure if I should continue to write them or file them under ‘nobody cares’ like Eve Fail (a site which I personally enjoy).


Experimenting with T2 Production

I’ve decided to try my hands at Tech 2 production. I trained up three alts with Laboratory Operation V, Advanced Laboratory Operation IV, Science V,  ‘Beancounter’ Implants,  Mass Production V, Advanced Mass Production IV, and numerous Science skills in order to start on this endeavor.

Tech 2 production is much more complicated that Tech 1. With Tech 1, you can produce your item with minerals. Tech 2 involves moongoo, PI items, Morphite,  and an invented Tech 2 Blueprint Copy. Yes, yes, there are Tech 2 Blueprint Originals – we’re not getting into that conversation.

I plan on purchasing the Advanced Materials and producing Tech 2 Components. After some shopping in Jita, I ended up with a nice stock to start my production line.

I purchased a lot of BPOs for ships, drones, and general popular ship modules. After some reading, I decided to setup a Large POS with around 9 Labs. I have a mixture of Mobile Laboratories (1 Copy, 3 ME, 3 PE, 5 Invention) and Advanced Mobile Laboratories (3 Copy, 2 ME, 2 Invention).

I wanted to be able to keep track of how each item was performing because Invention success is random. I discovered that the API item “completedStatus” gives a 0 for a Invention failure and a 1 for a successful T2 BPC.

After creating some logic for the job result, I now have a nice section in my wallet manager program to track Invention jobs.

Next up is to create a page in my wallet manager that can report on the profitability of Tech 2 items as these values fluctuate with the prices of moon products.

Wish me luck. I would love to hear any tips from fellow Industrialists.