Would anybody be interested in running an investment bank?

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This sounds interesting. Can you elaborate?

 

Are you referring to buyouts or just long/short term investing. I used to actively invest on runescape and would love to help you if you need any. Not sure if I'll actually take part, but I'll provide advice and knowledge.

 

Piqued my interest. Are you currently taking classes/have taken classes in the past about this, or is this hobby/personal research?

 

Message me, I have 5b so could make a lot with you. I have a lot of merching experience so I can tell if something is dumb or not

 

This seems like it can work. I'm interested. I'm sorta new to merching but I feel like this could be the kickstart I need. Add me: Soul Regards

 

Too hard, unpredictable market.

 

This. 0 regulation in runescape market. You don't have stop outs and shit like that. Plus like the real world in the commodities market someone with a big credit line can drive a market up or down.


To my knowledge there are still rs3 merch clans. So what happens if one of the products your using to set your index gets blown out. Then you get an outlier and your whole equation is f'ed.




As far as finding items that are inversely related... you'll be wanting to look at substitutes. Think of like different food types shit like that. But even then idk. Maybe weapons that are comparable when one price rises the substitute will remain. Unless the only factor driving price is demand.. in that case the comparable item will follow trend. As you can see its a bit more complicated... And then there's the fact that a lot of items are stale and the price doesn't move a lot. I haven't played rs3 in awhile but there are a shit ton of items and a grand exchange that provides a small source of prices traded. So maybe look at the more obscure items. That's my two cents. Let me know what you decide i'm interested from a learning aspect.

 

I'd be interested in running some trading with you. Although as this is buy side it would be more of a hedge fund and less of an I-bank. I have experience in banking/on the buy side (no advanced quant but some general knowledge) but I quit rs a while ago so only about 250M. Tell me if you're interested.

 

If I'm not mistaken, what you are suggesting is using what is called the CAPM (Capital Asset Pricing Model). Although this is a simple and intuitive model that is often taught to undergraduates and new investors, the simple fact of the matter is that IT DOES NOT WORK!!! No need to get into details here since it seems you'll be studying these things more in depth in your internship and in college. But just keep in mind that if you try to use such an approach in RuneScape, you will probably lose money. If you try to use such an approach in real life with stocks, you will also probably lose money. Even if all the assumptions necessary for application of the CAPM theory and linear regression are satisfied, the model is only useful theoretically. In practice, the estimates you form with the regressions are going to have enormous confidence intervals. Again, no need for me to elaborate why since I'm assuming your professors will take care of that for you.

But, if you are curious about the CAPM model, feel free to shoot me a pm. I have studied it a bit in some previous courses, so I can answer some basic to moderate questions.

And hopefully your internship will emphasize how difficult doing meaningful regressions really is. If not, please do take some high level theoretical econometrics courses in college. Improper usage of regressions really does have horrible consequences.

 

With how easy the market is to manipulate, the low limits on quantities of items, and the speed with which prices fluctuate it would be almost impossible to make any large amount of money without a considerable amount of risk.

 

The important thing you should have got from my post is that CAPM doesn't work in practice, and regressions are pretty complicated. You should really study up on the theory behind time series analysis if you are going to try to use past data to predict future prices (unless you have already studied it of course).

 

^I think this would be a serious issue...

That being said, I've always been interested in investing whether it be RS/IRL, so what do you ask of us to do?

 

I would be willing to invest, please add my skype.