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Moto Akimoto
Posted - 2011.03.31 20:39:00 - [1]
 

Edited by: Moto Akimoto on 05/04/2011 18:51:10
Akimoto 400™ Index


Akimoto 400™ Index Inverse


Greetings Fellow MD Investors & Traders
(My apologies for bad spelling, grammar, and poor presentation in advance.)

I would like to propose this idea to the community but I might be overlooking very important details that may create problems in the future. So if possible I would like your comments, suggestions, constructive criticism, etc to make it better.

Summary:

Akimoto 400™ (AU400) and it’s inverse (AD400) is an index composed of 128 products from within the “Materials” category. The shares [AU400] and [AD400] allows an investor to more conveniently profit from their opinion on market direction without a need to acquire the products themselves. With access to “The Forge” region historical prices, market participants can calculate the index fairvalue daily and trasparently.

googledoc file with methology, composition, and historical data.

General Information on the Index:

The Akimoto 400™ Index measures the performance of 128 unique basic materials.
The Akimoto 400™ Index is constructed to provide a comprehensive, unbiased, and stable barometer of the commodities used to build the majority of higher tiered products within the Eve universe.
The “Average Price” in The Forge region during the last server downtime is used for fair value calculations.
These 128 products from the “Materials” category consists of:
All 9 “Fullerenes”
All 16 “Gas Clouds” for booster production
All 7 “Ice Products”
All 20 “Raw Materials” in the “Moon Material” sub-category.
All 8 “Minerals”
All 15 “Processed Materials” in the “Planetary Materials” sub-category.
All 15 “Ancient Salvaged Materials”
All 38 “Salvaged Materials”
The sum of each average price along with it’s multiplier is the index daily value so AU400=(P1*P1Multiplier + P2*P2Multiplier + P3*P3Multiplier + …+P128*P128Multiplier).
The fair value of the inverse AD400 is (x^2/AU400) where x is a fixed number calculated using historical price data and available to everyone.
Any changes by CCP to the game would not affect the fairvalue calculations, this would be done by adjusting the product multipliers as neccesary.
The multipliers will be available on the forums and/or download from eve-files or googledocs.


General Information on AU400 & AD400 shares:


The company does not determine the FairValue, the market does.
The shares do not pay an income (no dividends or interest).
The shares are unaffected by the profit/Loss of the company.
The shares are unaffected by the number of shares outstanding.
The shares are freely tradable with anyone at anytime.
The company will repurchase the shares from a shareholder on request at FairValue*.90
Initially the shares can be purchased from the company at FairValue. After a certain number of shares have been sold, purchasing shares from the company is FairValue*1.10
The shares outstanding, shares authorized and shareholders’ name(s) will be available on the MD threads.
When redeeming shares to the company, please transfer the shares and send an email that mentions the number of shares and fairvalue for proper credit.
Whoever redeems the shares is the one getting the cash transfer, no exceptions.
When purchasing shares write the number of shares and fairvalue, once I confirm the fairvalue and deposit I will transfer the shares.

Moto Akimoto
Posted - 2011.03.31 20:41:00 - [2]
 

Edited by: Moto Akimoto on 31/03/2011 20:52:41
General Information about the Company, creator and characters:

These are “shell” companies created for administrative purposes (for maintaining the index, wallet transfers, etc) without affecting my main account.
My main account is Moto Akimoto, I have no other accounts aside from these two.
The Full API key for the index account will be available to reputable MD auditors.
The AU400 and AD400 characters’ information will be available to the public through the eveboard website, this will include the wallet balances.
I have no interest in acting as 3rd party.
I will not provide loans or margin for the purchase of these shares.

General information on risk to the company and shareholders:


The index and inverse will be launched simultaneously to limit my risk, so as long as shares outstanding of AU400=AD400, the company would be market neutral.
The company will maintain a minimum of 10% in cash of the total value of the shares outstanding for share redemptions, this amount will vary based on FairValue*Shares Outstanding.
Changes to the composition of the index (mainly because of game development) would be made by “pinning” the FairValue and adjusting the product multiplier,.
I am the only person with access to my accounts.
The only wallet activities within the accounts will be between shareholder(s) and the company and/or between the company and Moto Akimoto.
I can provide the largest shareholders my out of game email address and skype username upon request, in case I or the shareholder is unable to log into Eveonline.
I do not participate in RMT (aside from the game subscription provided by the CCP developers) and I take a neutral stance on RMT. The current RMT rules were made by CCP and it is their responsibility to enforce it not mine.

Underwriting Process:

The underwriters will be sold shares of both index in equal amounts at fair value.
The second phase, continued public sales from the index corp, would be sold at 1.10*fairvalue.
This will keep the underwriters at market neutral initially and give them a profit by selling these shares to the public.
The winning bids will the he highest isk value.


Why did I create this:
As a benchmark to measure the performance of my trades, other traders, and a get general “feel” for the market on a regular bases.
As an investment instrument to avoid major bottlenecks in trading (i.e. freighter capacity, dangerous shipping routes, delays in order fulfillments, ect.)
Scalability
Tax and broker fee evasion.
As a method to “Short” the market not currently available within the game.

Questions:

Q1: Why are you using a multiplier?
A1: On occasion the need to change product weight may be necessary, the feature was added to change this weights without changing the price of the index.

Q2: What is all this nonsense of indices, shorting, and tax evasions? Why don’t you just issue bonds or take a loan like everyone else?
A2: This is an index and an investible product.

Q3: Can you advise me when to buy and when to sell?
A3: No, my crystal ball is cracked. There are many savvy investors within the game, I would recommend you seek their advice.

Q4: Is this a scam, ponzi scheme, pyramid, circle jerk, etc?
A4: The canned response is “No, of course not”. Although scamming is legal within the game and some players enjoy it, I personally do not care for scams. Even though this is only a game, I would have a guilty conscious. My belief is that a scam is a one time gain but in the long term you can make a lot more isk by dealing fairly, building relationships and respecting other players.

Q5: Do you have a real life qualifications to make you believe you can create indices for the Eveonline community whenever you feel like it?
A5: Absolutely none, if I had the real life resources and background to create indices, I would spend my time with Standard& Poors, Russell or NYSE Euronext not on a game. This is a game and I would like to do some stuff I can’t do in RL.

Moto Akimoto
Posted - 2011.03.31 20:43:00 - [3]
 

Edited by: Moto Akimoto on 31/03/2011 20:54:18
Q6: Dude, seriously this is an overkill for an MMO. Why are you wasting your time with this crap?
A6: I like doing this “crap”, I’m sorry you feel this way but other players might find some value in its creation and my efforts.

Q7: There are better ways to create indices, why don’t you go back to the drawing board and try again?
Q7: Yes, there are many ways and many more combinations of products, hubs, etc but I have to work with what is available within the game while at the same time not making it too complex to become acceptable. I also do not want to spend 8 hours online per day just trying to calculate FairValue, ideally I would like to spend only 1-3 hours per month on maintaining this index.

Q8: Can you give me some trading strategies to make isk on this? Am I doing this right?
A8: Just as in real life, there are many more viable trading strategies than there are assets to trade. An important part of trading is figuring out strategies and adapting to market conditions. Some general strategies and styles are “buy low, sell high”, “sell high, buy low”, momentum, daytrading, position trading, arbitrage, swing, scalps, hedging, leveraging and just simply throwing darts. Good luck!

Q9: Ehm…Why are you calling it “Akimoto 400” when there is only 128 products?
A9: Most indices in RL don’t have the same exact number of stocks, commodities, etc in them and after a while its about brand recognition. I chose 400 because there are 403 unique items within the “Materials” category.

Moto Akimoto
Posted - 2011.03.31 20:45:00 - [4]
 

Edited by: Moto Akimoto on 03/04/2011 01:07:58
Q10: How does the index make isk and what does the corp do with the isk?
A10: The corp makes profits/loss based on the sales price (fairvalue*1.10)- redemption price(fairvalue*0.90). This spread allows more enough room for market makers to slide inside the corps prices and also allows room from volatility risk on a day to day basis.

The corp will keep the cash in the corporations characters wallet and/or use it to hedge against adverse share redemptions such as 3:1 index to inverse.

Q11: Which characters will be used for administration?
A11: These are the Eveboard links to them, Akimoto 400 and Akimoto 400 Inverse

Q12: Don't we already have an exchange featuring over-complicated market-weighted shares that no one uses? Do we really need another?
A12: Yes, there is an exchange, BSAC, with other offerings. This is a stock/index that can be traded on the exchange.
The Inverse allows an investor to have a "Short" market direction. I don't believe this exist yet but I have found many threads with ideas on how it could be implemented.

Q13: I've read the whole thing several times and I still don't have a clue what it's about.
Q13: It's an index/ETF sort of like the SPY, SDS, SSO on the S&P 500. In real life, the short ETF would use options, futures, swaps, etc bundled together for trading under one ticker. These instruments are not available in Eve so I had to create a Short ETF (Inverse) by mathematics alone.

Ray McCormack
Nordar Innovations.
Posted - 2011.03.31 20:46:00 - [5]
 

Omg, the 400 is trademarked! Invest I tell ya, invest! This guy means serious internet business.

Moto Akimoto
Posted - 2011.03.31 20:48:00 - [6]
 

Edited by: Moto Akimoto on 31/03/2011 21:16:27
Originally by: Ray McCormack
Omg, the 400 is trademarked! Invest I tell ya, invest! This guy means serious internet business.



Thank you for your reply, Ray McCormack.

The trademark thingy looked cool on other threads so I stole the idea.

Roguehalo
Caldari
Roguehalo Ship Brokers
Posted - 2011.03.31 20:48:00 - [7]
 

What do you do with the isk people give you for the shares?

Ray McCormack
Nordar Innovations.
Posted - 2011.03.31 20:48:00 - [8]
 

reserved

Moto Akimoto
Posted - 2011.03.31 20:53:00 - [9]
 

Edited by: Moto Akimoto on 01/04/2011 02:31:37
Edited by: Moto Akimoto on 31/03/2011 21:19:48
Originally by: Roguehalo
What do you do with the isk people give you for the shares?



I added your question to the op, Roguehalo.

"The corp makes profits/loss based on the sales price (fairvalue*1.10)- redemption price(fairvalue*0.90). This spread allows more room for market makers to slide inside the corps prices and also allows room from volatility risk on a day to day basis."

Gallians
Posted - 2011.03.31 21:06:00 - [10]
 

Reserved.

Gatan Hahran
Posted - 2011.03.31 21:13:00 - [11]
 

reserved.

Cyaxares II
Posted - 2011.03.31 21:13:00 - [12]
 


so you could change the index weights at a whim (based on your own predictions as you're probably lying & your crystal ball isn't broken) to achieve a development of the index value that favors your sinister goals?

Khanid Voltar
Night's Dawn Investment Fund
Posted - 2011.03.31 21:14:00 - [13]
 

RESERVED

Atima
Minmatar
House of Marbles
Posted - 2011.03.31 21:14:00 - [14]
 

Before anyone puts any money towards this I would like Moto to disclose the nature of his time in his first corperation Xenotech Ventures Incorperated. And also disclose any alts/other accounts.

Biocross
Posted - 2011.03.31 21:16:00 - [15]
 

reserved

Moto Akimoto
Posted - 2011.03.31 21:29:00 - [16]
 

Edited by: Moto Akimoto on 01/04/2011 01:23:11
Originally by: Cyaxares II

so you could change the index weights at a whim (based on your own predictions as you're probably lying & your crystal ball isn't broken) to achieve a development of the index value that favors your sinister goals?


The index multipliers are public information and the players will know without a doubt if it has changed just by comparing it to the previous day's multiplier.

If the need does arise to change the multiplier it will be due to CCP announcements, too many loses to me due to player manipulations, etc. Before any changes are made to the multipliers, the corp would make a public announcement to allow players and market makers to balance out their positions and adjust their risk accordingly.

I do not have any sinister goals but thank you for giving me more credit than I deserve.Razz

Originally by: Atima
Before anyone puts any money towards this I would like Moto to disclose the nature of his time in his first corperation Xenotech Ventures Incorperated. And also disclose any alts/other accounts.


My employment at Xenotech Ventures Incorporated (Dan Noble-CEO)was one of a new player. I was recruited as a scout and spent most of my time doing wormhole(WH) operations and getting podded. I left the corporation because they got wardecced a 1000x times per day due to 75% of the players within the company being ninja salvagers.

I was later asked to join Retribution Corp. (Matrixx-CEO)by one of the veteran players of Xenotech, his name was Matrixx. My responsibilities were the same, corporate scout, this might have been due to the fact that I enjoyed my job and was able to get the corp/fleet out of a "pickle" very fast. I also didn't lose too much isk when I got podded in the WHs since I was a new player with little invested in implants, clones, mods, etc.

I loved being part of both companies and enjoyed speaking with the other players on a regular basis on Team Speak but I left Retribution. to form my own corp when my real life friend joined Eve and he wanted nothing to do with null sec. Another reason was because I enjoy trading more than WH and null sec stuff, basically I'm an Uber carebear and I'm proud of it. Very Happy

Edit: A few players found it odd that a new player would start off in a company with 2003 players as a newbie scout. I can't speak for others but why else would I join another player corp if I can do the same exact thing in a NPC Corp. The recruiter offered me 30-50M sign up bonus and 30-50M for every Class 4+ WH I found. This was all around a 3 month timeframe and around the same time that CCP announced the new player taxes of 10% around the Dominion expansion, I do not like paying taxes to CCP so I always prefer paying taxes to other players or myself.

Myra2007
Millstone Industries
Posted - 2011.03.31 21:34:00 - [17]
 

Originally by: Moto Akimoto

A10: The corp makes profits/loss based on the sales price (fairvalue*1.10)- redemption price(fairvalue*0.90).



If I understand correctly investors that have bought shares on day x have to hope that at some later point in time say y they can redeem their shares and make (fairvalue(y)*0.9 - fairvalue(x)) * number_of_shares profit? That is assuming they bought shares at fairvalue not fairvalue*1.1. Fairvalue in that context as I understand is simply the value of that index on a particular day/date according to the specifications you've given?

Assuming my understanding is somewhat correct I have two questions:

1) Why in particular would anyone have reasons to believe that the fairvalue will rise (which seems to be the condition for profit on his part)? Especially given that it is you who constructed the index and your interest is obviously to ensure that you're not losing money on the redeem part.

2) Would you - in theory - be able to deny the request for redemption? If not what measures are taken to ensure this?

I find this idea interesting but I don't really understand what incentive an investor has to go "ohh right this is definitely going to go up so let's buy". Admittedly though I haven't really looked into the details so maybe that would obsolete my questions.

Elise DarkStar
Posted - 2011.03.31 21:42:00 - [18]
 

Don't we already have an exchange featuring over-complicated market-weighted shares that no one uses?

Do we really need another?

Block Ukx
Forge Laboratories
Posted - 2011.03.31 21:51:00 - [19]
 




I think it is an interesting project. Probably the first of its class. My main concern is burn-out. Updating prices daily on 128 items can be a big headache. It would be beneficial for a project like this one if ccp comes with some form of market API.



Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.31 22:00:00 - [20]
 

Originally by: Block Ukx



I think it is an interesting project. Probably the first of its class. My main concern is burn-out. Updating prices daily on 128 items can be a big headache. It would be beneficial for a project like this one if ccp comes with some form of market API.





It's a similar project to one I started last year called "VEMEX" (several things of mine have that name on MD if you go check) but besides the lack of time, it's going to take months to be setup. I would not want to end up tellering all day long because someone wants to scalp prices every 3 minutes or something.

Roguehalo
Caldari
Roguehalo Ship Brokers
Posted - 2011.03.31 22:03:00 - [21]
 

I've read the whole thing several times an I still don't have a clue what it's about.

For that reason I'm out.

Atima
Minmatar
House of Marbles
Posted - 2011.03.31 22:05:00 - [22]
 

****** Please no one send him any ISK yet.

VV, any chance you can log in please ? I've got something super tl;dr for you that you would love. Bonus cookies from everyone in MD if it works out

Ave Volta
Perkone
Posted - 2011.03.31 22:06:00 - [23]
 

I think it's a good concept in theory, and I applaud the effort, but it has been seen in the past that there is a limited demand for such products. I think a key ingredient in making something like this successful would be to create a very customer friendly user interface with lots of pretty graphs which are also informative.

I like the indexes listed on this page for example because it gives a quick and useful overview of trends. If something like this could be combined with the ability to trade shares, it would have the potential to attract more interest.




Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.31 22:17:00 - [24]
 

Originally by: Ave Volta
I think it's a good concept in theory, and I applaud the effort, but it has been seen in the past that there is a limited demand for such products. I think a key ingredient in making something like this successful would be to create a very customer friendly user interface with lots of pretty graphs which are also informative.


That's what was VEMEX meant to be(come).
Sadly ATM my time is too small to do it Crying or Very sad

Moto Akimoto
Posted - 2011.03.31 22:42:00 - [25]
 

Edited by: Moto Akimoto on 01/04/2011 02:36:57
Originally by: Ave Volta
I think it's a good concept in theory, and I applaud the effort, but it has been seen in the past that there is a limited demand for such products. I think a key ingredient in making something like this successful would be to create a very customer friendly user interface with lots of pretty graphs which are also informative.

I like the indexes listed on this page for example because it gives a quick and useful overview of trends. If something like this could be combined with the ability to trade shares, it would have the potential to attract more interest.


Hello Ave,
This is what I'm trying to implement, this index has different weights from those on Railman85's site this is because it was very difficult to implement an inverse based on them. No one would buy the Inverse(short) since it lost value almost everyday since Tyrannis and whoever created an investment product based on those index for trading would go bankrupt within a couple of weeks imo.

Also I have already asked Railman85 to add this index to his list once I went public with the info. He currently gets data from sites such as Eve-central which provides actual orders on the market (orders not completed trades) which is not what this index is based on. I have yet to get additional replies from him as to whether or not he can do this because of cache, codes, etc. Unfortunately, I am not a programmer so I don't know all the details if/when he gets back to me I'll update this post.

Misty McGinnity
Mystify Trading Company
Posted - 2011.03.31 23:05:00 - [26]
 

Originally by: Elise DarkStar
Don't we already have an exchange featuring over-complicated market-weighted shares that no one uses?

Do we really need another?


I cordially agree with this red headed avatar's response.

Liberty Eternal
Posted - 2011.03.31 23:14:00 - [27]
 

I concur. Moto, what are the trading advantages of this system? In other words, should I be doing this with my markets? If so, why?

Moto Akimoto
Posted - 2011.03.31 23:17:00 - [28]
 

Edited by: Moto Akimoto on 31/03/2011 23:19:53
Originally by: Myra2007

If I understand correctly investors that have bought shares on day x have to hope that at some later point in time say y they can redeem their shares and make (fairvalue(y)*0.9 - fairvalue(x)) * number_of_shares profit? That is assuming they bought shares at fairvalue not fairvalue*1.1. Fairvalue in that context as I understand is simply the value of that index on a particular day/date according to the specifications you've given?

Assuming my understanding is somewhat correct I have two questions:

1) Why in particular would anyone have reasons to believe that the fairvalue will rise (which seems to be the condition for profit on his part)? Especially given that it is you who constructed the index and your interest is obviously to ensure that you're not losing money on the redeem part.

2) Would you - in theory - be able to deny the request for redemption? If not what measures are taken to ensure this?

I find this idea interesting but I don't really understand what incentive an investor has to go "ohh right this is definitely going to go up so let's buy". Admittedly though I haven't really looked into the details so maybe that would obsolete my questions.


1. Yes, you are correct. Price appreciation of the value of the index is how the investor profits, so (price paid)-(selling price). There are more trading strategies than there are products to trade, this is true within Eve and in real life. A few reasons a player might believe the fairvalue would increase could be based on his own trading on the underlying (Tritanium, Pyerite, etc.) or his own manipulation of them. Hedging large positions also comes to mind for example, you own 100B Technetium and you want to soften the blow if the market goes against you.

I did construct the index but the value is determined by market prices in the Forge Region. The construction and methology allows anyone to calculate the indices fairvalue at anytime by just looking at market history and plugging it in against the multiplier so anyone with a spreadsheet and the data can value it.

2. The spreads of .90*fairvalue and 1.10*fairvalue was implimented to try and create a market for them by new market makers (all you traders), if your trade your share against another player then you and that party decide on the price. Tho exchange of share(s) bought/sold to the index corp are exactly .90 or 1.10 x Fairvalue.

The current game mechanics have no method to enforce deals/contracts outside of the contract/market user interface else I would implement these features.

Lauren Hellfury
Full Pocket Aggro
Posted - 2011.03.31 23:23:00 - [29]
 

Originally by: Atima
Before anyone puts any money towards this I would like Moto to disclose the nature of his time in his first corperation Xenotech Ventures Incorperated. And also disclose any alts/other accounts.


Because it seems to have got lost and enquiring minds want to know. Twisted Evil

Moto Akimoto
Posted - 2011.03.31 23:36:00 - [30]
 

Edited by: Moto Akimoto on 10/04/2011 22:51:33
Hi Lauren,

I posted my employment history here.

My main account has 2 other characters used for passive income, industry, trading, etc. They are:

1.
2.

All my characters have been created from scratch. I have never purchased or sold a character in Eve.

Originally by: Block Ukx



I think it is an interesting project. Probably the first of its class. My main concern is burn-out. Updating prices daily on 128 items can be a big headache. It would be beneficial for a project like this one if ccp comes with some form of market API.




I have discussed and thought about the burn-out part. I did my best to address this by making the fairvalue calculations as transparent as possible. I'm also trying to get the index quoted on websites such as eve-tools.org to help me and investors out.

Since the index only requires the following from me: 1. Issuing/redeeming shares 2. Updating prices.

Step 1: the burden is lightened by providing an opportunity for market makers to trade against the public, either on an exchange such as BSAC or in private (one-on-one).

Step 2: Updates on prices can be done by anyone on any site even if I'm not online.

I agree this product would benefit from a market API but none is available atm to my knowledge. During Fanfest, Dr. E did mention something about "Player Driven Analysis" or something along those lines so I'm hoping it's what I'm expecting.

Originally by: Liberty Eternal
I concur. Moto, what are the trading advantages of this system? In other words, should I be doing this with my markets? If so, why?


I believe every big trader could use a product like this to their advantage. For example, hedging, speculating, lazyness, etc. There are documents available throughout the net on using formulas such as Black-scholes, Sharpe's Ratio, etc but to be honest I don't fully understand them so I can't fully explain all the Greeks and math. Maybe another player can explain this if they are willing to chime in.


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