Since I'm going to give some gold tips and tricks of my own here, I think it's important to know where I'm coming from. My way isn't the best way of course, but it's built on years of in-game money/gold making. But for my purposes, I don't believe you can lead a horse to water, you have to mold them to your way of thinking before you can make them drink. Part of avoiding mediocrity is taking your mind to the next level of thought, and then making an effort to get to the next level after that, and constantly developing your thought process. This is why the vast majority of the world is prevented from free thinking, because once you've seen where you've been, you don't want to go back to it. Let's talk philosophy today.
This is something I reviewed with people about 2 years ago via the Consortium forums, but it's something anyone who is in business needs to be told or figure out for themselves. I put this here because it's part of my approach to building a system and my approach to the game itself.
What you do on a daily basis in the AH is applying an age old thought process. You buy things to resell, hopefully at a profit. Many people only make gold to buy things they want or need, but many people like me make gold purely to make gold. In the real world, industrialists and investors do this and people often question - when will it ever be enough? In short, never. Why would I want to go backwards? Why would I want to stay the status quo? Is being poorer fun? It's part of our competitive nature. Sure it's been lost in many areas of the world, but that's their loss.
Years ago when I was finishing college I was forced to take some liberal arts classes - obviously to kick some tuition over to them, and even though I was studying engineering and business. But, one of the best classes I ever took was on the history of American manufacturing from Reconstruction to present. The professor was a noted Andrew Carnegie biographer, and really conveyed the spirit of the robber baron. Within the first weeks of the course, he tried to get us to understand their mentality, explaining that you have to understand that there's an Investment Mentality, otherwise everything he taught after that would make little sense. After it was over, I found this to be the most important discussion, because you had to understand the frame of reference to understand their motivations.
What this means is that a person does not look at money the same as a consumer, they look at money as a means to make more of itself. Consequently, they are most concerned with a return on an investment (ROI), not buying a new mansion, castle, or late model sport car. In fact, most millionaires are notorious "tightwads", not because they don't believe in blowing money on themselves but because they would rather use the money to make more money. This is actually how Carnegie got his start, he got into his railroad/steel empire by investing every spare dime he could (even borrowing), because he was introduced to compound interest and how to think long term from his first mentor at the railroad when he was just a lowly clerk. He did it so well that after age 24 he never worked for another person the rest of his life. Keep in mind he started penniless and a poor immigrant.
It's a fascinating association, because you begin to see how people tick. You stop looking at it as a consumer wanting to just buy things. The majority of people go to work daily because they have bills to pay, and their minds never extend beyond a cubicle or their next paycheck; but buying that fancy new gizmo on credit which they'll pay back later is a priority for them - simply to keep up with others. Who has the investment mentality here? Why, the company issuing credit of course.
You have to look at money as working for you, not you working for your money. That means you aren't out there spending your time by the sweat of your brow, you're expending the energy of your brain. Zig Ziglar mentioned it in one of his tapes I liked: From the neck down you're worth minimum wage, from the neck up your value is infinite.
This concept applies to my version of the gold game. I don't blow the gold on things I want because it's shiny and attracts attention, I look at the gold moreso as a way to make more of itself. When I make a big purchase, it's usually because I have something else in mind to possibly make more. The more I can keep invested wisely, the more of it I can make. The microeconomy of a server is a fun mind game to me, far more interesting than any raid.
So what's this got to do with Warcraft?
Before MoP started, I had eliminated most all of my gold in game hoping to enjoy another title more. That title didn't work out for me, so I came back to the game with about 80,000g to my name. Now, I'm not exactly going to light any infernos with that amount, but I do have knowledge. Since I have the knowledge I have the capacity to make enormous sums very quickly. Additionally, I had the tenacity to do what it took to get to a point where I didn't have to bust tail anymore doing it. In other words, I rebuilt my in-game system like I've done since implementing one in Vanilla and other games. I went to seven figure again rather quickly, simply running a system of investing as much of my gold as possible, and not foolishly buying toys.
I prefer to reinvest my profits 100%, whenever I can. It's important to me to be able to continue an uninterrupted supply of raw materials sourced at the lowest possible cost. Later, when I go over spreadsheeting and its superiority to Just-in-time (JIT) manufacturing, all of this may make more sense.
It's not important to worry about what you have in gold, liquidity is the enemy of growth because that's a dead asset. It is potential growth, but you have to find those things to invest in that will make you a decent ROI. More importantly, you should know your costs to as close to 100% vs. Market Value of the finished product so that you can compete against anyone. Currently, according to my inventory, my net worth is now 64% raw materials, the remaining 36% is in liquid gold, and I'm liquid over seven figures.
Note: You can determine the value of your raw materials quickly by keeping everything in a guild bank, and then using Sapu's macro. I use this across several banks to help determine my net worth and total investments.
These raw materials have the potential to make 120-500% of their present value. This is why my profits today are as close to my sales volume as I can get, I acquire everything I need daily, not when I need it, and whether I need the supply or not. My costs are preserved, which guarantees my ROI. It's also another reason I do not engage in speculative markets - which are those markets where the price fluctuates greatly or the value is depreciating rapidly (unless I have proven to myself that the product can be produced and delivered to an end consumer quickly, or the price is below a historic market price). Depreciating assets are DMF cards, TCG mounts (these are commonly duped), and world/raid drop BOE.
Of course, material availability prevents me from ever hitting a 100% investment portfolio. Once you get to a certain point, momentum will take over and you start seeing higher revenues as your stockpile begins to build. For me the quest is to break the previous day's/week's record, and that's only done in one way: Investing the bankroll with little regard for my liquidity. In the real world, of course, this would be an insane model. But we are dealing with a system that's removed regulation, taxation, theft/spoilage/catastrophe, payrolls, cost of living, and all those other fun things mandating we hold something back in reserve.
This also goes for your time investment. What should you be doing to become more efficient? Are you watching pointless videos about goldmaking? Are you reading prime pieces of advice? Are you leveling an alt to possibly open a new market for you? Honestly, your choice determines your wealth. It's funny to me so many people camp out at the auction house, when your best use of your time is to do that on your second account, while placing more producing alts in the pipeline.
So as I stated in last week's tip: You make money when you buy, not when you sell. The less you have invested in materials the less you will make consistently. The more gold you have laying around the less you have in the market to make more. There's no shame in having 10k available, if your banks are stuffed with everything under the sun and you're keeping up with posting daily.
Thanks for stopping in!