Merching on RS is Just Like a Hedge Fund

Might make a detailed post on this later, but I'm reading through investopedia to get a good idea of what hedge funds do since I've got an interview with one soon. And it's just blowing my mind how similar merchanting on RuneScape is to the methods used by hedge funds.

Examples:

1.Relative Value Arbitrage (in particular convertible arbitrage) - This is very similar to say buying a gem and the other materials required to turn it into an enchanted piece of jewelry and then selling it for a profit in the event that the price of the materials is less than the price of the enchanted jewelry. The only reason this isn't exactly equivalent to relative value arbitrage is that we cannot short things on RuneScape, so we are exposed to some risk of price movement while we take the time to create the enchanted jewelry.

2. Options and other derivatives - Buying items on RuneScape that are at their price floor (alch price) because you think there will be an update in the future that will increase its price is like buying an American put option with expiration time infinity.

3. Normal Arbitrage - Buying alchable stuff for less than alch price and alching it.

There are more examples, but I need to get back to preparing for the interview. Seriously though, you should all really look into this. It's INCREDIBLE how similar RuneScape (and RWT) is to real life finance, and your experiences with RuneScape and Sythe could very well have given you a skill set good for a finance job at a great place.

EDIT: With respect to trading gigs, flipping is equivalent to market making. Not really a hedge fund thing, but still cool.

 

Hey, investing is investing. Although options are more limited in RS, it isn't any different.

 

It's just so cool. It really seems that, if we learn the lingo of the "real world" finance, many of us should be able to leverage our gaming experiences to get jobs at excellent financial firms. The hard part is learning that lingo and expressing to employers that (example) buying an onyx and turning it into a fury is like relative value arbitrage. But once you have that down... I feel like you're in an incredibly good position for interviews.

 

I've been merching this past year on oldschool and RWTing and have learned so much from this game about investing, supply and demand, and business. It is truly mind blowing how much a game (sounds silly right..?) can actually help you learn stuff that one day may help you in the real world.

 

I mean, Runescape is supposed to act as a microcosm of the real world. There is a small economy that lives in RS and while it may not be worth millions, it sure is in the thousands if not hundreds of thousands.

 

Couldn't of said it better my self

 

Runescape is a VEEEEEERY toned down version of investing.

If you actually want to learn how to invest, there's really no way to do it but invest your own money. Nothing motivates you more to learn than when your own money's at stake

 

The rs economy is actually worth several million $

But yeah, there are a lot of similarites, though I'd say the real world of finance is a LOT more complicated still. For example, within RS you can often analyze what price trends there are and make good assumptions about their future, while in the real world its a lot harder.

 

Definitely toned down, but a great introduction nonetheless. Anyways, you should realize that anything you risk on RuneScape is equivalent to risking real cash because you are always able to trade your RuneScape wealth for real money at places like Sythe.

 

I think you're overreacting. I don't see how this makes RS a hedge fund; plenty of other entities do all these things. Just because you're buying something for a price that it's theoretically convertible for doesn't make it an option; there's a substantial time cost in selling or alching those alchables that you're ignoring, and you're not agreeing to anything with another party, except maybe Jagex if you want to get all theoretical about it.

But more importantly, which HF? Full-time job or internship? Do you have other offers? It's pretty late for HFs to hire, no?

I've brought up RS-related stuff in interviews and impressed people... not that I encourage people to get involved in RS for job prospects lol.

 

You didn't know supply v demand was a thing until you started dealing with Runescape gold?

 

Probably a little overreacting, I kind of nerded out about it earlier. :laugh:

Anyways, I never said it IS a hedge fund. I said that the strategies are often similar (at least conceptually. RS is very simplified). I also explicitly stated that there is a time cost in my post (I only wish we could short things on RS...).

It's for an internship, so not too late. I don't know too much about the HF recruiting timeline though since there aren't a lot of HF opportunities for my school (that I've found), and most aren't very well known to students since they aren't publicly advertised. It's also not that common for undergraduates to find opportunities with hedge funds as far as I'm aware.

It's mid-office, but I feel like I'd be getting a lot of exposure to various strategies that could help me with full time recruiting down the road. So, I am actually considering it a bit.

Since I'm not in the diversity or accelerated groups, it's still mid-season for internship recruiting for me. Most resume drop deadlines are still a bit off in the future.