PoEconomics: Belton's Market Manifesto (WIP)

Despite the average player's apathy towards standard as league, it is incredibly ignorant and misguided to deny it's influence over league pricing on certain items. As leagues progress, inflation combined with a sense of impermanence will force items towards their standard equivalent price as there will be some players who purchase them in order to profit in standard afterwards. 99.9% of the playerbase could be unaware of, or not practicing this, however it only takes a small number of people (1-3 would do) to transform an entire market. For example, Mirrors of Kalandra are rarely ever used for their explicit purpose (duping rare items) in leagues, however have predictable trends in pricing (~40ex at least start, ~80ex at 1mo, ~120 ex at halfway ~160-180 at end of league) this is due to the standard market and their role there as the "gold standard" of currency.

Unlike the real world and standard (which have many similar economic practices ***oligarchs***), leagues reset every 3 months and therefore come equipped with a fresh economy. Since everyone starts from 0, and invariably has the same goal (character progression, and the acquisition of wealth to facilitate the former) one can make educated assumptions about the decisions players will make depending on what phase of the league you are in. This, combined with the inflation that naturally occurs as more currency enters the economy, create an actionable precedent upon which we can focus our macro economic strategy. For example, on day one of the league, everyone will be focusing on reaching maps and progressing through a1-a4 normal-merc. Following this, the average player will seek out their build enabling uniques, 5 or 6 link chest/weapon, defensive base gear (2.1-2.6 this was ES pieces however *may* change come 3.0), skill gems, flasks, and other basic requirements in order to enter maps as quickly as possible and begin generating currency. With this in mind, we can safely assume that such items will be at peak price (relatively speaking) at approximately this time, as their supply will be quite small (as people take varying amounts of time to level, and those who do level very quickly aren't typically crafting gear, as they will be pushing levels/maps). Over the upcoming days, more and more players will level, and those who were reaching maps first will begin to supply the market with enough basic defensive gear and unique items that this demand and supply will reach an equilibrium, eventually favouring supply, and thus decreasing in price (particularly relative to the purchasing power -- i.e. a 5c helm day 1 and a 5c helm day 10 are very different prices relative to their purchasing power. It stands to reason then, that we should invest our money into things that are in high supply but low demand during the phases above where we would otherwise normally seek out same stuff as the "average" player. Specifically, now is a good time to purchase things that have long term applicability, but low level requirements (for example, i84 bases aren't a good idea as they require too high a level of content to obtain). Very good examples of these are jewels (as they have no iLvl requirements for their mods or to drop) Prophecies (vaal winds, monstrous treasure, fire and brimstone etc are good examples), divination cards-- amongst others. Using mostly logic, as well as historical data and past behaviour as a reference point, one can now reasonably assume that as the players who have obtained their base gear, map pool, gems, etc. continue to play their characters that they would seek to generate more niche items, min max their character further, and begin to spend with some "disposable" income. One of the last things most people will optimize at this stage of their character are jewels. As previously mentioned, jewels have no ilvl requirements, which means that perfect 4 property jewels will be hitting the market day 1 of the league, however, due to characters not being leveled (most people get jewels later in to the build around level 90-- as well as a tendency for players to go for "higher impact" gear off the bat) the demand for such jewels will be incredibly low, particularly relative to their supply. This is 100% universally the best time to purchase and run "woops" for any jewels you might want later in your build. Those people who do choose to level and use jewels early into their builds will often do so out of necessity (sac harvest, fertile mind, intuitive leap, etc.) -- and those are mostly going to be unique jewels. You should not craft jewels at this point in the league, as they will be so cheap relative to their future sale price that it would be a net loss to craft, even without considering the opportunity cost of time invested that crafting requires. Some good examples of jewels that I have had success with in the past are 3 modded Multi Jewels (typically aimed at Discharge)-- these, without fail will spike in price to a very minimum of 2 exalts around the 1 week mark, in some cases eventually hitting 3 ex. They can be purchased with relative ease for 5-15c on the first 1-5 days of the league. When targeting jewel markets, look for builds that have a high reliance on them for scaling, or look for jewels that are generic and target the meta. You can expect a bare minimum of 300% return on these investments, with a more realistic figure floating between the 500 and 1000% mark. (5:1-10:1). In regards to prophechies, target ones that have mapping applications (monstrous, vaal winds, etc.) or ones that can create powerful and commonly used unique upgrades (Signal fire). Another great thing to invest into at this point is whatever the current league items are. The reasons for this are twofold-- one, they aren't often prioritized or impactful in an immediate sense (with some exceptions) , and two, they are commonly misunderstood or misused as effectively as possible (a prime example of this is people learning about "Seek the Apex" in Darkshrines). Now that we have our currency invested into items we can reliably assume will appreciate, we can begin to go through the process that the other players did earlier on in the league. However, since they have advanced past it, we will be paying typically 1/3 to 1/5 the cost they did, and at the same time, we will be selling them the items we bought for 5x the price we paid. This relationship (paying less, selling for more on the basis of player behaviour) is one which we shall continue throughout the league.

Using information gathered by the wiki and/or that has been datamined, when combined with simple math, we can calculate average outcomes on a variety of different things in the game. When you combine this average with poe.trade pricing on the requesite materials, and eventual outcomes, one can make statistically sound or unsound decisions. For example, if someone were to offer you 3:1 odds on a 50/50 coinflip, that would be a sound decision. Conversely, if they were to offer 1.5:1, it would be unsound.
The law of averages, or the law of large numbers means that while anecdotal practices of the above will produce varying outcomes person to person, over a large enough sample size they become predictable and accountable and can therefore, within a calculable margin of error, be used to profit off of if the margins warrant the risk. All else remaining equal (i.e. the cost of materials and selling price of the desired outcome), the larger the amount sample size, the more accountable the outcome and the more accurate your estimates will be. The best way for me to illustrate this point is with the use of Vaal Orbs. The title of this section could readily be changed to "Vaal Orb: A MasterClass" and still bare much the same content, as this is the most demonstrably evident use of this principle. Below I will demonstrate the math, and considerations taken into using a vaal orb on a Signal Fire quiver, as this is the application on which I have profited the most, one time making 2 mirrors in 6 hours.

MATH FOR VAAL ORBS (gear):

1/4 chance to go rare
1/4 chance to do nothing
1/4 chance to gain a vaal implicit
1/4 chance to get white sockets.

If the item you are vaaling does not have sockets, the vaal orb will do nothing to the item save for corrupt it, so in that case the odds become 50/25/25 instead of the 25/25/25/25 typically seen.

The desired outcome in almost every scenario is going to be a specific (or on some items, a variety of) vaal implicits. From here we should head to the "vaal orb" page on the path of exile wiki.

From here we can sort by the base type of item we intend on vaaling (in this case, a quiver), as well as see how many implicit modifiers are available by using a vaal orb on that base type. After we sort our item, we can look at the item level requirement for the vaal implicits on said item. In many cases, certain modifiers can be removed from the pool of options by using a lower item level version of the item you plan on vaaling. For example, with Quivers, there are 9 possible implicits. In most scenarios the desired outcome will be +1 arrow. By lowering the item level of the quiver we vaal to 49 or below, we remove the possibility of 4 of the 9 implicit mods, thus greatly increasing our chance at hitting +1 arrow, and accorindgly, the likelihood of us to profit. Once we have determined what mods we can remove, we will click the small hyperlink above the list of mods entitled "For the datamined information, see List of item corrupted mods." Here we will find the implicit weighting for each possible outcome.

For Signal Fire quivers, there are 5 possible results.

+1 arrow
+ chaos res
% converted to fire
% converted to cold
% converted to lighting

To determine the weighting, use Ctrl+F and search out the mod. Once doing so we will come to learn that:

+1 arrow= 1000
+chaos res= 2000
conv F= 500
conv C= 500
conv L =500

As we want to end up with +1 arrow in this scenario, we can now determine that the odds of achieving it, on a controlled item level base, are 1000/4500, or 1/4.5. Since there are 4 outcomes a vaal orb can have on an item, we multiply this number by 4 to come to the conclusion that 1/18 quivers will have +1 arrow when vaaled.

To determine to viability of this as an investment strategy we now need to take into account the requesite materials, which in this scenario are the prophecy "Fire and Brimstone", an item level 49 or lower Blackgleam, and a vaal orb. We also need to know the selling price of the desired outcome, +1 arrow, as well as the selling price of the quivers that receive no effect or are given an alternative implicit.

For the purposes of this demonstration I will use the figures that were present when I did this earlier in Legacy League. Naturally, if you are to consult this in the future, remember to change the values respective to your current market.

Fire and brimstone: 15 c
iLvl 49 blackgleam: 1 alc-1c
1 Vaal Orb= 0.7-0.8c

Total Cost = 16c per quiver created and vaal'd.

As we know that the average number of quivers required to hit our desired outcome is 1/18-- we will use this as the number of quivers done in the hypothetical scenario to determine whether or not this is a worthwhile method to pursue.

18x16= 288c cost on average to create 18 vaal'd signalfires

Now we have to calculate our average return using the same sample size. Taking into account the 4 possible outcomes of a vaal orb, we should always round AGAINST our favour should the size not be divisable by 4. In our case, as there are 18, we will say that 5 go rare, 9 do nothing, 3 get a bad implicit corruption, and 1 gets a +1 arrow, per the averages we calculated earlier. We then check poe.trade and discover that the no effect and bad implicit quivers actually sell for 20-25c each! A profit despite being "bricked". This is due in part to people's ignorance on how to acquire them, and also due to the variability of the Phys added as fire roll (25-35). We then look up the cost of a +1 arrow result, and learn that it ranges from 18ex to 30ex, again dependent on roll. We will assume a median between the two and thus conclude that the average sale price would be 24 exalts. At the time of purchase, exalts were 100:1 chaos.

We now have all the required data.

Average cost = 288c
Average Return =3x20c for bricked quivers, and 2400c for the +1 arrow, for a total of 2460c.

Average profit= 2172 chaos, or 21.7 ex per 18 quivers vaal'd.

Another thing for us to consider now, is the amount of times in which we would have to fail in order to breakeven. That is to say, without hitting a +1 quiver. In our scenario, at 16c per failed attempt, we would have 150 tries before hitting breakeven, or more than 8x the average it would take. This is very obviously worth the risk. In my case, I vaal'd a total of 223 quivers over the course of 2-3 days, resulting in 13 +1 arrow quivers which subsequently sold for a net profit of over 2 mirrors. The entire process took 6 hours.

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