How to Short Sell Items on MB

1. Player 1 (P1) borrows product "A" from Player 2 (P2)
2. "A" goes for 10,000 Gil on weekends and 5,000 Gil on weekdays
3. P1 immediately sells the borrowed product "A" for the going weekend rate: 10k
4. The following week P1 buys back P2's product on MB for 5,000 Gil
5. P1 returns the borrowed "A" to P2 the following weekend
6. P2 still retains product in the long run and P1 makes 5,000 Gil off an item that DECREASED in price
7. P1 never puts in his or her own Gil, though he or she is obligated to pay back P2
8. P2 may present terms to P1 upon borrowing

The Catch: If the price of "A" goes up rather than going down, P1 will LOSE Gil rather than gain it.

I hope this simple idea will help those that like to play the MB! Happy Gaming.

P1 stands to gain everything. P2 stands to be ripped off (P1 obligated to pay back P2, hah).

In reality, P1 buys P2's product at weekday's price on speculation. P1 attempts to sell product at weekend prices. If success, good for them. If not, they recoup their gil by selling either next weekend or try to break even at weekday prices.

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Originally Posted by dspguy

P1 stands to gain everything. P2 stands to be ripped off (P1 obligated to pay back P2, hah).

In reality, P1 buys P2's product at weekday's price on speculation. P1 attempts to sell product at weekend prices. If success, good for them. If not, they recoup their gil by selling either next weekend or try to break even at weekday prices.

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1. This isn't something done with random players. This is only done between individuals that trust each other (i.e. siblings, spouses, friends, FC mates). Risk is mitigated because of this. I thought that would have been implicit in the statement.

2. The point is not to spend Gil that's already wrapped up in the locked value of the product. Instead of limiting your scenario to buy low sell high and leave P2's value locked into the product, inventory is rotated in a cyclical fashion. To put it more clearly, it is a way to make Gil off of an item that you want to RETAIN but don't want to have to INVEST more Gil in.

I'll put it in a way you might understand w/o the borrowing factor. Let's say I have an item "A" worth 50k(week)-100k(weekend) in inventory. I notice on Sat that "A" is at the top of the trend selling for 100k. What if I was not online during the weekday to take advantage of buying low? If historical data is on hand, it would be silly to wait a week to take advantage of an opportunity that exists RIGHT NOW.

Liquidating "A" frees up Gil that can be reinvested by flipping other items between the peak and trough of the 50k-100k trend (roughly 4-5 days). This strategy keeps Gil cyclical and working for you. It also diversifies assets (items), hedging against risk (a market potentially bottoming out).

Instead of buying low and selling high w/ "A" retained in short, it's selling "A" high, rebuying later low, & putting the Gil to work w/ another item. This results in value accumulation over time that otherwise would never have happened if was static.

The point is not to rip off P2, it's to make Gil off his/her static inventory. Potential deals could be worked where P2 gets a % return or flat rate from essentially loaning the item to P1.

This isn't really selling short, it's more consignment.

Selling short would be you having a item in your retainer, and your retainer selling it at current prices in hopes of buying it cheaper later on without telling you.

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Originally Posted by StouterTaru

This isn't really selling short, it's more consignment.

Selling short would be you having a item in your retainer, and your retainer selling it at current prices in hopes of buying it cheaper later on without telling you.

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No it is not consignment. Consignment is when someone gives another person an item to sell and the return is strictly currency or product that differs from the original item. P2's item is being returned, w/ potential interest.

2nd, short selling is not malicious. Short selling is borrowing something from someone who has what is called a LONG position and returning w/ the borrower GAINING in the short term (original holder profiting slightly). Hence the word "Short".

A quick Google will give you the definition.

What items would you even use this on, and what benefit does it have over just buy low/sell high?

Malicious is the wrong word for it, but short selling is detrimental to stock holders. You're betting on a hiccup while doing something that fuels that hiccup. The money you make in the process isn't from nowhere, it comes from other people. You add nothing to the system on the investor or investee side, you just weasel yourself in as an unnecessary middle man to take a cut.

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Originally Posted by StouterTaru

What items would you even use this on, and what benefit does it have over just buy low/sell high?

Malicious is the wrong word for it, but short selling is detrimental to stock holders. You're betting on a hiccup while doing something that fuels that hiccup. The money you make in the process isn't from nowhere, it comes from other people. You add nothing to the system on the investor or investee side, you just weasel yourself in as an unnecessary middle man to take a cut.

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It works with any item. The lower the price, of course, the more bulk you need. The higher the price, the more single units you can sell. A lower priced item that would be a good example is Sticky Rice. SR on my server goes anywhere from 100-150 per unit all the way up to 300-350. If I have 50 units of SR and sell them @ 350 a piece I have 17500. If I then wait until the bottom of the trend and buyback the product at, let's say 150 per unit, I have made 10000 Gil. Not to mention, the Gil I made off reinvesting when SR trends down. Also by reinvesting this Gil in an undervalued market stockholders in the items I buy with SR revenue BENEFIT. Like a seesaw.

Somtimes, this might be detrimental to select stock holders in the short, but in selling SR when it is in demand I have increased liquidity of that item. Yes the price of the SR you have might go down after mine hit the market and sell, but the player looking for that item in high demand on the weekend, lets say a Culinarian, received a service. Item liquidity demand is even more apparent in non-bulk markets such armor, weapons, etc.. Sometimes it is needed to bring down an over valued market.

There are two sides to the coin, you can't strictly limit the scenario as "selling product "A" hurts "x" person" because there is actually a person "z" that benefited. What I add to the system is ITEM LIQUIDITY, completely necessary for markets to function. If everyone horded their items and never sold short then products become more scarce leading to inflation.

Also, the benefit over buying low and selling high is stated in one of my previous posts:

"Instead of buying low and selling high w/ "A" retained in short, it's selling "A" high, rebuying later low, & putting the Gil to work w/ another item. This results in value accumulation over time that otherwise would never have happened if was static."

You have more items working for you basically. YOU MAKE MORE GIL! :)

The question wasn't which items you can short sell, it's which items would. It's not about possibility, it's about practicality.

You would need items that sell regularly, are somewhat scarce, and that someone else hoards.

Liquidity is nice, but any item that your comparing weekday/weekend prices on has a pretty solid about of liquidity already.

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Originally Posted by StouterTaru

The question wasn't which items you can short sell, it's which items would. It's not about possibility, it's about practicality.

You would need items that sell regularly, are somewhat scarce, and that someone else hoards.

Liquidity is nice, but any item that your comparing weekday/weekend prices on has a pretty solid about of liquidity already.

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Yes there might be liquidity, but not at the new price I make available at the top end of the high trend.

It isn't limited to "items that sell regularly, are somewhat scarce, and that someone else hoards". The beauty of selling short is, as a seller, I just have to identify when an item I have in stock is over valued on MB. If the item is peaking, it does not matter WHAT it is. As a seller I can make Gil by liquidating low priced items by focusing on QUANTITY, or I can focus on high-priced scarce items and focus on QUALITY (i.e. rare sought after items).

Wal-Mart vs. Boutique Vendor.

Practicality is time dependent. Those with MORE time will find this MB strategy useful, those with less probably won't. The finite nature of time is what creates opportunity for middle men. Don't hate just cause I might have more time. :)

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Originally Posted by IIBEEFCAKESII

P2's item is being returned, w/ potential interest.

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In your initial "7-point plan" there was no mention of gains made by P2 (otherwise known as the Benefactor in your MB strategy). If P1 is splitting the profit with P2, then I can see people maybe being interested in this.

An FC member and I had our own mutually beneficial agreement. If he found a niche in the market that involved a crafted item, he bought all materials, I did the synth (0 cost to myself) and he listed the item. I got 1/2 the profit. Done. Simple. Seemed fair and it worked. This even worked if he found a direct buyer (no MB involved).

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Originally Posted by dspguy

In your initial "7-point plan" there was no mention of gains made by P2 (otherwise known as the Benefactor in your MB strategy). If P1 is splitting the profit with P2, then I can see people maybe being interested in this.

An FC member and I had our own mutually beneficial agreement. If he found a niche in the market that involved a crafted item, he bought all materials, I did the synth (0 cost to myself) and he listed the item. I got 1/2 the profit. Done. Simple. Seemed fair and it worked. This even worked if he found a direct buyer (no MB involved).

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Sure. This is optional. The Benefactor may decide the terms of essentially loaning the item. Since it is a variable that is decided between P1 and P2, and the terms can be anything, that's ultimately left up to the players. I should have made this more clear in my OP. *I edited to reflect.

The main point of OP was to bring to people's attention the concept of liquidating inventory at the right times and rebuying, at a lower price, something you plan to use in at a future date. The frequency at which this is done can yield major profits, especially with a large static inventory.

P2 may notice his product was being sold for 10k by the signature and also notice P1 bought the borrowed item for 5k... ^^;
iI would suggest P1 just buy cheap but not borrow form P2.

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Originally Posted by Nicobo

P2 may notice his product was being sold for 10k by the signature and also notice P1 bought the borrowed item for 5k... ^^;
iI would suggest P1 just buy cheap but not borrow form P2.

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Then P2 stands to make no interest (potential terms) off a static item if he/she has no time to flip, and P1 does not make the difference on product "A" initially because it is locked into a duplicate item. Short selling another player's product that does not have time allows P1 to make the now "Freed" Gil work for him/her through another item/product. Growth then becomes relative to time. It is a time tradeoff. Not allowing value to remain in an item unused during periods of demand in the cycle.

I get what you're saying Beef, and I can see how it would be useful. Thanks for the thread! It's a simple concept, I just never thought to do it in that "direction". I think a lot of players view game markets as simple, random, game environments and don't realize that the MB can, and typically does, react like real world markets. I'll take a stab at what you're explaining but from a less technical economic stand point.

Scenario 1:
It's Friday night and P2 has 41 unique items that he wants to sell. However, he only has 2 retainers, meaning he can only sell 40 items (20 per retainer) right now. The remaining 1 item, even though it holds a value if sold (weekday=300gil, weekend=1000gil), returns no value to P2 as it sits in his inventory. In this scenario, that 1 item will yield P2 0 gil so long as it is idle in his inventory and P1 makes 0 gil since he's not involved.

Scenario 2:

It's Friday night and P2 has 41 unique items that he wants to sell. However, he only has 2 retainers, meaning he can only sell 40 items (20 per retainer) right now. The remaining 1 item, even though it holds a value if sold (weekday=300gil, weekend=1000gil), returns no value to P2 as it sits in his inventory.

Enter P1. P1 has nothing for sale by his retainers. He borrows the 1 item P2 has in his inventory idle and agrees to split the profit 50/50 with P2 upon returning the item. P1 sells it for the weekend price of 1000 gil.

On Tuesday, P1 buys the same item for 300 gil from the MB, yielding a net income of 670 gil (less MB fee) and he has the same item in hand. P1 returns the item to P2 with half of the profit (335 gil) and retains 335 gil for his efforts. In this scenario, P2 yields 335 gil from an item that he still has and P1 makes 335 gil from an item "they never owned". Win/win!

Another simple way to look at this is to reverse the farming/buying and selling model. Players start the game with 0 gil. They farm something and sell it on the MB until they have some gil. Then, they buy low and sell high to gain a profit off items. This approach REQUIRES you to have gil now, BEFORE you can make a profit. Short selling is the reverse of this as you don't need any gil to start. A brand new player with 0 gil can immediately borrow an item and use short selling as a means to make gil without farming and selling. This approach requires NO GIL to yield a profit. (I know, you don't immediately have MB access with a brand new character, this is to demonstrate a point.)

And of course, I must say that I would NEVER attempt this type of short sale agreement with a stranger. Short sales should be used as a cooperative measure to help P1 and P2 simultaneously. Attempting this with someone you don't know can swing all of the risk onto you if you're P2 (since you'd be giving product to someone you don't know for "free" up front). Attempting this with a stranger as P1 is much less risky. But if P2 doesn't fully understand the concept, it can get messy as they may accuse you of cheating them (meaning they don't get how it works) or they could start demanding a larger cut of the profits since they loaned you the item (which destroys their chances of you helping them short sell in the future).

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Originally Posted by Victdeus

I get what you're saying Beef, and I can see how it would be useful. Thanks for the thread! It's a simple concept, I just never thought to do it in that "direction". I think a lot of players view game markets as simple, random, game environments and don't realize that the MB can, and typically does, react like real world markets. I'll take a stab at what you're explaining but from a less technical economic stand point.

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Perfect! Sometimes I make things sound to complicated. Every scenario you posted is a great example of how short selling can be used as a tool to gain Gil. I want players to understand, this is just one of many ways to accrue value over time. Short selling should be used in addition to buying low selling high, in addition to farming, in addition to crafting, in addition to services etc... Instead of putting all of their eggs in one basket, players should diversify their Gil. But, to summarize your points, if someone is a new player and doesn't have all these options at his/her disposal, or the player sees opportunity knocking at a specific moment relative to a certain item, take advantage of the MB!

Thanks Victdeus for helping break down the concept further! Happy Gaming.

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Originally Posted by IIBEEFCAKESII

1. This isn't something done with random players. This is only done between individuals that trust each other (i.e. siblings, spouses, friends, FC mates). Risk is mitigated because of this. I thought that would have been implicit in the statement.

2. The point is not to spend Gil that's already wrapped up in the locked value of the product. Instead of limiting your scenario to buy low sell high and leave P2's value locked into the product, inventory is rotated in a cyclical fashion. To put it more clearly, it is a way to make Gil off of an item that you want to RETAIN but don't want to have to INVEST more Gil in.

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Player 2 should be owed a fee over and above the return of his item for being put to the trouble of lending it.

That's not 'short selling' that's called 'brokering'. Short selling is selling a commodity that YOU DON'T CURRENTLY OWN OR CONTROL. If I short sell something, I THEN have to be able to buy it (at a low enough price) to give to you and still make a profit. It's impossible to short sell on the MB.