FUND VALUATION

The contract for this fund does not spell out any details of how the fund will be valued.  This is intentional - I did not want to commit to a specific means for valuing securities only to then be compelled to use it in circumstances where it would be irrational to do so.  Here, however, are the guidelines I will be following when valuing the fund:

LTC/BTC exchange rate : This will be the mid-point between bids/asks on BTC-E.  I toyed with the idea of just using the rate quoted at the top of LTC-GLOBAL, but unfortunately that's just the price at which the last trade completed.

Securities : The first rule with these is simple:

The valuation must always lie in the range (Highest Bid - Lowest Ask).  This seems obvious - yet I see funds trading where they religiously use 5-day average even when that value now lies outside the range at which the security trades.

Bearing the above in mind, the means by which a security is valued is determined based on whether the security is one I'm trading or one I am investing in (i.e. intend to hold for more than a day or two).

Investments:  Securities I purchase with the intent to hold will be valued at the 5-day average (GLBSE) or 7-day average (LTC GLOBAL) adjusted where necessary to fall within the bid-ask range.

Traded Assets: Securities I purchase with the intent to sell back in the short-term will be valued at the price they were bought for (adjusted if necessary to fall within the bid-ask range).  There will be no optimistic valuations based upon the price I expect to be able to sell them for.

The regular reports for the fund will NOT include details of which securities are currently held for trading (long-term investments WILL be shown) - those lines of the spreadsheet will be hidden when the screenshot is posted.  I AM willing to provide the full spreadsheet to any investor holding 10% or more of authorised issued units (currently 2500 units are authorised for sale): if you hold 10% or more of units (250 until more are authorised for release) then email me (at the email address listed for this asset) from the email address associated with your LTC-GLOBAL account.  When I produce the weekly report (1st one will be this weekend) then I will email you the full spreadsheet showing all securities held, their valuations etc (after verifying that you indeed hold the required number of units).

Asset is now live.

LTC was trading at 0.00356 vs BTC when first units were placed on the market at 10.0.  Price of units for sale (and the buy-back bid) will be adjusted appropriately if that exchange rate significantly varies: from now on all bids/asks I make will be based on actual NAV/U of the units.

Meh - contract only says it'll be maintained in a reasonably timely manner.  If it's been cleared with sells then just put shares up for sale at .99 and wait for usagi to come online and replace the wall.  If he/she doesn't do it then, then you have a complaint - but short of using all the funds on a bidwall there's no way to guarantee a wall will always be there when someone wants to sell.

I'd seriously suggest putting up a sell order rather than waiting for the bidwall btw - usagi's idea of a wall may be rather more modest than what you or I would consider to be a wall.

Yup - nyan.a shareholders aren't facing any sort of disaster (unless you believe usagi will actually default).

It's nyan.b that are really getting screwed - their safe(er) investments will get handed to nyan.a because nyan.a chose to invest in HRPT.  Doubt many nyan.b investors read the contract and expected their assets to end up being given to nyan.a because nyan.a invested in a high-risk non-mining security.

[[Contract for asset on LTC-GLOBAL
UPDATED 23rd November 2012 in accordance with a motion passed by investors
UPDATED 16th January 2013 in accordance with a motion passed by investors
UPDATED 5th May 2013 in accordance with a motion passed by investors
]]

----- CONTRACT BELOW THIS LINE -----

DEFINITIONS

(The) Issuer / (The) Fund Manager : The individual controlling the user account with the name "Deprived" on The bitcointalk forums.

The Fund : The Litecoin Actively Traded fund (Ticker : LTC-ATF).

Unit : The smallest portion of the fund which may be traded.

NAV : NAV (Net Asset Value) refers to the total value of all assets held by the fund.

NAV/U : Net Asset Value per Unit.  This refers to the NAV of the fund divided by the number of outstanding units.

HWM : High Water Mark.  This is the previous highest NAV/U at which units have been valued.


OVERVIEW

The fund exists to trade share, bonds and other securities denominate in Litecoins (LTC), Bitcoins (BTC) and other crypto-currencies.  The fund is itself denominated in LTC and has the long-term objective of primarily trading in LTC-denominated assets.  Due to the current paucity of such assets initial trading will be largely in BTC-denominated securities.

The majority of the fund's capital will be used for short-term investment (sometimes referred to as "day trading") rather than for long-term investment.  Long-term investments will, however, be made where the fund manager believes it to be sound.

Initially trading will only be made on the BTC-based exchange known as GLBSE and the LTC-based exchange known as LTC-GLOBAL.

The fund is a growth fund - no dividends will be paid and profits (or losses) can only be realised by selling back units to the fund.


UNITS

Equity in the fund is distributed and measured in units.  Each unit represents ownership of 1/(Units outsatnding) of the total value of the fund's assets.

100,000 units have been originally created.  A portion of these units (2500) will be initially authorised for issuance.  At various times in the future additional units may be authorised for issuance.  The manager is entitled to authorise for issue whichever is the larger of 2500 units or 25% of current outstanding units each week.

Other than as detailed below under "MANAGEMENT FEES" the manager is only entitled to sell issued units on the LTC-GLOBAL exchange.  Such sales may only be made at or above the current NAV/U (to avoid dilution of existing investors' holdings).

The manager is entitled (and expected) to buy back units.  This may only be done on the LTC-GLOBAL exchange at prices below the current NAV/U.

The current value of a unit will be regularly calculated and posted in the forum thread listed above.

Units have no voting rights.  The manager may, on occasion, issue votes to obtain feedback from investors.  Such votes are purely for information purposes and are in no way binding on the manager.


MANAGEMENT FEES

At least once per fortnight (with the goal being to do it weekly) a report will be prepared and posted in the forum thread linked above.  This will include a current valuation of the NAV and NAV/U for the fund.  This valuation will be in LTC (a BTC valuation will also be posted).

When that valuation is above the current HWM then the excess is considered to be profit.  The manager is entitled to receive 10% of that profit as a management fee, paid in LTC-ATF units at the calculated adjusted NAV/U.


INVESTMENT METHODS

The following are intended as an overview of the TYPE of strategies the manager will be using.  The following is not exhaustive, definitive or restrictive - the manager is entitled to invest as he sees fit within the constrainst described elsewhere in this document.

Long-term investment:  A minority of the fund (no more than 25%) will be allocated to long-term investments.

Spread/margin trading: Securities will be bought with bids and sold with asks to make a profit.

Bot-exploitation: Some securities on GLBSE have bots trading on the spread/volatility.  At least some of these bots are exploitable due to their having very naive interpretations of market depth.

Panic-trading/Liquidity crises: A lot of trading on GLBSE is from investors who need to raise cpaital quickly.  As there is very little liquidity for most securities on GLBSE this forces them to sell at way below a fair price.  This can be doubly taken advantage of - first by collecting their initial sales, secondly by buying during the temporary price-slump that often then follows.

IPO trading: Often when a new security is issued, some portion of securities are offered at a discount.  Profit can be made by buying then reselling.


LIQUIDITY & FUND CLOSURE

The fund does not pay dividends - so the only way for investors to realise profits (or losses) is to sell their units.  The fund shall attempt at all times hold at least 5% of fund value in LTC for the purpose of buying back units.  When the manager is online (and has an accurate current valuation of the fund) this shall be done by bid-walls placed on LTC-GLOBAL at between 95% and 99% of NAV/U (the precise value within that range may be set by the manager - based, primarily, on volatility of the LTC/BTC exchange rate).

If significant bids already exist at above 99% of NAV then the manager is released from the obligation to place bid-walls - but not from the obligation to hold sufficient liquid LTC to place such walls if the need arises.

If circumstances arise such that the manager is no longer able to continue operating the fund then the manager shall dispose of all assets held by the fund and distribute the proceeds to unit holders.  Such process shall be conducted in as timely a fashion as is possible without incurring major loss by selling into under-priced bids.


DIVIDENDS

It is not LTC-ATF's policy to pay regular dividends - in general profits are retained increasing the value of units.

On occasion the fund may grow to a point where it is the manager's view that there is excess unused LTC-denominated capital which should be returned to investors.  In those circumstances the manager is entitled to pay a dividend provided ALL of the following points are met:

1.  The dividend shall be paid immediately after a weekly report (and the payment of any management fee units plus adjustment of the HWM if required).
2.  The dividend may not be so large that, after its payment, the ratio of LTC-ATF.B1 debt to fund NAV exceeds 100%.
3.  The HWM will be reduced by the amount dividended per unit.
4.  If any market Bids are up that would be above the new NAV/U post-dividend then manager will briefly suspend trading and clear orders so noone is sold to at a markup to NAV/U higher than they intended when they placed their Bids.
5.  No management fee may be taken on the dividend - though the manager WILL receive dividends on any units he holds the same as any other investor.


DISTRIBUTION OF HOLDINGS

The manager should always aim to hold at least 5% of fund NAV as liquid LTC on LTC-GLOBAL (obviously this will not be the case immediately after someone has sold back units into a bidwall).

Target initial distribution of funds is:

5-10% uncommitted LTC on LTC-GLOBAL
10-20% LTC-denominated securities or bids on the same.
The rest BTC-denominated securities or bids on the same.

It is hoped that over time the proprotion allocated to LTC-denominated investments will rise - but that depends almost entirely upon suitable such securities being able.  The above distribution is a guideline only - and not a strict target which has to be achieved.


BOND ISSUING

The fund manager is authorised to issue interest-paying bonds with a face value denominated in BTC.  These bonds may be issued on ones or more trading platforms of Manager's choice.  Costs associated with creating these bonds will be charged to the fund and treated as an non-realisable asset depreciated to zero over a period not exceeding 20 weeks.  No additional management fee may be taken for
administering these bonds and the manager's fee must be taken on profits AFTER payment of interest due on the bonds.  For accounting purposes bonds are treated as a liability at their face value.  Although face value must be in BTC, the bonds may be transacted (and dividends paid) in any currency of manager's choosing.

The following restrictions are placed in respect of these bonds:

Bonds may not be issued with a total value greater than 1.5 times the NAV of the fund.  If, through exchange-rate movement or trading loss, NAV falls below this requirement then either more units must be sold or bonds redeemed.

The fund must maintain BTC-denominated assets such that outstanding bonds amount to a liability of no more than 90% of such assets.  When this ratio is not met (such as after issue of new bonds transacted in a currency other than BTC or after significant BTC-denominated trading losses) it must be promptly restored.

The interest offered on new bonds issued may not exceed 1/3 of the estimated average trading profit (excluding exchange-rate caused elements) of the fund for the previous 26 weeks (or since the start of the fund if it hasn't been running for 26 weeks).

No risks associated with normal trading may be passed on to the bonds - all loss from trading is applied against the value of fund units.  The risk of trading-platform failure may, at manager's discretion, be fully or partially shared with the bonds.

Manager has authority to define the detail of how bonds will be managed as he sees fit within the above parameters.


PASS-THROUGH OPERATION

The fund manager is authorised to run pass-throughs on LTC-GLOBAL to securities
issued on exchanges other than LTC-GLOBAL.  

Costs associated with creating these pass-throughs will be charged to the fund
and treated as an non-realisable asset depreciated to zero over a period not
exceeding 20 weeks.  No additional management fee may be taken for administering
these pass-throughs (any profit from them would be treated as normal LTC-ATF
profit and management fee applied as usual).

The following restrictions are placed in respect of these pass-throughs:

1.  With a single exception LTC-ATF must always hold at least as many units of a
security to which a pass-through operates as (units outstanding + units for sale).
a)  The exception is that this may briefly be theoretically broken whilst buying
back pass-through units from an investor.

2.  No pass-through may offer any guarantees in respect of the performance of
the underlieing asset.  Specifically, no guarantees may be offered by the
manager in respect of either future prices or dividends of any security to which
a pass-through is operated.

3.  Risk of failure of any asset to which a pass-through is operated, along with
risk of failure/default of any platform on which those assets are held or
transacted MUST be passed on to purchasers of units of the pass-through.

Manager has authority to define the detail of how pass-throughs will be managed
as he sees fit within the above parameters.


CAVEATS

The performance of the fund (expressed in LTC) is strongly dependent on the exchange-rate of LTC/BTC.  It would not be wise to invest with the expectancy of making an (LTC-denominated) profit if you believe LTC is likely to significantly appreciate vs BTC in the short to medium term.

For the purpose of this offering, BTC and LTC are considered virtual currencies with no intrinsic value (akin to currencies in online games).  This fund is being run for the entertainment of the manager and investors with no expectation of financial gain or loss for either party.

----- CONTRACT ENDS HERE  -----

----- OLD POST BELOW THIS LINE -----

STARTING PROCESS

Though not part of the contract I believe it would be useful to explain how the startup phase of the fund will occur (assuming the asset is approved by LTC-GLOBAL).  After approval I will do the following:

1.  Place a sell order for 500 units at 10 LTC each (or sell into existing orders if such exist).
2.  Calculate NAV based on my own current holdings on LTC-GLOBAl, GLBSE and BTC-E at the exchange-rate at that time.
3.  Assign to myself (a seperate LTC-GLOBAL account) units equal to NAV/10.1 (by contract I am obligated to buy shares either through the market or at NAV + 1% if I just transfer them).  Doing it this way saved myself the fees of converting BTC to LTC and saves the fund the cost of then converting those LTC back to BTC to invest.

The only shares I currently hold and will transfer are a few BTC-worth of ASICMINER.  These are one of the most liquid securities on GLBSE with a steady trading range (0.11 - 0.2 typically).  There will be no ponzi assets or unsellable fixed-rate mining bonds transferred from me (it is unlikely I'd ever even day-trade in such offerings).

Thereafter those LTC-GLOBAL and GLBSE accounts will only be used for this fund.  I already have a second LTC-GLOBAL account to hold my own units in - and will make a second GLBSE one if I ever see a need for it.  The BTC-E account may be used to do trades unrelated to this fund.

I will be using units gradually (up to the authorised 2500), rather than all at once for a few reasons:

1.  To get the best price possible,
2.  Most of the funds will need to be exchanged to BTC - I don't want to impact the exchange rate if possible.
3.  It takes a bit of time to get funds into play - I do noone any good by taking funds faster than I can actually usefully apply them.

WHAT IS LTC-ATF AND WHY DOES IT EVEN EXIST?

LTC-ATF is a small fund established to trade in securities denominated in crypto-currencies.  The fund's focus is very much on trading rather than investment - it doesn't sit on investments waiting for them to (hopefully) make a profit, rather it strives to buy and sell making profit in a much shorter time-scale.  As part of its strategy LTC-ATF now operates pass-throughs to securities which have a significant barrier to entry that would otherwise prevent smaller investors buying them.

The obvious question to ask is "Why bother setting up a fund with such a small amount of capital - couldn't you just use your own funds to trade?".  There are a range of reasons why the fund exists - hopefully the give some insight into
the rationale behind the fund and why it operates the way it does.  In no particular order :

Funding : Of course I have sufficient funds to use my own capital for an operation this size.  But if market conditions (range of securities and volume traded) change such that a much larger operation is desirable then without a track-record it would be hard to raise the funds to take advantage of that.

Fairness : I'm by no means shy about expressing criticism of other virtual securities.  It's therefore only fair that I run one myself and give opportunity for those I criticise to reply in like manner.  It's my hope (and expectation) that my performance, fairness to investors, reporting standards and transparency will make plain that - whatever else my faults may be - I'm no hypocrite when I complain about others' lack of those same qualities.

Fun : It's far more enjoyable running the fund in public than it was when I just invested my own funds in private.

Motivation : Having a responsibility to my investors causes me to put more effort into my endeavours than I otherwise likely would.  If I become lazy, lax or careless then it will become a matter of public record - a great incentive to do none of those.

Start Small : It's painful watching people attempt to create new companies in areas they have no proven expertise in and trying to raise thousand or tens of thousands of BTC right from the start.  I'm doing it (what I believe to be) the right way - start small, prove you can do well whilst small then (and ONLY then) expand.

WHAT SECURITIES DOES LTC-ATF OFFER?

At present LTC-ATF offers four securities on LTC Global:

LTC-ATF - This is the parent fund.  Investors in this purchase units of the fund representing a portion of the assets owned by the fund.  This fund does not pay dividends - all profits (or losses) are reflected in a regularly updated and published fund valuation.  Liquidity is provided via a constantly maintained bid-wall just below NAV/U.  Units of LTC-ATF are valued and transacted in LTC.

LTC-ATF.B1 - This is a bond issued by LTC-ATF.  The bond's purpose is two-fold - to retain as much of profit as possible for LTC-ATF investors and to allow trading in BTC-denominated securities with greatly reduced exposure to fund value changes casued by exchange-rate movement.  This bond has a face value (and pays dividends) denominated in BTC but transacted in LTC.  Dividends are paid weekly at a fixed rate which can be raised by the fund manager at will (but never lowered again whilst there are bonds outstanding).  Liquidity is provided via buying back through the market at just below face value and by facilitating sell-back of larger quantities of bonds through direct transfer.

At present 25000 LTC-ATF.B1 bonds have been sold.  These have a face value of 0.01 BTC each and pay a dividend of 0.6% of face value each week.

S.BBET-PT - This is a pass-through to the BitBet security listed on MPEx.

S.DICE-PT - This is a pass-through to the Satoshi Dice security listed on MPEx.


PLATFORMS TRADED ON AND DISTRIBUTION OF FUNDS

I list below the exchanges/platforms our funds are used on - along with an estimate of the percentage of funds deployed at each location.  Some of these ranges are pretty wide - actual funds on each platform varies as profit/loss occurs and needs change.  I don't intend to update the percentages too often - they're only there to give a general idea of how funds are distributed.  I WILL, however, update the list promptly if we add an extra platform to which we have exposure.

LTC Global : 25%-45%.  Majority of funds will usually be here - as we can't use LTC denominated capital anywhere else (there's no meaningful LTC activity on Crypto).  This percentage will drop as activity on BTC.CO/BitFunder picks up and we issue new bonds to take advantage of it.

BTC-E : 10%-20%.  We hold reserves here (for faster movement between LTC/BTC, to exchange to maintain ratios and to ensure we can maintain bidwalls in the event lots of our Bids get filled).

BTC.CO : 10-30%

BitFunder : 15-35%

Cryptostocks : Currently no funds here.

CoinBR/MPEx : 5-25%  CoinBR is a brokerage through which we trade on MPEx (the 30 BTC MPEx registration fee to trade cirectly on there is beyond the fund's budget at present).

WeExchange : 0%  Have to pass through this site to deposit/withdraw from BitFunder.  No funds are left here for any period of time.

BitFinex : 0%-10% Used to arbitrage LTC/BTC, as an alternative to BTC-E for exchanging.


SUMMARY OF RESULTS TO DATE

The table below shows the overall performance of the fund to date.



There's a column for each of LTC and BTC showing how the fund has performed measured in that currency.  From top to bottom the rows are:

Fund Start :  Shows the date on which the funded and the initial NAV/U.
Last Report :  Shows the date at which the latest report was produced and the NAV/U at that date (that's the NAV/U after deduction of any management fee) plus the total of all dividends paid to date.
NAV/U Change : The change (growth) of the NAV/U from the fund's start until when the latest report was produced.
Growth (%) : The percentage the NAV/U of one unit has grown since the fund's start.
Days Elapsed :  How long the fund had been running for when the last report was produced.
Daily Multiplier :  What the starting NAV/U would have to multipled by every day (compounded) to reach the current NAV/U.
Daily Growth : The daily multipler shown as a percentage.
Weekly Growth : How much on average the fund has grown in a 7-day period.
Annual (APR) : What the annual growth would be if the current growth were maintained over a period of 365.25 days.

Whilst these figures DO represent the actual performance of the fund to date they should NOT be taken as any sort of sensible prediction of future behaviour.  A lot of the growth to date has been achieved with a much smaller amount of capital AND a much lower-valued LTC : both factors which allowed growth of a scale it is unlikely can be sustained.

No promises or predictions are made, intended or implied as to future profitability.


DETAILED HISTORICAL RESULTS

The spreadsheet below shows the performance of the fund since its inception.  Do note that the ending NAV/U reported for each week is BEFORE management fees - the starting NAV/U for the following week represents the actual NAV/U units were worth to their holders.




Here's an explanation of the various columns (from left to right) :

Date : With the exception of the first row (which records the start of the fund) this is the date at which a report was produced.  This is typically done each weekend - however it can be done more of less frequently.  Shorter periods between reports will only occur if either the fund is in significant profit AND is selling new units (where the ask price gets artificially inflated by unclaimed management fee otherwise) or if a very significant event occurs (such as the closing of GLBSE).  For the remainder of this post I refer to each of these periods as "a week"  - this should be read as an abbreviation for "accounting period (typically a week)".

Exchange-Rate : The LTC/BTC exchange-rate at the time at which the report was generated.

Start of Week NAV/U : This is the NAV/U of the fund at the start of the week.  If the previous week was profitable then this will be lower than the ending value listed for the previous week (due to the reported value at the end of a week being before deduction of management fee).

End of Week Actual NAV/U : The NAV/U of the fund at the end of the week.  This is the value before deduction of management fees, but after servicing any outstanding bonds or other commitments.

End of Week Actual Profit : This is the trading profit made by the fund expressed as a percentage.  Again, this is before deduction of management fees, but after servicing any outstanding bonds or other commitments.

%LTC : The percentage of the fund's net assets which are denominated in LTC.

%BTC : The percentage of the fund's net assets which are denominated in BTC.  Net assets refers to gross assets less liabilities.  Bonds are a liability at their face value.  So if the fund had BTC denominated assets (cash+securities) worth 30 BTC but had 20 BTC worth (at face value) of outstanding bonds then the fund's net BTC-denominated assets would only be 10 BTC and this percentage calculated accordingly.

Recalced minus E/R NAV/U : This is a (fairly crude) estimate of what the NAV/U would be were any exchange-rate movement ignored.  It is the average of (the average fund-split between currencies at the old exchange-rate) and (the average fund-split between currencies at the new exchange-rate).  i.e. the calculation assumes that the exchange-rate change happened steadily throughout the week and any change in the split between currencies also happened steadily through the week.  Sometimes one (or both) of those assumptions will be wrong.  This is just an approximation designed to give a crude view of what part of profit/loss was actually from trading rather than from exchange-rate movement.

Recalced minus E/R Profit : This is the profit that the fund would have made (expressed as a percentage) were the NAV/U at end of week the one recalculated in the previous column.

These last two columns are important - as the maximum rate that LTC-ATF is able to offer on bonds is one third of the average weekly profit adjusted to remove exchange-rate fluctuations.  This value needs to be defined ignoring exchange-rate impact as funds raised by issuing BTC-denominated bonds are immune to exchange-rate changes.  Below the main table are listed the average gross profit per week (i.e. before management fee) and the maximum rate LTC-ATF is allowed to offer on bonds.  Both of those are AFTER adjustment for exchange-rate fluctuations.

At the time of writing this, that figure sits at 3.2%.  There is no way a rate THAT high will ever be offered as I believe our results so far are above expectation and we shouldn't need to offer that high to sell bonds anyway (and why pay more than we have to?).

In general, the fact that most assets are terrible isn't an issue for me: and the fairly irrational behaviour of most investors is an absolute positive for me.  Bear in mind that I'm not buying most assets to hold - just to turnover a quick 5-10% profit on.  That's harder to do somewhere that there's sensible pricing of stocks and good liquidity.

The API takes about half as long to load data as the web-interface.  So far my own bot/trading interface can only download data (having issues formatting POST orders).  So right now all it can do is monitor my bids/asks and warn me when a range is moving, one of my orders has been filled or my order is no longer priced in the correct spot.  Once I've sorted the POST side of things I'll then be able to delegate the actual placement of orders to software, meaning it wont take much of MY time to place 5,10 or 100 orders.

When I last looked at MPex there wasn't much diversity there - the problem would become one of there not being 6 stocks worth bidding on, rather than (as it is on GLBSE) the sheer pain of actually trying to place and monitor 6 orders.  FWIW I have no interest in options at the moment.

Apologies for derailing the thread - but it seemed an honest question and deserved an answer.

The original investors who bought it at 1.0 are already wishing that.

For once I'm going to post (semi) in support of usagi.  Note first that I  totally agree with you that investing in obsi was a bad move.

You can't value shares on GLBSE based on bid depth - as there's very few shares which have any signifiant bid depth at all.  That doesn't necessarily reflect any lack of desire to bid for shares on GLBSE - it's (in part, maybe largely) down to a couple of major problems with GLBSE itself.  Here's why:

Say I have a chunk of funds I want to invest (I mainly day-trade, rather than invest long-term on GLBSE).  I look at my short-list of stocks that I'm willing to touch (majority of offerings on GLBSE I won't even buy to flip).  Maybe I find 6 where I'd be happy to have someone sell into my bids.

I have X BTC available.  What I'd LIKE to do is put bids on all 6 stocks for X BTC worth and take whatever gets sold to first (volume on most stocks is pretty low - so I can't be too fussy which I get unless there's a very good reason to want to favour one).  Obviously if one of my orders got sold to then the others would be automatically reduced down to whatever my remaining balance could cover.  But GLBSE doesn't support that (or even the cruder alternative of cancelling any bids which can no longer be covered in their entirety).  That's the first problem with GLBSE.

So: my alternatives are either to bid X on one stock or to bid X/6 on all 6.  I'd prefer to do the latter - but X isn't particularly massive and here the second problem with GLBSE forces me to do the first.  That problem being that GLBSE appears to be run on a 10 year old computer connected over a 56k dial-up modem.  Loading the market regularly takes 10-20 seconds and about 1 time in 3 it doesn't even load properly (plus after I place an order it gos back to portfolio rather than staying on market - meaning I have to go to market again to double-check my order is correctly placed relative to other orders).  It's just not an efficient use of time to try to place and monitor multiple orders with a small value of X.

This means that, most of the time, the bids from me on market tend to be 1/4 - 1/6th the size they'd be if the site worked in a more reasonable fashion.  It also means that there's always a bunch of stocks that I'd have bids on if it weren't such a chore to actually place them.

Unless i'm unique in this (and I KNOW I'm not as others have said pretty much the same thing) it means that the actual bids on stocks don't reflect the real funds available (and willing) to buy them.  Pricing based on Asks is obviously not correct (the lowest Ask is the cheapest price someone is willing to sell for but noone is willing to buy at right now) - but trying to price based on bids on GLBSE would be far more misleading. 

Actually there's no real issue with one fund investing in another - the problems arise where the investment forms a loop.

CPA holding BMF shares and Nyan/Nyan.x is fine: it's when one of them also holds CPA that it become a mess.  What it does is form a feed-back loop where changes to the price of one stock alter another which alters another which then alters the first (and so on ad infitum) - amplifying any rises or falls in any one stock price (and making it impossible to properly value any of the stocks in the loop).

For the same reason his/her Nyan.a (only supposed to invest in low-risk securities) does.  Having lost a large chunk of NAV of all his/her companies he/she went for double or nothing on OBSI.HRPT (it's not like what you agree to in your contract actually matters, right?).  Double isn't looking like the most likely outcome, needless to say.

I wonder if he/she gets a mangement fee for all the 'profits' being distributed through dividend (a large chunk of which gos to other usagi companies that can then dividend them back - due to the way they all hold one another's shares)?

Just run NAV down - and keep dividending back and forth taking management fees: great business model (except for investors of course).

I assumed usagi was female because he/she used to sign most posts as "Serena" - which is a female name.

e,g, :

https://bitcointalk.org/index.php?topic=97178.msg1094798#msg1094798

Is this true?

Pretty sure he then traded all the ASICMINER shares for OBSI.ABMO - he asked for the trade to be revereded but the Obsi shareholders voted against it.  If OBSI.HRPT turns out to be a ponzi then it's a safe bet those OBSI.ABMO shares will also be worth exactly zero.

I'd be most worried that having lost a ton on Pirate she's now trying to go double or bust on Obsi.  And her companies have more exposure to Obsi than she seems to realise (some of which, in fairness, wasn't her doing and is now unavoidable).  She seems to have confidence in OBSI.HRPT at a time when nearly everyone else in the market believes it's a Ponzi about to crash.  This smacks more of desperation to make a profit (for once), than of planned exposure to a properly assessed risk.

I have a theory about why the price may have dropped.  It's only a theory - but does tie in nicely with the timing of things.

Here it is:

1.  OBSI.HRPT is widely believed to be a ponzi that is about to crash and burn.
2.  If indeed OBSI.HRPT is a ponzi then it's pretty safe to say his other companies are also scams.
3.  If OBSI.HRPT is about to collapse and is a ponzi then he'd not want to leave assets on GLBSE that nefario could freeze/return to his shareholders.
4.  FACT: Obsi traded a bunch of  own shares in OBSI.ABMO for thousands of ASICMINER shares from DMC.  That trade made good sense (for obsi) whether or not the HRPT is a ponzi.
5.  If the above are true then you'd expect Obsi to be offloading those ASICMINER shares and withdrawing the BTC.

This is only a theory - but makes perfect sense (and the timing is right) IF OBSI.HRPT is a ponzi (which you'll all have to make your own minds up on).  If true it means buying ASIC shares now is a good idea - as the drop isn't caused by anything related to this share.

Disclosure: I hold a modest number of ASICMINER shares (and absolutely zero in anything Obsi related).

I'd been staying out of the threads for your 'companies' - but as you mention me by name I have no option but to respond.

I've made no attacks, negative comments (or, to the best of my recollection, ANY comments at all) about either Patrick or Theymos.

Normal service is now resumed: today's episode is entitled "The Emperor's New Clothes".

The profit mechanism is that you're betting that the ponzi collapses before you've paid out more interest than the original capital deposited with you.  In theory it could work - in practice there's a bunch of difficulties.

As an example take OBSI.HRPT - which many believe to be a ponzi.  Let's assume, for the purpose of discussion, that it IS a ponzi.  If so, then it's teetering on the verge of collapse - with no new funds coming in.  But it would still be hard to make a profit on it from the means described in the op?  Why?

Becasue OBSI.HRPT doesn't allow withdrawals and DOES allow paying 0% interest.   So even assuming it IS being run as a ponzi it's stll hard to see a point where a scheme such as OP's could claim that it had defaulted.  In theory Obsi could just sit there paying out 0% and refusing to pay out funds forever - without at any stage defaulting from what what was agreed in his contract.  Worse still (from the perspective of the operation described in the OP) the price on his shares  will crash heavily if that happens.  If they drop low enough he can buy a load back cheap then has the option of actually cashing out all remaining investors at their original investment and still keeping a handy profit.  At that stage the operation described in OP would have to refund all its depositors too - in addition to having paid out interest and having had all the funds sit around doing nothing in the meantime.

OBSI.HRPT also has another edge on a competing investment such as the one in OP.  If it's a ponzi/scam (we're assuming it is for this discussion) then he's also pulling in income from his other shares/bonds.  If he drops the rate OBSI.HRPT pays to 0% then he can still continue to suck in cash on the other shares so has no reason to make plain that OBSI.HRPT was a ponzi (allowing the OP's operation to 'win') as that would dry up his other income.

It seems to me that the amount of time investor's funds would be tied up for before they could safely be claimed would degenerate the rate of return so low as not to be worthwhile even if a profit was made.

'eventually' didn't take long to arrive.

I think a lot of the reason is that people look at it, see that it's too good to be true - but then keep looking and looking trying to find something to convince them that it's actually real.  Once they'd seen it was too good to be true they should walk away unless convincing proof is provided of it not being a ponzi.  A 'good' ponzi operator won't try too hard to prove they're not a ponzi - as there's no way they can prove it to someone with any sense, and every post they make is another opportunity for them to accidentally mess-up and contradict themself/be caught in an obvious lie.  Instead they'll be vague - and allow the people who WANT to invest to formulate their own explanations so as their greed/ignorance can overcome their common-sense and make them part with their money.

Once they have a few idiots on the hook, others who were initially marginally less stupid will follow - as they now have fear of "missing an opportunity" to add to their other reasons to invest and tip the scales.

For my post:

ponzi = the investment believed to be a ponzi (whether it is one or not).
Investors = people investing in your company who are betting the ponzi will collapse.
Depositors = believers in a ponzi who instead invest with your company for a slightly higher rate.


There's (at least) a few problems:

1. It wouldn't fly with a guaranteed buyback of 10% - to get believers to depositors you'd have to guarantee full value of their investment if the ponzi you were betting against closed down and paid everyone out.  Now as long as you didn't touch original invetsors' funds you wouldn't be running a ponzi (as depositors would be being paid from investors cash - not from the cash of fellow depositors).  So if the ponzi ran too long and investors funds were near exhausted you'd have to force buy-back at original value all deposits - then they could laugh at you and deposit them in the original ponzi.

2.  What happens with investors' funds? Either they sit around in some escrow account earning no interest or you use them to make profit. But if you actually try to use them to make profit then they're no longer reliably there to back your payments.

3.  The scheme if it succeeded could become a victim to its own success.  Say some new obvious ponzi starts up - so you run a company paying slightly more.  As your company pays more, is transparent AND has secured funds to pay investment there's very little risk - so everyone would invest in your scheme rather the ponzi.  The ponzi would thus get little funds in (and so little liability out) - whilst you rapidly depleted investors' funds.  You'd soon have to shut down - at which point the ponzi can say "Hey! THEY ran out of funds and weren't a ponzi -I'm still here so obviously aren't one either".  And the depositors can then flock to it with all your payouts and give the ponzi not just their own funds but what your own investors lost betting against the ponzi.  You'd have to bet ONLY against (suspected) ponzis that had built up to a certain critical mass - where the weight of their liabilities would prevent them continuing for long if their income stream dried up.  Put simply, IF you believe them to be ponzis then OBSI.HRPT would be great to bet against along your lines, WIT a bad idea.  Ideally you'd want to bet against things like Pirate where withdrawals are possible.

The big problem with it is the sheer quantity of investment you'd need to have to make any impact - investment which couldn't really be utilised for anything if deposits were to be properly secured.