Clan Chat: Cellerdoor Clan Chat: Cellerdoor Clan Chat: Cellerdoor Welcome to the Billionaire Invest Encyclopedia. In this guide, youll find everything there is in investing. From the basics to the advanced, there is something here for you. I am the 36th rune crafter in the game having massed 1.2 billion from it, and an additional 600m from investing, and you can do the same and more. If you have any further questions, suggestions, concerns, feel free to come into the chat. Table of Contents PAGE 1 Post 1. Introduction, Rules, & Ranks Post 2. Investing Guild & Market Advice Post 3. Investing Guide for Dummies Post 4-5 Investing Basics Post 6-7 Testing the Markets Post 8. Market Peaks & Crashes Post 9. Types of Investors & Investments Post 10. Advanced Investing Post 11-13. Merchanting Guide (Wezall2002) Post 14. Suggestions and Wezalls WARNINGS Post 15-18. Engineer's Advanced Investing Ranking I cannot do this on my own and I need your help! Ranking will be done on a merit system. Simply bumping the guide wont be enough for a general (although it does help). Ranked members should be friendly, helpful with a strong investing knowledge. (- Investing Guild -) This guild is set aside for mainly forum use. Anyone is encouraged to join. The purpose of the guild is for the common investor to share their knowledge with everyone else. They are encouraged to post their ideas and suggestions on items. ¤ Guild Application ¤ Name: How long have you been investing? Have you read the rules? Do you understand the purpose of the guild? (-Market Analysis -) We offer you our opinion on a specific item and how well it would work for investing. There is the following disclaimer: We do not and cannot control the prices of the item. We offer our intellectual advice when it is requested. It is the persons choice to buy or sell items based on our opinions. ¤ Item Application ¤ I would like your opinion on (insert item here). Please add any additional information that you would like us to know. (ex: When is the expected peak? Is it safe? I am investing X amount, is it possible to earn X amount from this?) (- Investing Basics -) Investing is a process where you earn money by buying an item to sell for a higher price later on. It is a more complicated form of merchanting. You have to speculate a price change. When you notice an increasing trend in that item, it is by far one of the better investment ideas. Investments are more susceptible to peaking short of their predicted max nowadays. However, the GE DB allows the investors to view the graphs of average prices over a time span which gives you clear insight to how well an item is doing. Therefore, it is much easier to find an item that has bottomed or is just about to peak just from observing the graph. Some common mistakes are buying at the wrong price, wrong time, or buying an item that is easy to buy but hard to sell. Keep a log of your prices so you can predict what price it may peak at and what price it will start dropping at. Good luck ¤ Tips ¤ *Search for your own items You will need a few million before you can start investing efficiently. Do not give away all of your investments. It is advised you keep a record or use the GEDB daily Investing has risks. Every item has a continual cycle: Drop, Rise, and Peak Do not panic when an item is dropping. Be patient (- Investing Guide for Dummies -) STEP 1: Build up your capital. I would recommend 10M+ before you begin. Anything below that can be considered practice because you will not gain or lose much. It is still possible to earn up to 20M from 1M but it will take on average a few weeks to a month. STEP 2: Search for your items. Many people come into the chat saying, What should I invest in? and expect to find their answers. The purpose of the guide is to teach you how to invest rather than what to invest in. Not only do you have no idea with what you are doing, youll have no clue in what you are getting into. Ill try to add a couple of pointers to help out along the way. STEP 3: When you are fully confident that there are a couple of items that you would like to invest in, you will test the market for each item. Record their prices for a couple of days to get the percent of increase. Use the GEDB to see previous peak and bottom prices so you will have the general idea of when an item will peak or crash. They will not follow the same pattern every single time. However there are a few items out there that will repeatedly form a perfect bell curve. STEP 4: Invest in an item that has a steady market with potential. STEP 5: You will hold the item for a few days to re-sell for a tidy profit. There is alternative that you can try as well. Sell the item the next day and re-buy the item at a lower price. Basically, an investment can be used as a merchant. STEP 6: Repeat until you have gained the profit you wish for. The ideal return percentage can be anywhere from 5% to 10%+ depending on the type. (- Investing Basics -) Investing follows the law of supply and demand. 1) Rising prices= Low supply and High Demand 2) Lower Prices= Overflow and Low Demand 3) Stable prices = Average supply and equal demand 1) Rising prices= Low supply and High Demand -This would be when you sell your item -If you think that the price has peaked and will start dropping, sell it. -Use your best judgment because no can tell you what the prices will be 2) Lower Prices= Overflow and Low Demand -This is not talking about items that are available in infinite amounts -There can be many factors contributing to oversupply -When you think the price has bottomed, and will rise in the next few days, try to stock up on the item and check the GE regularly. This would be classed as a higher risk investment as you do not know when the item has bottomed. 3) Stable prices = Average supply and equal demand -These would be items that are generally staying within their range and takes a while to sell -This is an option for small time investors who do not want to take big risks -You buy at a lower price and sell it within the next update at a higher price than bought -However, this method does not always guarantee a profit and is tricky to learn (- Testing the Markets -) Everyday, the markets constantly shift. All investors alike need to rely on several factors in order to succeed. There will be a brief explanation for each method used. ¤ Grand Exchange Database ¤ The GEDB is great for getting the basic idea of where an item might be headed. It also displays previous peaks and bottoms to give the new investor ideal price fluctuations. Many inexperienced investors will take the graphs for granted and can be easily misinterpreted. While it shows the average prices over the time period, it does not show the volume (amount) traded or the most common price that the given item was being bought at. There is no guarantee that the given item will continue to rise or fall. Therefore, further research must be put into the item being considered. ¤ Forums ¤ The forums can give you a fair idea of how the market is doing for the specific item in question. Common sense will tell you that if the ratio of Selling to Buying is 10:1, the price is headed downwards. If you happen to be browsing through the Selling and Buying of that item and notice that the given item is being bought at market price frequently that day, it will be one of the signs that the item will be reversing soon. ¤ Price Logs & Percentages ¤ This is reserved for the investors that are willing to put in effort and additional time into their investments. While the GEDB is great for browsing and searching for the general prices, a price log on items will help you achieve maximized profits. Take a couple of items (5 to 10+) and log their prices for a while. You can have more accurate and precise predictions if you had the specific prices. Calculate the percent of increase/decrease over the days. If the percent of increase is slowing down, you will have to be a little more careful with the item. If the percent of decrease is slowing down, you can expect a bottom of the item within the next few updates. (- Testing the Markets -) ¤ Percentages: Calculating the percent of increase ¤ Day 1: 200 at Medium price Day 2: 223 at Medium price 1) Day 2 - Day 1 = X 223-200= 23 2) X / Day 1= Y 23 / 200= 0.115 3) Y * 100= Percent of Increase 11.5% Increase ¤ Market Test * This is a 1x test and is performed fairly easy. Simply buy the item in question. Start from the lowest price possible and raise it until the item(s) are bought. It will give you the general idea of what price people are willing to sell at. In order to profit, you will have to buy the rest of your order below that price. MAXIMUM Prices: When you cannot buy at this price, the item will be rising for the next update. Be wary of these items because it will be fairly hard to get into the market and when you do, the market could have already peaked. MEDIUM Prices: When the item(s) take a while to obtain at this price, you can consider this an ideal investment because there is apparent demand for the item. MINIMUM Prices: When you can buy at this price instantly, the price will be going down. There is a tricky maneuver that an investor may be able to pull off (example given below). On the other hand, a patient investor will set an order for minimum+ after a few updates of crashing if they are confident that the item will be reversing soon. They will face relatively small competition from other investors and demand if they have timed it correctly. (- Market Peaks and Crashes -) ¤ Crashing? ¤ 1) You can buy at medium but not minimum. 2) Risk: High 3) You can give yourself up to one update to sell 1) You can buy at minimum instantly 2) Risk: 100% Drop 3) You do not have any time left ¤ Options ¤ 1) Sell your item along with the horde of investors hoping you can profit 2) Hold the item to wait for the item to start rebounding ¤ Peaking?¤ 1) You can buy immediately at Maximum 2) You cannot sell at Maximum 3) You can give yourselves a few updates to sell. The price will still be going up until a proportional price. However, it will be difficult to sell as the investors will notice and try to sell the item. You can make the decision if you want to put in as Maximum to wait overnight for the item to sell. If you detected the peak early enough, it will sell overnight. If it is later during the peak, you may want to put in a few at Maximum and a few at Medium. Calculate it so you will still end off with a decent profit if you sell. ¤ Crash: Investing ¤ -Demand is lower than supply -Supply is high and is well over the demand -There are too many investors crowding the market -Typically, it creates a chain effect and after the next update, the item can be bought at minimum Day 1) Instantly buys at Minimum Day 2) Instantly buys at Minimum Day 3) Slower buys at Minimum Day 4) Even slower buys at Minimum Day 5) You cannot buy at Minimum Choose between Day 3 to Day 5 to invest. The purpose of this example is to illustrate how a reverse takes place and how an investor can profit off of one. (- Types of Investors & Investments-) There are different investors and investments that will be explained below. Cartel: This is primarily with a group of affluent friends. To limit the supply and increase prices, the group will attempt to buy and control a large portion of the market. Group Investors: They are different from cartels in a couple of ways. It is generally the group that follows one persons advice of what to invest in. They may not know or trust everyone in the group but they still do so for the hope that they can profit. Individual: This is the average investor. They search for investments on their own and occasionally tell a couple of friends about their findings. In no way do they attempt to persuade a large group of investors to use the same item. Manipulator: This is an investor who succeeds by putting others at risk. They attempt to create a demand among investors to spark a chain event and will try to artificially inflate the prices. Short-term: These investments will last a few days to a week before they peak. Long-term: These are thought out investments that can include the following items that are used for upcoming updates or items that are naturally inflating due to the lack of supply. (- Advanced Investing -) ¤ Diversify ¤ It will not be an advantage to invest in one item. Create a mix of several items. Try to maintain an investment at all times. It is advised that you start looking into armor and weapons if you havent already. They tend to yield better results than bulk items. ¤ Efficiency¤ Some people may have trouble when they are working around the trade cap. Increase the number of orders that are set. You will want to cycle the money in the fastest time periods possible. To maximize your returns, you will have to compensate profit for efficiency. You are looking for overall profit not individual profit on a single item. ¤ Merchanting ¤ Personally, I prefer to merchant as it is safer than investing. It is possible to merchant anything that is not crashing. The objective is to work around the average buying price. Even if the item is trending downwards, it is possible if not easier to buy the item at a lower price to sell for a profit. ¤ Profits and Prices ¤ If you are an experienced investor and understand the market for that item, it will be far easier for you to merchant. Given that you know how well the market is doing, you attempt to buy at the lowest price possible you will want the item to sell at this price. It does not necessarily have to be the minimum price. Sell for a decent profit but to increase efficiency you will want to sell at a price lower than others yet still make a nice profit. ¤ Publicity ¤ Increasing the demand in the market can benefit those involved. Remember, there is strength in numbers. ¤ Timing ¤ Perfect timing results in maximal returns. In order to achieve the desired profit, you will have to have a near to exact timing on each item. It is also a good idea to switch out of an item for a couple of updates if they are just about to crash heavily. It will be difficult for you to profit if the item is predicted to sell at minimum continuously for the next few days. (- Merchanting Guide -) Written by Wezall2002, Edited by Cutie ¤ Merchanting Basics ¤ Merchanting is known as flipping. Flipping is the buying of an item to sell at a higher price. The difference between flipping and investing is that it is not necessary for the price to increase to gain a profit. The goal of a successful merchant is to complete as many trades as possible between each update. A 5-10% profit per exchange should be your goal. You will also gain insight on when an item is about to peak or reverse if you cannot finish your order in the time allotted. The larger the amount of money used contributes to a larger return of profits. It is simple percentages! The absolute minimum required is 50k which brings 5k a day consistently. It is unrealistic to expect your money to double every day. As your wealth increases you will need to move on to more expensive items in order to use all of your money, this is due to the item cap. There are a few clarifications that need to be made when dealing with merchanting. Many people have a notion that the only merchants are items that are rising. That is not true. An item that has been falling can serve as a decent merchant. Example: Pot of Flour 1,590,000 1,650,000 1,700,000 Hypothetically, the highest buying price of that day could be 1,640,000. Although the price will fall for the next update, it is still possible to profit. Therefore, you will want to buy low enough that people would still sell them to you in order to create a profit. In this case, I would buy at 1.6M and sell at 1.64M. ¤ Tips ¤ Start off small. If you decide that you do not have the patience for flipping, it is easier to take a smaller loss. Manage your time efficiently. Do something else while waiting-like skilling! Find an item that you think will be good and give it an entire day, there may be others doing the same thing. Make use of all your slots. (- Merchanting Guide -) ¤ How ¤ It is suggested that you keep track of several items and merchant with several. It not only decreases risks but gives you a variety of items to choose from. Find items that have a sufficient trade volume. For example, there may be less than 10,000 Spades traded a day. Even though you can buy at minimum and sell at maximum for a profit, it is simply not efficient. Instead, search for an item that has a steady market. ¤ Prices ¤ It is necessary to shift your prices along with the market. To alleviate competition, you will buy slightly higher than the lowest selling price and sell slightly lower than the highest selling price. Example: Lobsters 160-170-180 Lobsters have been decreasing. In order to profit, you will not buy at 170 to sell at 180. Instead, it will be ideal to buy at 160 and sell at 170. If you are looking for faster profits, it is smarter to buy at 161 and sell at 169. The lowest selling price does not always mean minimum. If X has been increasing and is likely to increase again after the next update, it is unrealistic to expect that your order for X will be completed at minimum. Instead the lowest selling price may medium+. Therefore, you will sell at maximum- ¤ What ¤ These are the categories for the few items that are related to flipping. The item follows a predictable cycle that allows you to determine whether it will go up or down, items that vary very little are acceptable as well. Buy low when it is going down, mid when it is going up. Frequent buying and selling in low to medium numbers The price is in a range that you can use the money that you wish without reaching the cap NOTE: There is a 4 hour trade delay. ¤ Maximum Trade Caps ¤ 100 for Weapons/Armor 10k for Food 10k for Feathers 25k for Herbs 25k for Ores 25k for Logs 25k for Runes 10k for Potions 10k for Bolts ¤ Reverse: Merchants¤ If you can understand the investing basics and how the market works, you will do fine with merchanting. The only problem that some merchants may face is that their timing is not always correct. Every item generally follows a cycle. To perfect your timing, it is vital that you have an accurate estimation of how the market is doing. A tricky merchant is a reverse merchant. When the item is reversing, meaning it has bottomed and will rise soon, timing is the factor that will determine whether your order sits or completes. Some people may update their trade at a higher price if they are certain that they will not get their trade completed in time. For example if minimum+ is not selling, they would update it so they are buying minimum++. In the same way if they cannot sell at medium++, they would shift their prices down to medium+. If that occurs, you must either shift your buying price to minimum+ or switch to another item for the time being. ¤ Buying Prices ¤ Decreasing: Buy at minimum or minimum+ Increasing: Medium or medium+ ¤ Selling Prices ¤ Decreasing: Sell at medium or medium Increasing: Sell at medium++ or maximum (- Suggestions and WARNINGS -) ¤ Suggestions ¤ There are many items that you can merchant and invest in. Here are a few that will give you an idea on where to start. 1) Headless arrows: This can be used by someone with less than 100k 2) Lobsters: This is ideal for F2P. PKers are the ones who use these the most. 3) Barrows Armor: Veracs, Torags, Guthans, Ahrims, etc. 4) Treasure Trail: Theres potential in these markets 5) Rares: Never do party-hats. Santas and Masks are decent but will constantly fluctuate 6) Armor will always work well if you have chosen the right ones. 7) Weapons can work as well. Whips can guarantee a profit if you have done it correctly. ¤ Wezalls WARNINGS¤ These are items that I believe are not going up due to natural causes, such as normal fluctuations and updates, but rather they are going up because either a cartel or one wealthy investor is forcing them up. Current items are: Gems of all types Wait until these items crash and then buy them, as they go back up to their normal price, you will make money. Note: If you can tell me a reason that would validate the item going up I will either take the item off or include it. Engineer's Tips for Advanced Investors Overview I joined Engineer Mba's chat about 5 months back, and it has changed the game for me. When I first joined, I had 20m in gold and 20m in items. In case you're interested my first 10m came from skilling (Fishing, Rune Craft, Smithing), and the remainder came from Barrows. I had more gold than most of my friends, and I joined the group after reading the first version of this thread. I had a modest goal to buy a godsword without selling all my items. After 5 months in the group, I'm still learning every day. I don't consider myself an expert, but I have learned a few tips I'll share with the people who are also on this journey. If the response is positive, I'll add additional tips as my I learn more, and I'd love to hear the things you've learned so that we all mature together. Tip #1 - Lessons from Buffet Warren Buffet is currently the richest person in the world ahead of Carlos Helu and Bill Gates. While Helu (#2) leads a telecommunications company, and Gates (#3) leads a software company, Buffet is an investor who has some very interesting practices that I follow on Runescape. Buffet is the most famous modern con-trarian investor which is someone who looks for out of favor items that are undervalued. His investments are based on value with the idea that the market will eventually correct itself. I'll now explain how this applies to Runescape. We have a fantastic GE DB that clearly shows the highs and lows of an item. My first rule of finding an investment is to look for an item that has a nice curve, and that is currently in a low period. I'm positive there will always be a demand for yews, nats and the like. I'll happily invest a good percentage of my net worth in those items when they are at their low points with confidence they will trend towards the mean at some point in the future. This is why I always choose to pass on the hot, fad items of the day like ashes, box traps, or whatever is being pushed. Tip #2 - Consistency over Volatility For my next tip, I like'd begin to illustrate with a scenario. Let's assume you have 1m gold, and have the following investment options: Option 1 - This is a highly volatile investment. It will either gain or lose 10% per day. This week we gain 10% 4 days and lose 10% 3 days so if you add up the percentage you show a 10% gain on the week. Any idea how much this is worth at the end of the week if we start with 1m? Option 2 - This strategy is based on waiting patiently on really good investments. For the first 6 days, no great investments can be found so you wait patiently. On the 7th, you find a great investment and earn 10%. Just like the previous investment, at the end of the week if you add up the percentages you will show a 10% gain. Any idea how much this is worth if we start with 1m? Option 3 - This is the most mundane approach. You simply find some items that consistently grow in value each day and buy those. You gain 1.428% each day, and if you add up these pecentages you get 9.96%. Any idea how much this is worth if we start with 1m? Results: Option 1: 1,000,000 x 1.10 x 0.90 x 1.10 x 0.90 x 1.10 x 0.90 x 1.10 = 1,067,329 (6.7% ROI) Option 2: 1,000,000 x 1.00 x 1.00 x 1.00 x 1.00 x 1.00 x 1.00 x 1.10 = 1,100,000 (10% ROI) Option 3: 1,000,000 x ((1.01428)^7) = 1,104,346 (10.4% ROI) I'm sure many people are getting the calculator to look numbers above, and have trouble believing the results. There are two factors at play here. The first is that in investing a loss is hard to overcome. If you gain 100% you double your money, but if you lose 100% of your money, you're broke. If you do both, you're broke regardless of order, and you shoud avoid speculative invsements even if you miss some winner. The other surprise is that the 1.428% for 7 days which adds up to less than 10% outperformed the single 10% gain. This is due to compounding interest which will be discussed in more detail below. Tip #3 Life on 3% per day Whenever I first share my approach to investing, people often question my goal of earning 3% per day. It seems like such a modest simple goal to earn 3% per day, but I hope the previous tips explains the power consistency. I'd like to pose another question: "How much gold do you have at the end of a 30 day month, if you start with 10m and earn 3% per day?" Think about it, 3% per day x 30 days = a 90% gain so you'll gain 9m, right? If you understood tip #2, you'll realize the problems with the previous statement. Instead of having a a mere 19m (10m starting capital + 9m profit) after a month, you will actually have 24.27m (10m starting capital + 14.27m profit) after a mere 30 days more than doubling the 10m you started out with. The double effect works regardless of the amount you start out with, but the more you have the harder it becomes to earn 3% per day. Tip #4 - What's the true cost? My fourth tip is something I discovered a couple weeks back. I carefully track the returns on my investments, but my net worth wasn't growing as quickly as I'd like. I began thinking through my actions and realized I had been making a huge mistake for months. When I'd earn a profit, I'd take some portion to reinvest, but I'd take a roughly equal portion to spend on items or skilling. This is definitely my desired long-term state, but I realized I had been cheating myself by taking my profits too early. As many active players know, last month I spent 50m buying chins to get to 99 range. While I'm very proud of that accomplishment, I now realize my true cost was much greater. Consider if I simply hadn't spent any gold on range, the skill would still be in the 80s, but I'd have much more than 50m. If I had chosen to invest that instead with a paltry 2% return each day, it would now be worth 90m. I would almost be able to buy the chins from my profit if I'd only waited and still had the 50m that I spent. Once I began thinking about this, I put a hold on buying more skills until I hit a few financial goals.
