It is hard to imagine Warren Buffett, once the richest man in the world and current CEO of Berkshire-Hathaway, playing WoW (World of Warcraft), yet the philosophies that he practices to create and maintain his empire are completely translatable to the game’s commodities market, the Auction House or AH.
Warren Buffett’s Philosophies and World of Warcraft
Warren Buffett’s techniques are complex and depend on many factors, which can be learned in depth from the many books written on the subject. For the sake of brevity, this article will only focus on two general techniques.
One of Warren Buffett’s techniques, which is especially translatable to the WoW Auction House, is known as Value Trading. This constitutes finding an undervalued stock that if held will grow over longer periods of time and can be sold at a profit.
Another of Warren Buffett’s techniques has to do with his incisive and unrelenting analysis of Financial Statements. Knowing the value and earnings of a company factors highly on its share prices. Simply stated, he looks for trends that show routine growth.
World of Warcraft and the Auction House
So how do Warren Buffett’s techniques apply to World of Warcraft and the Auction House?
While the Auction House is more akin to eBay than the NYSE (New York Stock Exchange), the same rules apply in that the shareholders, or in this case, the owners of goods, collectively determine the value of any given share or item.
Therefore, in theory, the same techniques Warren Buffett uses could apply to the Auction House, with some alterations, of course.
Value Trading in the Auction House
For those who are not familiar with the Auction House, there is little to it. Any item that is not soulbound or a nonsalable item can be put up for auction to be bought by any other player in that particular realm.
Items put up for auction have two prices, the bid price and the buyout price. For this strategy, only the bid price is of interest. The bid price can be a beacon to making money using the Auction House. There are two primary techniques that can be applied.
First, go to any Auction House (located in the major cities of Azeroth) and bring up the auction window. It helps if you have add-ons to facilitate pricing, such as auction search based add-ons and price calculating add-ons. On the browse section’s left bar are a series of selections, the most important being Trade Goods and Gems. Why not the others?
Weapons and Armor are priced subjectively and fluctuate too violently in price, Glyphs and Consumables do not trade frequently enough to produce a profit, and Quest and Misc. offer few routine value prices.
Select Trade Goods first and hit search to view all items and then hit the bid tab to sort all items by lowest bid to highest. The rest is relatively simple, though merits practice to develop efficiency. Simply scroll through the pages and there will be bids of only a few silver, while the buyout prices are fixed at several gold. The prices vary, but continue to search and routinely find bids undercut by 200%, 300%, 500%, and even sometimes 1000%! Simply bid on the item, wait until the auction time runs out and the item is won, then resell them at their gold value with a bid closer to the buyout price.
This technique, however, yields heavy competition. Often times, bids will be quickly outbid and one must keep diligent notes of value items, as World of Warcraft does not recognize outbid items once a character is logged off. Only the returned bid in the mail box will show items that were outbid, so take notes.
The second technique is similar. Instead, sort the searched items by the time remaining. Bid only on items that share the same value concept as above and that have short or medium time remaining, that is to say 0 min – 2 hours left. This way, items will be bid on with less time remaining, allowing less time to be bid against. There will still be competition, however, the likelihood of winning the auction will be greater. This technique will require more frequent trips to the Auction House. So if returning will be a problem, use the aforementioned technique.
Apply the same technique to the gems tab.
World of Warcraft Trend
Isn’t this a game? How is a trend applicable?
It is not so much the format or information that is critical, but the concepts that Warren Buffett uses to gauge trends that is indeed applicable to the World of Warcraft Auction House.
Much like demand growing steadily will raise stock prices, items will grow in value over time as well. It is important to note, however, that prices may vary between realms, so do not assume prices will be the same. Over time, patterns will emerge that show a particular item routinely being bid low while the buyout increases over time due to increased demand. These items should be the focus.
Auction House Final Tip
Make a list of all items that routinely are below market value and check back on them often. Remember though, this is a game, so have fun, though World of Warcraft is much more fun with gold to spare. These techniques applied properly and diligently will yield a steady increase in income.
For other considerations and sources of gold making techniques, see How to Farm Gold in World of Warcraft.
Sources:
Buffett, Mary, and David Clark. Warren Buffett and the Interpretation of Financial Statements. New York: Scribner, 2008. Print.
Kaniel Loughran - I am the managing member of The Loughran Consulting Group based in NYC. While information generally comes at a cost, I believe some ...
