Archive for the 'Investing' Category

Should You Buy Land in Second Life?

October 01st, 2007 | Category: Doing Business in SL, Investing, Land Issues

I recently purchased a nice plot of land in Kidoko West, owned by Doeko Cassidy of slnn.com fame, when I bought it, I thought I was getting a pretty good deal, the person I knew had purchased it for 65,000 lindens and was selling it to me for 40,000 lindens because she was buying some other land. I figured I could hang there for awhile and then flip it and make a few lindens, whatever, I considered it an experiment, so it didn’t really matter. I had no idea at the time what I was getting into exactly, so hopefully this post will help some of you in Second Life, as it has been a learning experience for me.

Wouldn’t you know it though, this wasn’t even a month after the gambling shutdown, before the whole Ginko Financials thing happened, so, land prices dropped some and there was more and more land available, further dropping prices. As a matter of fact, the price of land has been dropping all year long, this month so far the average price per meter is 6.4813, at this time, last month it was 7.0839 per meter, in June it averaged 8.5869, in May 9.1649, in March it was 10.63 a meter, in February it was 11.29, and in January of this year it was 12.20 lindens per meter. The price is almost half of what it used to be, so, I guess right now it is a buyers market. The total number of residents with land for sale in January was 2,849 residents selling 12,894 parcels totaling 8,313,696 square meters for sale. This month there are 7,444 residents with land for sale, about triple January’s numbers, selling 44,881 parcels, little over triple January’s numbers, totaling 29,964,256 square meters for sale, or almost four times January’s numbers.

But, should you buy land, or should you just rent it? Going by those numbers, you should probably wait until the prices bottom out before you consider buying. What exactly is the advantage to buying a parcel of land from someone who owns the Island, or sim? If anyone has any, please leave a comment, because, right now, all I know are reasons not to buy land.

What is the advantage of renting over buying land? Well, the main thing to me is you can’t get screwed out of your investment, because you don’t have that big payment up front when you just rent it, if you get kicked out for some reason. As an example, in my case, I paid 40,000 lindens for the land, thinking I could sell it and make a little when I did, but I still had to pay 2,128 lindens a week for the tier fees, which is more than I was paying in rent for the place I was already “living in”. Now, I had a lot more prims available on the land that I “purchased”, but, all I used them for was stuff I didn’t need, but that is one plus for buying. Using Kidoko West as an example, the covenant states that when the timer hits 0, they can reclaim your land and are then free to resell it or rent it.

When I first bought it, I asked if the tier fees were monthly, the lady I bought it from said yes, so, it was surprising to me when the fees came due again a few days after buying it. I even waited a few days because I im’ed Doeko to see what the deal was, so the very first week I was a few days late because I was thinking I shouldn’t have to pay them yet. I received no response from Doeko, and everyday I received this message that said I was late pay to avoid eviction, so, I ended up figuring it out after reading the covenant again, it said the fees were weekly, so I went ahead and paid them, and started thinking about whether I should get rid of it or not, as it was going to cost me more than my current rent, when I thought it would be cheaper and eventually pay itself off. Again, this part is my fault, I did not read the covenant thoroughly, there must’ve been some confusion between the seller and I on the tier fee’s, and I did not have the proper knowledge going in to know exactly what to check and what my rights were.

At this point, I was a few days late, and saw no ill affects other than the daily message about it being late, in fact, I saw several different plots that had been expired for two weeks, and others that I have talked to said the same thing, and I kind of figured I would get some kind of final notice before they actually reclaimed it. Nope.

So here I am holding my virtual dick in my hand with no recourse, I just loose the $180 some dollars, or $40,000 some odd thousand lindens I paid for it. Legal, yes, good business? I wouldn’t think so, if you truly want to pay the monthly tier fees, you would think they would want to keep on getting their weekly payments from users such as my self. Ethical? I don’t think so, I asked to get the land back or for some kind of refund, there are no refunds, you should’ve paid Doeko said, I still can, but it is already listed for sale again, which is probably the whole point. This sim has probably paid for itself many times, I just wonder how many times some of these plots have been reclaimed and sold by them. Certainly isn’t a very neighborly practice, like they claim they are in the covenant.

If you want to live in Kidoko West, or anything owned by Doeko Cassidy, I recommend you rent and avoid all the chances of losing your “investment”.

For everyone that will say this is just sour grapes and I should’ve known exactly how this stuff works, you are right, I am just trying to prevent other people from doing the same thing and hopefully, helping you save your lindens.

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Financial News

August 25th, 2007 | Category: Banking, Investing

Weekend sales, SLCC edition
Three bargains you need to know about, even if you’re hanging around the SLCC hotel in Chicago!

Jolie Lumiere of Jolie’s Boutique is having a big sale through September 4th to raise money for medical expenses. Whether or not you’re feeling especially charitable, half off is half off, and Jolie makes some really fabulous items — everything from gowns to lingerie.

Regulating Second Life The recent run on Second Life’s Ginko bank, one of the virtual world’s financial institutions, has prompted many residents to ponder whether their magical play land might not need some regulations after all. Their fears aren’t fueled by lewd acts or incessant griefer attacks. Rather, they’re about the one thing that truly matters: money. CFO magazine recently looked into the bank’s failure as evidence that some form of outside oversight is needed to guard against fraud, money laundering, tax evasion, and incidents like Ginko and the recent theft from the World Stock Exchange. An excellent suggestion. But the article fails to deliver on its promise.

IBM Employees Might Strike…In Second Life The Rappresentanza Sindacale Unitaria IBM Vimercate (RSU), the official trade union representing IBM’s 9,000 workers in Italy, is planning a strike to protest the fact that IBM is raking it in and none of it is being passed down to the employees in Italy.

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Business and Finance News about Second Life

August 22nd, 2007 | Category: Banking, Business, Investing, Stock Exchanges

Dutch research shows strategic advantage for businesses Recent research of the University of Utrecht on why companies establish in virtual worlds showed that Dutch companies feel they have a strategic advantage on competitors. Also they find themselves innovative and feel it gives them a better insight in the behavior and preferences of tomorrow’s customers.

The L$150,000 lindens that were taken by Jasper Tizzy, of the Atlas Venture Capital (AVC), has been returned, at least according to a comment from Cocky Dagger on this ISE press release.

cocky dagger
The issue with the money has been resolved. Jasper has paid the money that was deposited by the ISE.

Second Life Developer Out sources Accounting Linden Labs, creator of the online virtual world Second Life, has begun outsourcing its finance and accounting work to Consero Global Solutions.

Linden expects to save over $1 million over the next three years from the arrangement. The company’s Second Life online world has attracted more than 8 million registered users in 100 countries.

Virtual speakeasies defy Second Life gambling ban Last month, Linden Lab banned gambling in Second Life, bringing a thriving casino industry to an abrupt end. But while the old casinos have shut down, a vast network of illicit speakeasies have sprung up in their place, providing gamblers with new places to play.

Poker players in Second Life say anyone looking for a game can easily find one.

In Reality, Virtual Marketplace Falls Short The virtual world of Second Life is taking a media beating. What was recently touted as the next great frontier for advertisers and tech-savvy companies is now experiencing a backlash of negative feedback. For every successful company in Second Life, there seems to be countless others abandoning the virtual world in favor of other, more controllable worlds.

Cyber Boom With just the click of a mouse, virtual land barons are making a small fortune in real-world money. David Adams reports.

The new gold rush is on, but it’s no longer to the hills of Ballarat or California that people are flocking. Instead, it’s to the new frontiers of virtual cyberspace worlds where people are heading in their droves, eager to be among the first to snag themselves some land and set up shop.

What Second Life business exodus? Earlier in the summer, Second Life took several hits in the mainstream business press, which just last year was ga-ga over the virtual world and the potential for business activities. Pointing to negative articles in Forbes and Fortune, I concluded that “the honeymoon is over.”

A few readers agreed. One, identifying herself has “Shannon,” proclaimed that the “Second Life bubble has burst,” and described what she said was her own company’s experience.

People Don’t Like Marketing and Advertising Yeah, I know, if you’re here wondering what kind of obvious headline that is, you’re in the choir. I’m just translating.

When John Connell mentions this bit of Wired’s vanilla reinvention of what was predicted, I had to chuckle. People have shouted, they have screamed, and given the opportunity they will avoid marketing and advertising unless they like the product enough to get past the gimmicks.

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WSE Moves Office, Threatens Reporter

August 22nd, 2007 | Category: Investing, Second Life Videos, Stock Exchanges

Check out these two videos from SLJoe when he was trying to interview Luke McConnel from the World Stock Exchange (WSE). Lots more reasons to not put your money in their Stock Exchange.

Posted to Technology Videos on July 26, 2007

Posted to Technology Videos on July 26, 2007

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L$150,000 Taken from International Stock Exchange

August 21st, 2007 | Category: Investing, Stock Exchanges

Second Life Finance is starting to sound just like the old west, when it was pretty easy to grab a bunch of cash from a bank and disappear, Apparently, following last nights press conference where they announced they would not be auctioning off the Stock Exchange, Jasper Tizzy, of Atlas Venture Capital, has supposedly taken off with L$150,000 Lindens.

Jasper Tizzy of Atlas Venture Capital (AVC) Runs off with 150K of ISE’s Capital

FOR IMMEDIATE RELEASE - Immediately following the International Stock Exchange’s press conference scheduled yesterday at 6:30PM SLT - http://www.your2ndplace.com/node/445;

Jasper Tizzy in what appears to be his final act of desperation, departs the International Exchange with approximately 150,000L$ of the ISE’s deposited capital. Source: Jasper Tizzy of Atlas Venture Capital (AVC) Allegedly Runs off with 150K of ISE’s Capital

Anyone who puts their Lindens anywhere other than their avatars pocket is crazy if you ask me.

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International Stock Exchange News

August 20th, 2007 | Category: Investing, Stock Exchanges

The International Stock Exchange has decided to start disclosing all CEO stock transactions in direct relation to their listed company, and all CEO’s and their alts that resolve to the same IP address will have their transactions displayed for the last 10 days. No they aren’t displaying the ip address, just transactions coming from the same ip address. They are trying to stop any insider trading that has been going on and allow investors to gain a little more knowledge about what is going on in the ISE.

This has caused several companies, Atlas Venture Capital (AVC), Countless Galaxies (CGI), Bart Heart Estates (BHE), Valentine Heart Inc. (VHI), Kristatos Fashion Mall (KFM), and Mystik Designs (MDS), to delist and move to the new Stock exchange, Virtual Stock Exchange.

FOR IMMEDIATE RELEASE - Second Life, Talyn (235, 37, 61); Effective immediately the trading of Atlas Venture Capital (AVC), Countless Galaxies (CGI), Bart Heart Estates (BHE), Valentine Heart Inc. (VHI), Kristatos Fashion Mall (KFM), and Mystik Designs (MDS) have been halted and removed from the International Stock Exchange (ISE). Additionally, all investors will be refunded on trades of AVC, CGI, BHE, VHI, KFM, and MDS.

In an effort to protect investors and cut down on insider trading, we are implementing a policy of disclosing all CEO’s stock transactions in direct relation to their listed company. Furthermore, all CEO’s and their alts that resolve to the same IP address will have their transactions displayed for the last 10 days. Source: International Stock Exchange Responds On Companies Delisting

So, lots of stuff happening at the ISE, and I didn’t even mention the fact that they have put the Exchange up for auction.

Loads of comments about the new policy are available here.

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Techcrunch on Second Life Stock Exchanges

August 20th, 2007 | Category: Banking, Investing, Stock Exchanges

Following the ban on gambling in Second Life, Duncan Riley of Techcrunch decided to see if you could make money in SL by investing in one of the Stock Exchanges, he picked the WSE, probably because it was the biggest and most known. I would’ve liked to see him try his hand at all of them, but, any lights that get shined on some of the possible money scams in Second Life is good enough for me. He mentions the world of share trading is regarded by some s even worse than gambling, but doesn’t mention whether this is a real life or Second Life conclusion.

The World Stock Exchange (WSE) sits on its own Second Life island in a shiny multi-story edifice that just says money.

The trading floor on the third floor presents an initial lobby that includes an ATM machine (players must deposit money to trade stocks), rule boards and advertising for a bank that offers 15.75% PA. Walking through the lobby players are presented with a lounge area and customer service desks. There is usually a WSE representative on hand to assist with inquiries.

Can You Make Money Though?

There is only one way to find out. After perusing the 30 odd listed companies I made a number of investments which I may revisit at TechCrunch in the future to report on how they went.

For my opening portfolio I bought companies that sounded like they had substance. Hope Capital Limited (HCL) sounded hopeful, and as this is the holding company for the WSE you’d expect good results. Hype String (HYP) may not make string, but hype always rises, right? I expect Spontaneous Rich Investments, Inc. (SRI) to perform well. Ginko Perpetual Bonds (GPB) are all that remains of the funds from the collapsed Ginko Bank. After trading as high as L$26, today’s price of around $L0.19 makes them a steal. For good measure I rounded out my portfolio with the two IPO’s scheduled for August 20, Taft Worsley Enterprise (TWE) and Apez Corp (APZ). I have no idea what either do, but given the history of IPO’s in such markets, I’m confident of a strong performance. More in a week or so, unless of course I’ve made so much money that I’ve retired. Source: Betting On Second Life Stock Exchanges

He even created a video of his visit to the WSE. At least a bunch of armed guards didn’t show up this time to keep the peace. ;) I bet the GPB at L$0.19 a bond will still loose him money, any takers?

Posted to Technology Videos by eubeenhadd on August 20, 2007

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Now the WSE is Making Money Off Ginko Customers

August 14th, 2007 | Category: Banking, Investing, Scam

Nobody Fugazi is still all over the Ginko Financial closing and subsequent problems, such as depositors funds being transferred to the GPB, or Ginko Perpetual Bonds, at the WSE with no say or choice in the matter, heck they didn’t even get a shot at agreeing to the terms of service. So, if you did not have an account there, you had to create one, then sell them for less money than you ended up having in them, minus fees, but not only that, when you sell them some are converted to WIC’s, or World Internet Currency, which were originally created to allow people outside of Second Life to invest in Second Life companies. So, then he had to convert them to lindens and pay another fee. He sold 183,000 GPB and had 560 lindens in his account and 130.37 of these WICs, so, needless to say, he did not get the return on his investment that Ginko said he would and since he didn’t say how much he really received after selling, we may never know how badly he was screwed.

What I did not expect was to see a Linden balance of 560 Linden dollars for my shares? What the? Then I saw this ‘WIC balance’ that didn’t tell me what I could do with it. I didn’t ask for these dumb WIC whatever’s, I was just selling GPB so that I could cash out the Linden dollars. Why couldn’t I just get Linden dollars? So I tried the World Internet Currency ATM link, and it was asking me for my WIC account name. I try ‘Nobody Fugazi’. Not happening. I try it lower case. Not happening. After a lot of searching he found this:

WICS to Linden Dollars

You can buy Linden Dollars using your WICS by visiting the WIC Exchange ATM located at Hope Capital Island in Second Life. For a direct teleport please visit the ATM Locations page in the Education Centre.

USING THE FICTIONAL WORLD INTERNET CURRENCY IS SUBJECT TO THE TERMS OF SERVICE BY WIC EXCHANGE PTY. LTD LOCATED AT WWW.WICEXCHANGE.COM

What should have taken me about 2 minutes to do took me about 45 minutes to do. Why? Is this something which is supposed to garner good faith? If so, it is as misdirected as just about anything else I can find.

As far as I’m concerned, any fees I paid WSE or wicexchange.com were stolen. The sign over WSE should say, “Here There Be Muggers, Pickpockets and All Manner of Thieves”. I was mugged, and other people have been and will continue to be mugged either by incompetence or a complete lack of ethics. Right now, I think it could be both. Source: How WSE Is Screwing GPB Holders Even More

More info on the WIC’s here.

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Ginko Financial Ceases Operations

August 10th, 2007 | Category: Banking, Doing Business in SL, Investing, Scam

Ginko Financial DOSL (Dead on Second Life) as of August 8th at 7:30 pm sl time. Lots of coverage online.

Jitters in Second Life as bank shuts doors The biggest bank in the virtual world of Second Life has closed its doors after a run on its deposits, putting at risk hundred of thousands of real dollars of savings and investments.

On Thursday, Ginko Financial - which is owned by Brazilian from Sao Paulo whose real name is Andre Sanchez - stopped accepting deposits, froze all withdrawals and converted account holders’ balances into “tradeable debt securities” called Ginko Perpetual Bonds.

Unable to pay depositors, Ginko ceases banking operations “Customers will receive one bond with a face value of L$1 for every L$1 they have deposited in Ginko Financial,” said Chief Executive Nicholas Portocarrero (real life: Andre Sanchez of San Paolo, Brazil) in a statement. “Each Ginko Perpetual Bond will yield L$0.03 or 3% of face value per quarter.”

The security was trading at about a quarter of its face value at 7:20 am Pacific on Thursday. When the bank ceased operations, it had about L$50,000,000 queued up for withdrawal.

Ginko Financial finally dead Nicholas Porocarrero finishes the letter with the comment:
“Ginko Financial will bounce back from this and if you stick with us, you wll not lose anything. If you must sell the bonds, then you must sell, but I advise against accepting low prices.”

Whilst I continue to maintain you should make your own choices about what you do with your own money, I’ve been fairly forthright in my attitude towards stock exchanges, so whilst I continue to wish Nicholas all the best, I, for one, will be selling, and if it hurts my pocket, well so be it.

Serious Questions: WSE and Ginko Financial Before the Ginko Financial uproar which has taken the spotlight - even with it closed - I was focusing on the World Stock Exchange (WSE) and some of the problems related to it. Oddly enough, the involuntary transfer of Ginko’s clients assets into Ginko Perpetual Bonds has gotten me right back where I started. Further, after I pulled investment from WSE - Ginko, which is linked to the WSE through Hope Capital, tossed me right back. Well, here I am - about $183,300L of me. And I’m small potatoes - some of the numbers I’ve had people confide in me are certainly worth a few calls to a lawyer.

Making Second Life More Viable for Investment As I wrote before, the community needs to take steps forward. These steps, as I wrote, include these demands:

  • We want better investment or we will not invest.

  • We want more transparency or we will not invest.
  • We want more realistic expectations on our investments
  • We want better policy from Linden Lab when it comes to these things.

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Some Stock Exchanges to Allow Independent Analysis

August 07th, 2007 | Category: Investing, Stock Exchanges

At least two Second Life stock exchanges are going to provide data to an independent analyst, Robert Bloomfield of metaversed, the two data disclosure agreements will be with Arbitrage Wise of SL Capital Exchange (also covering data from their previous incarnation as AVIX) and Cocky Dagger of International Stock Exchange. The stock exchanges will provide Robert with comprehensive data on trades, dividends and stock issuances for all listed firms. Robert will analyze and publish the data so it be analyzed and compared to real world stock exchanges.

How are stock returns associated with economic events in Second Life, including dividend and other company announcements, Linden Lab policies, and currency supply?

What factors determine market liquidity and the cost of capital?

How efficient are the markets? According to “Efficient Markets Theory,” stock prices should react so quickly and completely too public information (like Linden Lab announcements), that you can’t predict future returns from past events.

I believe that the exchanges’ agreement to allow independent analysis of exchange data sends a strong signal that the exchanges understand the importance of transparency in maintaining investor confidence. I also expect that the publication of data analysis will further increase investor confidence, and attract new investors and new listing companies to the exchanges.

Finally, let me assure SL residents of my intention to be as objective as possible in my analysis. One important element of objectivity is to avoid financial ties that might provide an incentive to shade the analysis, or (almost as bad) that might lead people to think I have done so. To mitigate this concern, I am announcing that do not intend to invest in any of the exchanges, nor will I invest in any for-profit businesses in Second Life, whether or not they are listed on the exchanges. Source: Stock Exchanges To Provide Data for Independent Analysis

This well surely help ease some concerns on the stock exchanges, but what about the looming recession? One has to wonder what the WSE, or World Stock Exchange, will do since they haven’t agreed to anything yet, and last I heard he had some big symbols leaving, so it might not be too long before the WSE isn’t the biggest stock exchange.

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Is Second Life Headed for an Economic Recession?

August 06th, 2007 | Category: Investing, Recession, Second Life Money

Sure sounds like it after reading this post by Matthew Beller, The Coming Second Life Business Cycle, as he mentions the Lindens are controlling the amount of Lindens that are being released, and they control the value of those Lindens when compared to the US dollar.

In the Terms of Service, the L$ is defined as “a limited license right available for purchase or free distribution at Linden Lab’s discretion, and is not redeemable for monetary value from Linden Lab.” By defining the L$ in such a way, Linden has granted itself the power of a central bank in managing Second Life’s equivalent of a fiat currency. Linden can create as many new L$ as it wants, whenever it wants, and spend them or give them away at its own discretion. Also, because Linden maintains a peg of about L$270=US$1 on the LindeX, it gives the appearance that the L$ is as good as real-world money.

Fiat currencies are subject to much criticism, particularly by Austrians. However, they are not criticized because they cause undesirable economic distortions in and of themselves. Rather, they are criticized because, unlike commodity monies such as gold, they can be created from nothing, so are highly susceptible to artificial expansion and manipulation. This expansion, as the Austrian theory of the business cycle shows us, is the source of economic distortions that lead to unsustainable booms, followed by inevitable busts. Source: The Coming Second Life Business Cycle

After going into his strong evidence that the Lindens have unnaturally inflate the Linden supply, he lists a couple things that could happen because of it.

In the first, Linden will stop running significant deficits at some point. With less L$ available to spend, residents will demand fewer goods and services, leading to lower prices and reduced profits. Previously profitable enterprises will go out of business and the wealth of many residents will decrease, slowing overall economic activity.

The other possibility is that Linden will continue running deficits to the point that a sufficient number of residents and speculators will recognize the L$’s frailty. In what Ludwig von Mises referred to as a “crack-up boom,” everyone will scramble to redeem his L$ for “real goods,” which, in the case of Second Life, is probably the US$.

To summarize, it appears very likely that Second Life will experience at least some form of economic recession. Depending on its severity, it might result in Linden’s losing many of its customers. If Linden wants to prevent this from happening and foster a stable, growing economy within Second Life, it should apply the lessons of Austrian economics to its policies: abolish restrictions on content, strengthen the ability of residents to enforce their property rights, and, most important, tie the L$ to a real-world commodity money backed by 100% reserves.

Looks like we could be, guess I’ll look into selling some of that land I just bought. This article is definitely worth the long read.

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Good Investing Advice for Your Second Life

July 26th, 2007 | Category: Investing

We’ve seen the stock exchanges spring up around Second Life, and everything looks like it’s on the up and up, but, should you invest in SL, is it the same as RL investing? In light of the hacking of the WSE, some good advice from the in world professionals.

Posted to Second Life Video- Machinima Fans by SecondLifer on July 25, 2007

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