Although from the contract MINING should receive the new lower dividend tomorrow it won't.

When I wrote the contract I decided to go with a flat calculation based on difficulty 16 hours earlier - meaning that, on average, MINING would be slightly better off (compared to a PMB) than if I calculated exactly based on the time difficulty changed.  Of course sod's law says that the first (and likely biggest in impact on dividend) drop would occur in the other 8 hours.

I also note that TAT.VM pays on 24 hours previously - so would be keeping the old dividend.  If we pay differently it may confuse those trying to compare - which obviously I wouldn't want.

I will therefore be paying at the old difficulty BUT the difference between the contractually obliged dividend and the one paid will be refunded from my own pocket.  I will do this on ALL future MINING dividends where the same issue arises (which should be about one third of the ones immediately after a difficulty change where difficulty rose).

In short : The report will be as though the new dividend rate was paid.  The old dividend rate will actually be paid.  The difference between the two will come from me - not from SELLING investors' dividend.  I'll report the amount refunded by me obviously.

Every PURCHASE sent to me receives 1 MINING and 1 SELLING in return.  Prices have no effect on that.

The below is NOT an actual report - it's an estimate of what tomorrow's report will look like

If the report were produced now this is what it would look like.  In practice it's likely more PURCHASE will sell - so starting NAV/U will be very slightly higher and the dividend to SELLING slightly higher.  That difference will likely be very tiny.

Sold   1056 (377 trade-in for LTC-ATF.B1 and 679 market sales)
Price   0.066149
Total   69.853344
Less Fee   69.71363731
Man Fee   2.091409119

Management fee of 2.0914 BTC paid.

BTC Balance (BTC-TC)    797.31840000
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    922.31840000
   
Outstanding MINING   14176
Outstanding SELLING   14176
Outstanding PURCHASE   446
Effective Units   14622
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    920.41721561
NAV/U Post MINING Div    0.06294742
Days Dividend Post Div   484.13
SELLING Dividend    0.01093855
NAV Post SELLING Div    760.47375584
NAV/U Post Selling Div    0.05200887
PURCHASE selling price    0.05460932
PURCHASE buy-back price    0.05096870

This is provided for guidance - it is not necessarily the actual payments (MINING should be correct).  No management fee has actually been transferred.

A good job there's no way to use an IP other than your own then.  Just imagine if it was possible to connect from different IPs without having to travel around the world - we'd have all manner of false accusations then (and even people using different IPs then trying to pretend one IP wasn't them).  Let's hope nothing like that ever becomes possible.

That's fair enough - my own investments/holdings mainly came from solo-mining LTC for a few days then trading it up.  I think you'd find there's a lot more resistance to a significantly lower MINING price than you anticipate.

Part of the motivation for developing DMS was to see whether I could (and what happened when it was used) - when I paid the 15 BTC to register the assets I was by no means certain there'd be enough interest to even recoup that (though obviously I hoped to get that back in management fees and make some change trading it myself).

I'd love to debate your conclusions - but I can't as:

a) I DO have some reasonable-sized investment in MINING and SELLING (the 125 BTC is exchanged in for LTC-ATF.B1 plus some more I bought with cash) - so last thing I want to do is convince everyone to agree with me
b) It would ruin the experiment from my perspective.
c) My views may well get given more credibility because I run the fund - which would be wrong (as the math of how everything works is transparent - so I have no advantage in knowledge) but understandable.  If people get it wrong they must do so based on their own (or other people's) predictions - not mine.

One comment on this - and any similar posts which claim to calculate a value for MINING that's significantly different to market price.

IF you're sure you're right then why are you telling everyone rather than using that knowledge to make some profit?

I don't have a problem with anyone posting their calculations here - just don't expect any feedback from anyone who believes you're wrong and is actually investing.  The +EV thing for them is to agree with you if they believe you're wrong - hope other people believe you - and bet against them in the market (doesn't matter which way they think you're wrong - they can bet against you).

It won't acutally end up the cheapest as there's one or two PMB-like things around (shares paying out based on a fixed amount of promised hashing) where the issuer has either scammed in the past or is believed to be a scammer.  Those will always be the cheapest.

MINING will stay cheaper than most - largely because, as you pointed out, people can be sellers as well as buyers here.

Someone gos to a PMB and believes it'll never return capital at the current price all they can do is make a post in the thread.
Someone looks at MINING and believe's it'll never return capital they can buy a PURCHASE, convert it and sell the MINING part to someone else.

Obviously they have to believe there's enough of a margin to cover my fee and to justify tieing up their cash.  And they can, of course, be wrong - and be donating to whoever buys MINING from them.

There's also a few other reasons why MINING will stay cheaper than comparable PMBs.  One of the big ones is psychological.  MINING is explicitly referred to by me as speculation - I don't pretend it's a bond and I don't ever claim investing in it will make a profit at any specific price.  So people read thread - or even just the title - and think "this is risky".  And rightly so - it IS risky.  But they'll then go to some PMB which gives the same returns and buy it for more - as it gives the misleading impression of being some sort of bond where capital is safe and they just sit back and get dividends for free that the issuer is (for whatever charitable reason) throwing in their general direction.  Being honest about the speculative and risky nature of MINING (you buy at the wrong price you make a loss) is definitely something which will keep its price below comparable PMBs.

Whether it's profitable or not at any price point isn't something I'm ever going to comment on (other than that I've explicitly capped its maximum value at the price of a PURCHASE - and it should never trade above 365 days dividend).  But I can safely say that it'll make more profit or lose less than an equivalent amount of hashing from a PMB bought at a large markup in terms of cost per MH/s.

If you want to wonder what people are thinking, consider the ones paying double or more what TAT.VM costs (and an even bigger markup compared to MINING) per MH for 'real' PMBs - that's ones where they have to rely on hardware not failing for the operator to be able to afford to pay ANYTHING out.  Think the absolute worst ones (for value) are on Bitfunder - PMBs which aren't even mining yet lol.

For that matter you can even compare MINING to shares with reinvestment - reinvestment doesn't work that much differently to buying more MINING with your dividends (with a good manager the shares will perform slightly better).  And if PMBs are bad value there's some shares which are actually WORSE value (at the prices they currently trade at) - as the majority of their real value was lost by holding their capital as USD in pre-orders for BFL machines whilst BTC rose.

The absolute worst (in terms of value per hash) are ones where you buy a share of actual fixed hardware.  Those act like PMBs - except they stop paying when the hardware fails and they don't have any guaranteed payments at all (so they're even less perpetual and even further from being bonds).  Those should sell for LESS than PMBs per hash - but somehow manage to get away with selling for more sometimes.

I think you're wrong on that.

In the same way that anyone can write new Bitcoin clients with different layouts etc, anyone would be able to write a new exchange client - only the protocol and specification of block-chain need to be fixed.

Listing also isn't as big a problem as you think.  The simplest way (one not involving any Proof Of Stake) is to allow anyone to "list" but allow users to restrict which listings they see based on whose judgment they trust.  So anyone could set themselves up as a listing authority - with users able to choose whose judgment (and hence lists of securities visible to them) they accepted.  Worthless securities would then not even be noticed by anyone unless there was an approval of them signed and in the block-chain by someone the user accepted as being competent to some extent.

So you might decide you want to provide a listing service, take submissions from new securities and run a website on which you commented on those you considered valid.  In the block-chain you'd insert information transactions that proved you approved of (or withdrew approval from) some securities.

I may decide to do it a different way - and run a forum where members voted on which to approve.

Either, Neither or both us might charge a fee to consider applications to us.

Users could either add one or both of us to their list of people whose judgement they trusted - causing securities we approved to be visible in their client.
Users, with a suitable client, could also do things like add 10 approvers and define visibility as being restricted to only those approved by at least X of those 10 approvers.

Decentralised solutions DO exist in concept - the devil, as always, is in the detail of implementation (there's big issues with allowing large quantities of genuine orders whilst preventing spam attacks for one thing).

On SELLING you can only safely assume it to be profit if the total dividends you've received exceed what you paid for your SELLING.  In theory at any point difficulty can fall, stop rising (or rise by less than about 3% per change) meaning no dividend for SELLING.  That won't happen in the medium-term (unless you believe BFL will never ship, Avalon chips won't arrive, batch 3 Avalon won't be sent AND none of the other ASIC manufacturers will deliver).  In the short-term (next dividend or two) it's possible - as ASICMINER aren't shipping at present.  In the long-term it likely WILL happen (when ASICs reach saturation point) unless BTC rises vs USD significantly.

Only realistic scenarion in which SELLING receive no more dividends ever is if there's some massive problem with BTC causing the exchange-rate to fall to the level where it's not profitable to mine with ASICs other than with cheap power.  That scenario is one of the few where PMBs WOULD pay (a LOT - in that case) more than MINING (assuming the operator paid out even when he couldn't mine) - but that would be little comfort if BTC was basically dead.

Yes - and that's true for EVERY SINGLE SECURITY (other than scams where ANY price is too much).

The price you buy for is what determines whether it's a good move buying it or not.  It's not a Good investment or a Bad one or a Profitable one or an unprofitable one unless you talk about at a specific price.  The WORST question I see asked regularly is "Is X a good investment?"  Without a price it's totally impossible to answer - yet the forum is full of idiots who will proclaim something as good without stating the price at which that claim applies (it's fine during an IPO where there's a fixed price).

No mistake.

Change in the price of SELLING should occur through trading.

You're confusing price with value.  Let me give an entirely different scenario.

Say there's an IPO selling shares at 1 BTC each.

Those shares HAVE a fixed value - noone likely knows what it is but they have one.

When you buy a share, the share hasn't changed in value.  But immediately after the IPO sells out (or fails to sell out and the remaining Ask is taken down) the price at which they trade will often change - even though there has been NO change in value.

Value is what something is worth.
Price is the point which a seller and a buyer decide to agree represents a definition of value that they'll both accept for the purpose of conducting a transaction.

You make a profit on SELLING by buying it (or buying a PURCHASE and selling the MINING from it) at a PRICE which is below its VALUE.

Over time, if you bought it at below VALUE then the market PRICE will adjust to reflect the real VALUE (as dividends are paid - either to MINING or to SELLING) and narrow the range in which VALUE can actually lie.

Those changes occur due to a change in the perception of those involved in the market (which CAN be a real change in value or CAN be just a better understanding of what an unchanged value actually is).  Dividend payment (the actual payment of one) SHOULD have no impact on that perception - other than changing where a portion of that value is held (and hence causing an immediate drop in price in the PRICE of the security receiving the dividend post-dividend).

EDIT: The above is slightly simplified and intended to be a general description of a concept (how value and price are distinct things and shouldn't be confused).  There ARE circumstances where a change in price DOES cause a change in value (rather than just reflect a changed view of value - but there's no point discussing those if the fundamental difference between the two isn't understood.

Yes.  Payment of a 0.01 dividend to SELLING definitely means that SELLING is worth 0.01 less immediately after payment of the dividend than it was worth before it.  The same will also be true for PURCHASE.

That doesn't mean that the market prices will change in the same way - they would if everyone was acting in an entirely rational manner but it isn't safe to assume that will be the case.

It's likely that the current very large wide spread on SELLING reflects people being cautious about not placing Bids if they aren't certain they'll be around to cancel them before the dividend payment.

Note that the dividend is NOT necessarily going to be .01 - but it'll certainly be somewhere of that general size unless something major happens in the next few hours.

I just transferred 2500 LTC-ATF.B1 into the fund.

In return I received 377 each of SELLING and MINING plus .0618 BTC in change.

I'll take LTC-ATF.B1 in return for shares from anyone else as well (you get SELLING + MINING or PURCHASE equal to the full face-value price of the LTC-ATF.B1) - so long as it's 500+ (5 BTC worth) at a time.  PM if you want to do this - as I'll need your LTC-Global AND BTC-TC usernames before you transfer to make sure I send to right person.  Any such trades will be disclosed - but not the name of the person trading in (that's only disclosed if it's me).

That brings our total LTC-ATF.B1 to 12500 - which will generate slightly over 0.75 BTC per week for the fund.

Votes on (two) other assets for investment will go up later today.

NAV/U and the selling price of PURCHASE rose very slightly due to decent sales of more PURCHASE and the LTC-ATF.B1 dividend payment.

Sold   1936
Price   0.066116
Total   128.000576
Less Fee   127.7445748
Man Fee   3.832337245

Management fee of 3.832 BTC paid.

BTC Balance (BTC-TC)    756.83177809
10000 LTC-ATF.B1    100.00000000
TOTAL ASSETS    856.83177809
   
Outstanding MINING   13014
Outstanding SELLING   13014
Outstanding PURCHASE   552
Effective Units   13566
   
Block reward   25
Difficulty   15605633
Hashes per MINING   5000000
   
Daily Dividend    0.00016113
50 days (Min Liquid)    0.00805649
100 days (Forced Close)    0.01611298
365 days (Buyback)    0.05881238
405 days (IPO)    0.06525757
400 days (Post SELLING div)    0.06445192
410 days (Pre SELLING div)    0.06606322
   
NAV Post MINING Div    854.64589117
NAV/U Post MINING Div    0.06299911
Days Dividend Post Div   390.98
SELLING Dividend    -         
NAV Post SELLING Div    854.64589117
NAV/U Post Selling Div    0.06299911
PURCHASE selling price    0.06614906
PURCHASE buy-back price    0.06173913

Yes - that's where Bitcoin investors have historically consistently got it wrong.  They focus on whether something is a 'good' or 'bad' investment when (other than for scams) there's no such thing.  In the context of investing 'good' and 'bad' aren't absolute concepts - they're relative concepts that only have useful meaning when discussed for a particular price-point.   Most Bitcoin investors' efforts to determine a price for a security don't go beyond looking at what it's being sold for and assuming that must have some correlation to its value.

Yes that looks likely (and has done so since Wednesday - before that it looked likely change would be after midnight).  A fairly small drop in hashing power and/or bad luck could still push it back - but it looks increasingly less likely.

I will NOT be able to announce the exact dividend in advance - as it's impacted slightly by any sales of PURCHASE, so can't be calculated at all until after I've taken down the PURCHASE Ask wall.

Was going to make a post after today's dividend and explain the math of predicting a SELLING dividend - but I see someone else has explained it already.

That's the correct way to work it out - and would be almost the correct dividend (dividend is paid AFTER a MINING dividend so you'd need to take off today's dividend AND tomorrow's).  Note also that if the difficulty doesn't happen until after midnight (GMT) tonight then tomorrow's dividend for MINIGN would be at al old rate - so the first MINING dividend at new rate (and SELLING's first dividend at all) wouldn't happen until Tuesday.

IMPORTANT : DO NOT LEAVE BIDS UP ON SELLING BEFORE THE SELLING DIVIDEND IF YOU DON'T KNOW WHAT YOU'RE DOING.

Why SELLING not MINING?

In theory, whenever a dividend is paid the price of that share AFTER (post) dividend should be exactly the amount of the dividend lower than it was before (pre) dividend.  With MINING dividends being small and regular that has no real impact.  But the SELLING dividend is likely to be much larger (unless a LOT of the network stops mining in the next few hours).  If the dividend is around .01 then payment of the dividend represents a transfer of .01 of the value of SELLING from being held by the fund (me) to being held by those holding SELLING shares.  That should have ZERO effect on the price of MINING (their VALUE hasn't changed) but should cause a drop of about .01 in the price of SELLING (and also of PURCHASE).

I do NOT intend to clear market orders on SELLING.  I WILL clear market orders on PURCHASE if there are any bids placed above the new selling price of PURCHASE (as those clearly wouldn't be intended to stay up).  The only time I'd clear market orders for MINING or SELLING would be if something unexpected occurred.  This dividend is NOT unexpected - it could be calculated and predicted with  great accuracy for at least 3-4 days now (from before any shares were sold at all in fact).

Any changes to the price of MINING are NOT due to the PAYMENT of the dividend - but could well be due to people recognising the existence of the dividend (in which case they SHOULD be priced in well before the dividend is actually paid).

As ever, dividend payments for MINING will continue to mirror those of 'PMBs' very closely.  In the short to medium term it is almost certain they will be exactly the same - and will only ever fall below if difficulty stops rising, falls, or rises very slowly for a protracted period of time.  None of those are likely this year.  So ANY conclusions you make about the value of MINING do very much apply to ALL 'PMBs'.  Potentially MINING will have total life-time payments (assuming payments forever) of 5% or less below 'PMBs' (and MORE than any PMB-type offering which has a lower buy-back clause).  Do NOT fall into the trap of believing that MINING is somehow going to pay out a lot less than PMBs - if they pay more then the extra will be a small amount given out in tiny dividends over a period of many years once MINING has been bought back.

MINING is a BAD investment if bought at too high a price (and PMBs bought for much more per MH/S are even worse).  It is a GOOD investment if bought cheaply (and PMBs bought for much more per MH/S are worse) .  The same is true for SELLING - whether it is a good buy or not depends on what you pay for it.  This fund is about allowing investors to effectively bet based on where they believe the correct price split lies - in the process the market is also defining what it believes the cost of 5 MH/S of PMB to be worth.

PMBs are NOT inherently a bad investment by design.  They're a bad investment if bought at too high a price.  Nearly all PMBs have been sold at prices where investors will not ever make back what they paid.

There's two different meanings for 'expensive' in this context - and I think you're talking about a different one to him.

You mean too expensive in the sense of "It's being sold for $10 but I don't think it's worth more than $9".
He means too expensive in the sense of "It's being sold for $10 and it's worth it but I only have $2".

His goal is to reduce the price per unit so more people can afford it - not to change people's perception of what it's worth.  A split also allows those holding a small number of units to sell off a small percentage of them.  Someone holding 2 units can't sell 10% of thier holding at the moment - they can only sell 0%, 50% or 100%.