How to Short Sell Items on MB

[IIBEEFCAKESII]

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.

[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.

[IIBEEFCAKESII]

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.

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.

[IIBEEFCAKESII]

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.

[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.

[IIBEEFCAKESII]

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.

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.

[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.

[IIBEEFCAKESII]

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.

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!

[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.

[IIBEEFCAKESII]

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.

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.