hard to accept the law of supply and demand. It is far easier just to
look at prices and consider them to be the best way to predict future trends.
If something looks profitable today, then we just assume it's going to
look the same tomorrow.
Price is a direct result of supply and demand. There is no way to
increase the price of an item without first affecting the supply and/or
demand. The best way to think of this is a scale. When the scale is
balanced, equal demand and supply, then the price settles at an
equilibrium. If you add more demand than supply, the price rises. If you
add more supply than demand, the price drops.
To predict how prices will react to changes in supply and demand, you
need to simply compare future situations to the current one.
This is true for weekly cycles, game updates, and even daily cycles.
Most people only look at the price and use that as the sole measuring
stick for determining what to do next. If, for instance, they see black
lion chests at 40 copper (as we did during halloween), they will
remember that at one time 3 copper was the normal price, so they'll
sell. What they neglect to realize is that this change was entirely
predictable. All you have to do is look at supply and demand. The supply
of chests didn't change, but new items were added to them that were
desired by the players. Equal supply, higher demand means higher prices.
These same people could have purchased thousands of Black Lion Chests
and made an absolute killing.
As players get the items they wanted out of the chests, or just lose
interest in trying, then demand goes back down but incoming supply
remains the same. This leads to a gradual oversupply of chests and the
price dropping (we're seeing that now).
But remember that chests, along with the mystic forge, are the two
ways that ArenaNet seems willing to utilize in changing the economy. So
you can bet your britches that a new item will be added to black lion
chests soon enough, and that will lead to massive demand once more.
I very rarely look at the current price when I speculate on anything.
It doesn't matter to me if the price was up or down a week ago. All
that matters is the different amount of "sand" that's going to be
applied to the scales of supply and demand. If an item's demand is going
up this weekend, then I don't care about the history of its prices. All
I care about is the fact that demand is going up and supply isn't
increasing to meet that demand. The price WILL go up, and so I buy
despite the fact that prices could right now be higher than ever.
I believe that too many people get suckered into watching trends and
plotting on a graph where markets will end up. It's the falacy of
studying economics as a mathmetician, when you should be viewing it as a
branch of psychology. How people react to numbers is more important
than guessing how numbers will change.
I hope this helps people get out of the mindset of looking at prices
instead of the forces that drive those prices. Supply and Demand is all
that matters. Not the price.