AUDs vs CLDs

[DaughterofAnarchy]

Following the announcement about Arkadia Underground Deeds being sold out, there were quite a lot of fluctuations on their price and quite a lot of people made or lost a hefty amount of PEDs on these fluctuations. Now, that the things seem to have stabilized a little and the heat that was clouding our judgement started to dissipate, I think is a good time to take a step back, get a pen and a piece of paper and try to analyze the situation and decide what we should do (if anything). But, before doing that, just in case there’s someone who is not familiar at all with the deeds concept, please allow me to try to explain (in as few words as possible) the basic things about AUDs and CLDs.

Read the full article on my blog: http://daughterofanarchy.blog.com/my-thoughts/auds-vs-clds/

 

[David Grayvey Gray]

Hi DoA,

Nice article, the premise of comparing CLD and AUD to see which is the best investment is a question that a lot of people would have and you've done a good explanation of how to calculate this.

The only thing i would say is that you points 2. and 4. effect is currently true (CLD having more stable prices than AUDs) i don't believe you cause is correct. You observe/speculate that this is in part caused by them being in the hands of long or short term traders, which I would probably agree with. However, this will have the opposite effect than you might think. Your referring to liquidity, http://www.investopedia.com/terms/l/liquidity.asp.

In markets, having lots of buyers and sells will give slight volatility, but price will stay on average the same. Having few buyers and sells will causes less changes in the price (less transactions), but there is a lot more likely that large price changes will occur. This is because a small change in buyers or sellers will cause a large relative change in supply and demand.

Contrary to popular belief, traders act to stabilize prices.

If we compare deeds to stocks, then deeds are highly illiquid and we regularly see >10% prices in a <week, something that normally takes a least a few month in stock markets.

 

[DaughterofAnarchy]

Thank you a lot for your explanations and what you say actually makes sense; also, I trust you know better - at the end of the day, I'm just 16 years old, so what can I know about economy - lol.

What I meant to say though was a bit different... I was referring to the fact that when people are doing a long term investment, they are less likely to freak out and start selling (or buying) at the spur of the moment after a bad (or good) week or month, so there are not expected to be (many) sudden activity on the market.

While, with AUDs, still they're not all in pockets of people that intent to keep them for the long time, the occasional owners, may react emotionally on a bad week or month, which would make the supply/demand fluctuate a lot (percent wise), which would make the prices fluctuate a lot.

I was not really referring traders, but mostly people who are not yet sure about their investment.

 

[David Grayvey Gray]

For your age, you have some good incite and that your open to other peoples opinions. I would also say that I don't know all that much, just the odd bit and piece.

What I meant to say though was a bit different... I was referring to the fact that when people are doing a long term investment, they are less likely to freak out and start selling (or buying) at the spur of the moment after a bad (or good) week or month, so there are not expected to be (many) sudden activity on the market.

While, with AUDs, still they're not all in pockets of people that intent to keep them for the long time, the occasional owners, may react emotionally on a bad week or month, which would make the supply/demand fluctuate a lot (percent wise), which would make the prices fluctuate a lot.

I was not really referring traders, but mostly people who are not yet sure about their investment.

This makes sense to me.

Other points I'll add that are also logical to me:
1.That the CLD price is affected by land plot as well as income, so will add stability but can cause large changes in price if MA changes the number/uses for the land plots. AUD is currently only on income.

2. With AUDs being cheaper, they are available to larger number of players. This will increase liquidity, but, like you say, could be with players who are more sensitive to price changes.

3. Players could use AUDs as a stepping stone to obtain a CLD. i.e. buy AUDs when they have enough PED, until they have enough to swap for 1 CLD. Again, making AUDs more tradeable then CLDs

 

[mastermesh]

seriously consider getting wordpress or some other site that loads faster. That blog.com site seems a bit slow to come up at times... based on some reviews I've read that's all in the server.

 

[DaughterofAnarchy]

seriously consider getting wordpress or some other site that loads faster. That blog.com site seems a bit slow to come up at times... based on some reviews I've read that's all in the server.

Yeah, to be honest the platform totally su**s, but it was the only one where I could get my name and it seemed easy to remember.

Eventually, someday, I'll afford to buy a domain and some cheap hosting and move up.