Marketplace
Rules of the Free Market
As the song goes, “you’ve got to know when to hold’em them, know when to fold’em, know when to walk away, know when to run.” That’s in everything life offers, and the gaming industry is no different. Video games have evolved from cartridges to CD-ROMs to digital file formats, and if you are not careful, as the saying goes, there is a sucker born everyday. The following are 4 areas to concern yourself with, if you are to take part in any form of gaming.
Know When To BUY
When news reaches the internet that a hot new game is coming out, hysteria causes you to be the first in line to acquire the game. In the past, you would wait long hours on line, in the middle of the night for the stores to be open, so that you can be one of the very few to purchase a brand new video game or console. Today, we have Pre-Orders. Due to the advancements of technology within the Information Age, acquiring new video games and consoles have become very easy. It is the ease of buying, which causes a lot of people to rush into the market, thereby causing a frenzy. In the stock market a rush in buying causes prices to go higher. In video games, you have a rush in product purchases, which may cause stock prices of certain companies to go up. Depending on the game, and the value that is being offered, you may want to wait until the frenzy is over, where prices drop down, and even more value is added later. In short, what you pay for now may be free later. However, if you make your purchase now, what is your exit strategy for an upgrade in value of the same item? That’s when we must…
Know When To SELL (Know When To Fold'em)
That’s right. Knowing how to sell and when to sell is very important. Reason being is because if you sell at the wrong time, you won’t receive as much money as you did when you purchased said item. That is because with use, value goes down. You see, there is a difference between price and value. Price is how much you pay for something. Value is what you get from the item you are purchasing. In the stock market, we call the price you buy at “the Bid”, the price you sell at “the Ask”, and the profit difference between the two figures “the Spread”. Very rarely will you ever, in terms of video games, get back the very amount of money you paid for or more, when you sell. This is only in rare conditions with rare titles, which will be discussed at a different time. In short, you must learn to read the market in terms of emotions, where you buy at the bottom, and sell at the top. However, prices for a game do not increase, unless you are getting an upgraded version of said game, which leads us to…
Know When To TRADE
Trading and Selling are the same thing, accept, instead of using cash to acquire video games, you are using video games to acquire video games. Trading games is all about assessing value, and this process mixed with negotiation tactics is called bartering. Questions to consider are:
- How rare is the game you are trying to sell (how big is the supply)?
- What is the condition of the item (what is its intrinsic value)?
- Can the item sell (is there demand)?
This is where you start to enter shark infested waters. As a rule, you should go to 3-5 different stores for an appraisal. Each shop is different, and attracts different kinds of customers. All you are hearing is someone’s opinion on your item as you undergo an appraisal. Therefore, you will not know what your item is worth, until it is sold. This will bring us to our final topic, which is…
Understanding Obsolescence Risk (Know When To Hold'em)
There are two ways an item can lose value. It can be through constant use and/or lack of demand. It is the lack of demand that we are discussing, which falls prey to time. Time is obsolescence risk, and it is when you hold onto an item for too long, to the point where demand for it drops, which causes prices to drop. This may be bad when you are trying to sell or trade, but when you are trying to buy, this is where you will find bargains. Games that once cost $50 USD, you can acquire for up to a 98% drop in price! You will find bargains like this in much older titles, but depending on rarity, the cost for older items may actually be higher. This is why you need to assess the emotions of the market, and know how to position yourself. Like in the stock market, you can make money when prices go up, when prices go down, or if prices stay stagnate (move sideways). As we dive in more on the marketplace, we will focus on these fundamentals, where you will be able to buy, sell, or trade at the right time, while observing the risks in the market.