Back from the Holidays.

Here we go, back to work. I am seeing a lot of good potential for the SL economy this coming year. User rates are rising. The problem we will continue to face is a lack of sincere honesty and regulation in the markets with a Linden Lab nervous about playing Global Cop after a couple of courtroom fiascoes. I continue to expect that land will stay a relatively flat market with land providers continuing to up supply with the rising user rate. The great concern is will it out-pace the rate of user acquisition where the users can be valid participants in the land market. What does this mean? Well, basically we need more users with money wanting to buy land and merchandise. I look at SL as virtual tourism, if you don't have the flow, you don't have the dough.

Merry Christmas.

I will be notably absent until approximately the 28th, at which point I'll probably begin a review of VSTEX ipos.

Here's wishing you and yours a very Merry Christmas. Peace on Earth, good will to all. Make sure you remember the true reason for the season does not come with a bow. Hold your family close, keep them warm, and count your gifts from God which will vastly outnumber any quantity of packages any person could purchase. (Especially if you include each star or grain of sand in that count.)

IPO Review for the Ancapistan Exchange.

A prior commenter brought to my attention an observation about ACE, that many of the IPOs appeared to them to be fairly untested and the standards of the exchange to be at risk. That said, the asked me to comment on my thoughts of the companies, their prospects, and their business propositions. That said, I am now going to begin an alphabetical review of the IPOs currently listed on that exchange at this time.

Disclosure: As policy, DGD buys a small amount of all ipos, larger amounts of promising IPOs, and day trades the one that it buys small amounts of. Therefore, DGD already has at least a minimal interest in all these companies. However, I have never let that skew my presentation of judgment to the public.

In alphabetical order they are:

ACE:Prospectus. Value Proposition: Exchange operations.

Shares to issue publicly	7,700,000
IPO shares sold to date	816,565
IPO shares remaining	6,883,435
Total shares in company	16,000,000

ACE is an offering of ownership in the exchange operations themselves. It is not uncommon for stock exchanges to raise funds initially, the purpose of the funds is to establish a bank on which trading can take place and to allow for ease of deposits and withdraws of new clients as well as to cover some moderate expenses the exchange may witness during the initial stages of operation. The IPO is well written and recognizes the weakness in the exchange market with 4 pre-established existing competitor exchanges. Typically, a well managed exchange is a stable investment. The risk is that poor management will allow anyone access to the market's capitol, subjecting it and shareholders to fraud that could potentially break the value of hte exchange itself and drive its clients away. Though ACE is a strong offer being the operations of the exchange itself whose revenues would be obvious to the public in the form of the commisions on trading, it could be undermined by the operations and management of its landlord BNT whose CEO, Intlibber Brautigan, co-owns both ACE and BNT. Proper management, however, could bring both companies to extraordinary prosperity since BNT has a large asset base. Time will tell where these futures will go but BNT has greater freedom of action trading on its own exchange. However, with greater power and ability comes greater responsibility. Abuse and mismanagement or over-reaching.. can be lethal. Slow and steady is the course to progress.

BAM:Prospectus: Value Proposition: Acquisitions And Mergers, rebuilding broken companies after buying them out.

Shares to issue publicly	1,000,000
IPO shares sold to date	25,981
IPO shares remaining	974,019
Total shares in company	2,200,000

Travis Ristow is the CEO of this company and in my eyes the CEO is and makes the company in Second Life. He's been a friend of mine and pretty reliable when it comes to the operations of his existing company on ISE, BCX Bank. DGD also owns property on one of his estates and it turns a steady profit running a vendor booth next to his banking operations. Travis seems pretty business savvy, but a business in Acquisitions and Mergers within Second Life exposes itself to a lot of risk. At the same time, there is also a significant amount of room for reward. Time will tell if this venture is profitable, but there is potential here. It all depends on how the risk is managed and that is true about any investment firm. I can't help feel slightly skeptical though for business operators who have more than one operation listed and their ability to keep financing separate. You would imagine they could use the strategy for the new business for their existing operations. That said, I still think this corporation may have a future if it is executed on correctly.

FWD:Prospectus: Value Proposition: Content and Marketing Information provider.

Shares to issue publicly	800,000
IPO shares sold to date	12,597
IPO shares remaining	787,403
Total shares in company	2,000,000

I do not know much about the insiders of this particular company, Never met the CEO or any of their staff in second life. This worries me. I see a lot of folks around the SL Finance communities and I invest with only who I trust or who I've seen running existing business operations and am aware of their ability to manage their operations. That said, I can't make a judgment on this company much based on its leadership. However, I can say that the value proposition is potentially viable. The idea of providing a "Newbie Haven" in order to exploit marketing contacts and collect data as well as to attract vendors is far from uncommon in Second Life. The real question about this company is how will it distinguish itself from its many other competitors? What will make it succeed? How motivated are the executives? I've only seen a few operations like this last any amount of time and I'm very skeptical about its prospects, but at the same time I feel compelled to give people I do not know an opportunity to prove themselves. This investment has a significant risk, versus reward factor and may not be for the faint of heart.

OIG: Prospectus: Value Proposition: Various investments including those in real life.

Shares to issue publicly	7,000,000
IPO shares sold to date	61,619
IPO shares remaining	6,938,381
Total shares in company	12,000,000

Basing a company on RL investments has repeatedly proven catastrophic in Second Life. DGD has a policy of avoiding them because of this, and because of the potential for basing your security's performance on RL securities risks breaching REAL UNITED STATES SECURITIES LAWS which clearly state that any asset that is "fungible" is no longer just a game, but a real.. trading security. I cannot trade my DGD stock for cash at the cashier's counter or barter it for food. I could however, take my ford stock and theoretically sign it into my grocer's name for food if I have the certificate and they're willing to accept that trade. That said, I would not be surprised if this company is not shut down.. or does not even get off the ground. If it does, I'll day trade it, but won't likely own much of it for fear of the U.S. Attorney General's office shutting it down and I losing all linden value. Also, the biggest bank collapse in SL history (Ginko Bank) resulted from a Brazilian that was trying to make revenues from his deposits in RL securities. It amazes me that this CEO account is listed as being registered from Brazil. Same person? In SL, how do you know? I'd advise most investors to avoid this issue like the plague unless you're just day trading. Long term positions are at significant risk of catastrophic loss.

OMG: Prospectus:

Shares to issue publicly	1,200,000
IPO shares sold to date	154,887
IPO shares remaining	1,045,113
Total shares in company	3,000,000

This prospectus was generally okay with me as there are many successful clothing entities in SL, just depends on the talent of the artist. This is what changed everything:

Use of Capital

Use of Start-up Capital
L$700,000 - Labor for designing clothes *$2,777 usd*
L$350,000 - Strong Marketing Campaign for months 1-6
L$150,000 - Misc. costs (land tier, events, prizes/camping, etc)

If anyone tell me why in Second Life anyone should be paid up front $2,777 us dollars for the design of clothing when I can make a sweatshirt for free, I'll reverse my decision that this is a scam.

Shortened Product line description:
Lines of clothing equalling around 140-150 different outfits.

So they're charging shareholders 20 USD per outfit that may, or may not sell. I'll let the investors make the decision on this one, it could pay out, but I don't anticipating that recapping its initial investment value any time soon especially with the added costs listed that are not one time, but sustained long term costs.

"Someone pay me 2777, I'll make 140-150 lines of clothes for 2777!!! And then put them in shops for you.. and they'll sit there.. and they'll stare at you.. and they'll stare at you.. and you'll own it all! And you'll have to pay for its rental spaces each month so you won't really make that much money on it. Oh, and thanks for the 2777 USD!"

Sorry. Have to mock it just a little.

The use of capital needs greatly expanded upon and I think investors deserve more.

Summary in response to the comment here by an anonymous user:

Is ACE rushing IPOs out the door for growth? Out of these 5, I'd strongly question 2, and have some clarifications to ask of a third. I'd say, yes they are pushing things a bit and allowing their standards to slip? Yes. I believe they are. If they want to be anything as successful as their predecessor exchanges they must be more selective. In my time allowing IPOs at AVIX (what CAPEX was before it was purchased). I eliminated at minimum 90% of all IPO proposals. Of the few listed on CAPEX now, several were not even approved on my watch and only one company has ever failed that I allowed to list, (CYB). Skepticism is healthy, an exchange showing a lack of it, is putting themselves and their clients at significant risk of permanent, bad will and loss.

Thank you for your inquiry Anonymous. Anyone whose corporation is listed in this blog who would like to clarify their position of their company in the comments, please feel free to do so. We all know I am not a Nazi, I encourage free speech 100% so long as it is constructive and non-derogatory dialogs.

RLX of the WSE is dead.

Another company on WSE, which continues to trade, has collapsed within 4 months of opening. RLX no longer holds any land, It's CEO has been absent for a long period with the last posting date before the most recent December announcement being the only since October. It has no means of income. Company communications are practically non-existent. Most employees have moved on. If you have investments in this stock; selling now will save your shares from being WTF'd to 1/4 value possibly even less.

I come to this conclusion after talking to former employees, researching the CEO's landmarks to the land holdings for RLX in world and researching the financial details of the company which have not been updated since October. It is possible the company may be reorganized, but I've not seen this occur often on the WSE.

Additionally, another symptom of decay is the state of the maintenance of the company's main web page. It does not appear to have been updated or posted upon since August, which is the very month the company listed.

Interestingly enough, the WTF fund of the WSE actually owns 20% of this corporation. I am relaying this information to WSE administrators and requesting an investigation.

DGD expands operations

It's been a while since I've tried a land venture in the SL markets because land has been rough, but I found a pretty hopping club next to some cheap land today, called Club Wolf.

The experiment is inexpensive, 1366 to buy the land to get started, 2611/month to maintain if all goes well.

If you're interested in seeing DGD's new startup location, just drop by Mark Edge.

The shop's already set up and ready to rent!

Happy Holidays Everyone! Merry Chrstimas, Happy New Year!

There's not much to say about the market this part of the year as it tends to get slow and sluggish as not to many people bother with their investments or tracking the market around the holidays.. at least, I don't. However, there's a lot to be said about the WSE which continues to generate controversy about the numbers that it posts concerning its own data and competitive stature.

As Aldon Hyne has so clearly pointed out, there's little chance that WSE now contains over 90% of the market volume. There's just too much trading on the other exchanges. I am concerned that the Dreamland Stock Exchange(DSE) may no longer be a valid investing exchange for Second Life. If they cannot get their PED to Linden transfer tool working once again, then there would be no way to buy some of the companies listed on their exchange or to convert PED investments into credit that would be usable in the Second Life world. Contacts with Support ACS of Anshe Chung Studios and the Dreamland Estate have resulted in consistent apologies for the lack of functionality and a promise for a return to normalcy as soon as can be provided. I have no choice but to wait patiently to see if the matter resolves, but hopefully they've learned from this and it's one more vulnerability they need not worry about being subject to in the future. I hope they're being honest with me, because I don't think Anshe could afford verifiable bad press concerning in game business ethics but would reap bounty from verifiable good will and solid business practices. The Support ACS personnel were even kind enough to offer to contact me soon as they know the converter was functional once more.

Intlibber's BNTF also continues to have me concerned. Their atms are consistently off and their web page is now employee access only. It's a very disappointing situation as I thought they would be able to maintain a far more stable interface for their clients given the size of their other operations. I mean, if we cannot trust BNTF, how do we trust ACE? They're owned and operated by the same person. I'm willing to be patient, but the question is, how patient must a depositor be for reliable account access. This is not the first time the bank and exchange combination above has had "interface problems." Sorry I'm so critical, Intlibber, my old friend; but I have to keep to the observance of the truth of the matter and truth is that this pattern is very worrisome to anyone who has funds in your institutions. Feel free to say something in comments about whatever progress or plans you have to remedy the situation to your defense if you like. Their web page is still down as of the posting of this blog, I will be checking their atms again later today. At this point, I have no intention of withdrawing from either institution; I am simply on edge.

I am hoping the holidays will start an influx of funds into the markets of Second Life and that part of those funds may see their way to the exchanges. The economy of Second Life is, after all, simply a derivative of the extra spending money of all the people who use it around the globe. Most users are probably from North America and the U.S. So it leaves hope for a slight boom of profitability.

Congratulations to CAPEX on exceeding the other exchanges in Market Volume dominance according to independently observed measures. Let us hope all exchanges continue to see growth, strength, and a continuing push towards good will towards investors.

Note to self, Login before you blog:

[12:14] Nancy ACS: (Saved Fri Dec 14 21:31:45 2007) Hello:)
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:26 2007) You can transfer PED into L$ in our website now
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:27 2007) :-)

DSE on the ball. Go Anshe? I feel so wierd saying that.

Of management, exchanges, and risk.

I've been quietly pondering something the past few days. The risk of exchanges are directly tied to risk of management. Many exchanges have leaders who have a strong ideological sentiment. Sometimes these sentiments disagree and verbal barbs are traded. The problem is that over-asserting moral authority can be as devastating as letting crooks go. There's a right and a wrong way to do everything..

Do exchange heads have a right to assert their ideology? Doing so can potentially put their own exchange and assets at risk if third parties, that mainly being Linden Lab disagrees with the intent of the message and thus exposes their investors to additional potential risk.

A lot of recent argument has risen over the products SL Capex's real life company produces and the legal risks involved in that product. Some assert the Sports Arbitrage product is legal, others illegal. Though the product clearly does not list itself as a gambling instrument, its links to gambling can easily be seen. If it's not a matter decided in the courts because it has no legal grounds, does it become a moral issue? Do exchanges have a right to claim moral authority?

To me, the exchanges have been and always will be an instrument. The only real measure of "morality" is whether or not they operate a system of fair and equitable trading. To me, anything outside is external to the game; the content of real courts and greater powers. Besides, games of chance can be moral if not abused and simply a form of entertainment in some jurisdictions. The problem is the moral fabric of society is so weak that in most cases it must be illegal or severe consequences result because addictions are not overcome. Linden Labs has dictated that inside their world all gambling is illegal, but the applications in question have nothing to do with second life and in fact are sold for "information purposes" only according to the terms of service.

Do the heads of exchanges have the right to take such moral risks with their operations given they have such a great power and sway over the operation of the platform on which so many investor's investments ride?

To me the answer to all the above questions, are no.. not really. But I don't have much of a choice in the matter. Exchange heads will continue to attempt to assert "moral authority" due to competition. Exchange heads will likely to continue to sell their products despite what I may say perhaps.. or perhaps not.. to legal regret and potentially market wide regret. Personally, I don't see much coming of this discussion that will benefit market investors at all on any exchange. All I see is greater risks, even as more information is uncovered and more rhetoric is thrown about.