Games
Games
Technical Trading in Second Life Stocks
Submitted by Aldon Hynes on Sun, 12/16/2007 - 15:34The recent discussions about exchanges and trading strategies in Second Life has prompted me to explore a little bit more some of these ideas. At the first public class of the Investment Education Team, there was a discussion about price earnings ratios. It was noted that stocks in Second Life seem to trade with little correspondence to these ratios. With banks and exchanges paying as much as 44% interest per annum, it means that any stock with a Price Earnings ratio higher than three needs to be less riskier than the banks or exchanges, to justify such a ratio, and that just isn’t all that likely.
So, it may be useful to move from fundamental analysis to technical analysis of the stocks in Second Life. Three exchanges, SLCapex, ACE and VSTEX provide in a format that makes it easy to do some of this analysis. A fourth exchange, ISE provides some similar data, but in a different enough format so that I haven’t gone out and added it to my mix of data.
Specifically, using the data feeds they provide, you can build your own data store and ticker plant. I wrote a little bit about that here. Now that I have a good store of data, I can start analyzing some underlying trends.
Analysis of Second Life Exchanges
Submitted by Aldon Hynes on Fri, 12/14/2007 - 20:49People have asked me my thoughts on the World Stock Exchange notecard, and particularly, section 3 where they claim
The WSE has over 95% market share and we ask that users express caution when dealing with the recent start-up exchanges as they are operating basic websites and trading platforms with extremely limited functionality compared to that offered by the WSE.
People have questioned how this 95% market share is calculated, and I must admit, I have no idea. So, I thought I would do a little digging into data available from the different exchanges. The International Stock Exchange (ISE) appears to provide the most detailed data, which can be aggregated. The Virtual Stock Exchange (VSTEX) provides detailed aggregated data. None of the other exchanges provide this sort of data in any readily accessible manner.
As a side comment, this calls into question the claims of extremely limited functionality that the WSE provides. Another key part of functionality that I rely on is the datafeeds that VSTEX, Ancapistan Capital Exchange (ACE), and Second Life Capital Exchange (SLCapEx) provide.
By taking this data, making projections out of data from ACE and adding in data from a recent report by SLCapEx, a fairly detailed picture emerges.
Over the past month, over 30 million Linden Dollars worth of stock exchanged hands. Approximately 41% was on the SLCapex, 38% on WSE, 10% on ACE, 6% on ISE and 5% on VSTEX.
At least from my experience and the data I’ve seen, WSE’s claim do not appear to bear up under scrutiny. That said, we would all be better off if all of the exchanges provided much better details about their historic volumes as well as historic data about deposits and withdrawals from the exchanges.
Second Life Deadpool
Submitted by Aldon Hynes on Fri, 12/14/2007 - 13:23Yesterday, I wrote about the Second Life Exchange Commission and the Investment Education Team in Second Life. Both groups have an interest in how trading in Second Life is viewed. Today, I received a note in Second Life from the World Stock Exchange (WSE) about what it going on there, and yesterday the Second Life Capital Exchange (SLCapEx) issued a report announcing that they had surpassed WSE in volume.
The WSE notecard talked about Ginko Financial, Midas Bank and Merlin Investment Bank, all companies that have joined the Second Life Deadpool. Perhaps we need to track the Second Life Deadpool similar to how TechCrunch tracks the technology firm deadpool.
Currently, there are forty-seven companies listed on WSE. When I started trading there, it was around seventy. Between the two dozen that have disappeared from WSE, and another half dozen at SLCapEx, the Second Life Deadpool has plenty of members. This shouldn’t be too surprising. As the TechCrunch deadpool shows, technology companies constantly come and go. In a place like Second Life where the barriers to entry are even less and the potentials for fraud are even greater, the deadpool can get crowded pretty quickly.
This should be a reminder to potential investors. Investing in Second Life companies is highly risky. The WSE notecard tries to remind people this, as has the IET training. Yet WSE goes too far, I believe in stressing the ‘fictional’ aspects of their services and the Linden Dollar. Perhaps there are some exceptions to the companies list, but by and far, these are real companies selling real goods and services. The Linden Dollars that they earn and the Linden Dollars deposited at the Second Life banks can easily be converted into U.S. Dollars. One person I spoke with who lost a fair amount of Linden Dollars when Ginko Financial collapsed had been saving that money to pay for their trip to the Second Life Community Convention. There was nothing fictional about this person or their dashed desires to travel to Chicago.
So, as trading continues to grow in Second Life, so will the Second Life Deadpool. Hopefully investors will become more savvy and invest in companies and exchanges where they are least likely to see their investments end up in said deadpool.
SLEC and IET
Submitted by Aldon Hynes on Thu, 12/13/2007 - 14:20Last night, there was another meeting of the Second Life Exchange Commission (SLEC). Like the previous meeting it was long on contentious discussion, and short on actionable items.
Like the previous meeting, issues of how the SLEC can establish credibility were discussed, with plenty of comments about people needing to check their egos at the door. Unfortunately, no one seems able to check their egos at the door, and SLEC remains mired.
What next for Linden Lab?
Submitted by Aldon Hynes on Wed, 12/12/2007 - 12:21Massively has a few posts up about Cory Ondrejkas (Cory Linden) leaving Linden Lab. Cory is quoted as saying, “Philip and my visions for the future of Linden Lab are divergent enough that he decided to lead in his own way”.
In the comments, Prokofy Neva says, “I think the public should know what these "engineering differences" are, especially because we're still *on* this wild ride.” Nimrod jokes, “Prok something is wrong with me... I am agreeing with you!” Well, I’m in agreement with both of them, but I’d like to move the discussion even further.
I suspect that there are at least 11 million different views about the direction of Second Life. 1.5 million of those views have been thought about in the last sixty days and at any given point there is likely to be between 30 and 50 thousand such views.
From my perspective, a lot this has to do with the relationship between Linden Lab and the open source community. Version 0.5 of OpenSim should be coming out soon. I run an OpenSim grid on my home network. I’ve heard that there are plenty of OpenSim grids inside of IBM. Perhaps most importantly is the emergence of CentralGrid. CentralGrid is an alternative grid, based on OpenSim. They are busy coding enhancements to OpenSim to make it a viable alternative grid, that even the business community can get involved with, and they have attracted interest from many of the business groups in Second Life that I follow.
Of course, there are plenty of engineering differences within the OpenSim community as well. I believe that an extremely important part of the virtual world experience includes a well functioning currency. CentralGrid is working on that, but others in the OpenSim community seem to view currency as a distraction.
It clearly opens up lots of interesting issues. How well can you trust the currency of CentralGrid versus the currency of Linden Lab? How would currency work in a grid where anyone can add their own regions? What sort of interworld currency markets will exist?
There are plenty of additional issues that come as we start looking at a world of intergrids. How does communications take place? The OpenSim community has talked about using standard instant messaging protocols, so in theory you should be able to IM between grids, and outside to systems like Google Talk.
What about assets? That is a big issue. To the extent that an asset is portable between grids, it opens it up to much greater copying issues. I could copy an asset to a region where copy protection is disabled, make as many copies as I want and then flood the original grid with cheap knockoffs.
Another very interesting issue is how searches will work, as well as how SLURLs will work. Ideally, I would like to search for places, people and events across all the different grids. Who will handle these sorts of searches as well as the advertising for such searches.
It isn’t surprising to see Cory and Philip have engineering differences, either because of the changes going on with Second Life and other virtual worlds, or simply because of the dynamics of company growth. However, it does seem worthwhile to make these discussions, at least on the engineering side of things, as public as possible.
