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Saturday, 20 August 2016

An update on my Profits and Wealth as at July 2016

Now that we are over half way through 2016 it is worth updating where i am in my wealth and how my monthly profits are progressing.


The Strategy


First, lets remind ourselves of my trading strategy.


My greatest constraint is time - i don't have much of it.  There are times, like recently, when i can only log in once a week.  Hence, my Business needs to be able to operate under such constraints.


Therefore, the aims of the strategy i have adopted since Day 1 of this blog is that


- each account must be able to make a Plex a month.  I want to play Eve for free.

- each business venture must be able to make a Plex a month (i.e. Inter Region Trading vs PI vs invention vs etc)
- assuming i can log in for no more than 45 minutes per day

As a reminder, i have 2 accounts and so 6 alts in total.  One alt in each trading hub (Jita / Amarr / Dodixie / Hek / Rens) and a second on Jita trying to make my null sec trading work.  Each of the alts (except the null sec trader) also sells into a second region, the Jita alt sells into two regions.  In all, therefore, i am selling into 10 markets (i don't sell into Jita).  My null sec trader is not trading at present - that is on the "to do" list.

At present, my main and only ISK earning is inter-Region trading.
My Trading strategy remains unchanged.  I am looking for slow moving products to sell at high profit margins (minimum 20%).  This is in contrast to other (much richer) traders out there who look for fast moving but low margin items to sell.  My style suits my play time.  I am trying to avoid the competition whereas the other traders take them on (and win).  Therefore, even if i log in once a week, i only need to update about a third to half my orders.


I also only Buy from Sell orders - the nature of my business means that it is more important i have the items on the market ready to sell rather than spend time updating Buy orders waiting for them to be fulfilled.

As an example, an item that I can buy for 100m ISK from a Jita sell order and sell in Dodixie for 130m in 5 days time with no maintenance to the sell order is fine with me.  In fact, that would be just ideal.  If i had 5 products that did that then i would earn 150m ISK over 5 days for 500m ISK invested.  That is more than halfway to getting me a Plex a month.  (before taxes etc etc but you see my point).

As a general rule, if I am able to log on for at least 45 minutes each day then I make 7bn ISK per month.  When real life is busy I make less (sometimes close to nil) and other times I make more.


(In my next post i will update on the mechanics of my business).




Current Wealth

My current wealth stands at 311bn ISK, as at end of July 2016.

My wealth is calculated by adding all Sell Orders less 20% value of Sell Orders as a provision against cutting prices over time + Buy Orders + Items in Production + Items for sale in hangers  +Items for sale in transit + ISK balance + Plex.

I don't value BPOs or BPCs or Ships or Towers etc.

The reason i take the 20% provision on the Sell Orders is that i am trying to estimate what i could re-sell my items for if i needed to liquidate them.


The majority of my wealth is Sell Orders (244.6bn) on the market (less the 20% provision of 48.9bn) - that is how it should be.  That is my best chance of increasing my wealth at the fastest rate.

The 892m "Buy Orders" are some Commodity Items i am messing around with - not really making much from them so i suspect i will ditch that as an idea.

The 10.9bn "Items for sale in hangers" consists in part of items waiting to ship to my trade locations but mostly to items that i used to stock in a null sec station - but trade was poor so i repatriated them back to Jita and will seed another null sec station once i find a suitable idea.

The 14.2bn "ISK Balance in Wallets" is actual ISK i have ready and available.  In reality, i would like to get that down to a floating balance of 5bn at a time.  The one thing i know about that 14.2bn is that it has no chance of generating additional ISK by just sitting in my wallet.  I need to make it work for me.

And the balance of my wealth is made up of Plex (88.9bn) i invest in to soak up surplus ISK i may have - see the end of this post for more on this matter.

Worth taking a look at how the Sell Orders are distributed around my characters, as shown below:


- each of the "sellers" and "Jita Operator" sell into two markets.

- the "Jita Operator" does not sell in Jita but in two Regions next to Jita (Lonetrek and The Citadel).
- The "Dodixie  Seller" and "Rens Seller" is a similar size to the "Amarr Seller" even though Amarr is a much bigger market.  That is because i find Amarr very competitive and so i don't sell all my products in Amarr.
- Hek only holds 30bn of Sell Orders vs Rens which holds 51bn.  That is because Hek is becoming a slow trading hub and so i tend to stock less of each item for sale.
- the "Null Sec Seller" is not selling anything in Null Sec for now.


Profits


In 2015 i made 109bn ISK vs 96bn in 2014.  In the first 7 months of this year i have made 44.2bn ISK - so clearly slower than even 2014 which reflect the decline in Plex prices and my lack of time to log in.  The decline in Plex has reduced my wealth by 16bn.  Either way, i need to pick it up in the final 5 months of this year!  Perhaps a rising Plex price will also help out.



Monthly Profits


I operate on a monthly cycle - i.e. i aim to be fully invested in the market at least at the month end as a minimum and have Plexed my accounts.  That also gives me an opportunity to see how my wealth is changing, as shown in the chart below.




As shown in the chart, i tend to make between 1 to 10bn per month.  I have had one loss making month and a few near 20bn.  The low and high months tend to reflect the move in Plex prices.


That said, what this chart also shows is that i have been unable to break out of that sub-10bn per month level.  That reflects the reduced time i have available to log in.  However, to meet that challenge i have devised a method by which i can log in for 15 minutes a day and hopefully boost my monthly profit.  Will be trying this from September onwards.


I also should invest in a laptop (i own a desktop and then nothing until i get to an ipad) for when i am travelling on business.


Another way of looking at my monthly profits is to see what the monthly profit is a % of my total wealth.  In other words, how hard is my wealth working for me?




Essentially what the above chart shows is that as my wealth increases i am not making any more profit and so my profit as a % of wealth is falling.  I need to reverse that.


One of my favorite charts shows my wealth at the end of each month and the ISK i make per day:




The blue bars represent my wealth at the end of each month - using the left scale.  The red line represents the daily profit in each month - using the right scale.  I like this one - it irons out the fact that some months are 30 days and others 31.  It also shows that when i am operating at full speed i make 650m per day and so i can afford a Plex every 2 days.  That has to be the aim though i will be happy if i can make 400m per day on average (= about 12bn per month).



Make up of Wealth

My aim is to ensure all my wealth is trying to make a profit.  The chart below shows how my wealth has been deployed over time:


Two items jump out.

Firstly, my investment in Plex is now a noticable part of my wealth.  I have not bought a Plex since March 2015.  In total, i have spent 86.8bn on Plex and it is now worth 88.9bn.  Not a bad investment at all.  More later in this post.

Secondly, the biggest part of my wealth is Sell Orders (notice the 20% provision at the bottom).  That is how it should be.

If you look hard, you can see the "ISK in my wallet".  During parts of 2015 it was reasonably high.  That ISK in my wallet is not very helpful, it is not making me any profit at all, and never will.  During 2015 it was too high so i took it down to nearer 10bn ISK in my wallet, i have now decided to take that down to 5bn to cover daily business costs.

Also, items for sale in my hangers is of no use - right now that is running at 10bn ISK also which i need to reduce.  These tend to be items that i once wanted to sell but for whatever reason are no longer in demand or items waiting to be shipped out to the selling locations.

The 20% Provision is currently reducing my wealth by 49bn - i don't mind that.  Keeps me honest.  Profits are only really profits once converted into ISK.  Csah is King, as they say.



Plex Account

My reasons for investing in Plex i detailed in an early post but in summary i find this is the best way of investing surplus ISK to hold its value in the game (i.e. an inflation hedge).


I started investing in Plex back in February 2014 (at a starting cost of 636m per Plex!).  Since then i have entered the Plex market a further 5 times and now own 94 Plex, valued at 88.9bn ISK (=946m per Plex).  I last entered the Plex market in March 2015, as show in the chart below:




My in cost of Plex is 710.5m vs the end of July value of 946m, so a 33% rise.  Not bad as an investment.

As an aside, the recent rise in Plex made me 5.3bn during July though i am still 23.2bn ISK down from the peak.


4 comments:

  1. Good to see you back! Always nice to see how your business is going.

    ReplyDelete
    Replies
    1. never left :) RL work just been more time consuming recently.

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  2. Have you noticed a decrease in return now that the market taxes have been raised?

    ReplyDelete
    Replies
    1. not obvious if the increase in tax has had an effect so far. That said, I tend to trade in items that are slow moving and high margin - hence, I can raise my prices to cover the extra tax and not see a noticeable fall in volume. I think, not sure yet.

      Delete

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