Here We Grow

Although it's a few days into 2008, I'd like to announce my resolution for Second Chaos. I'd like to see this site grow into the multiple-author glory that I have envisioned for it. I'll need good authors (still accepting volunteers!), active and faithful readers, and a constant flow of new ideas to make that happen, but I believe it can be done. I'd like to see nearly-daily updates and 500 unique pageviews per week by the end of 2008. Check out how I'm doing here.

Want to help me out? Here are some things I could use, if you felt like giving SC a late present this season:

• Links: Technorati authority is built on links, as is search engine page returns. I'll be happy to return the favor in relevant posts.
• Comments and Feedback: Nothing makes for interesting discussion like reader opinions. Plus, it helps us here at SC know where to guide our articles.
• Ideas and Requests: I've already gotten a few, but I don't think the other authors have yet, and I'd love to have more. Keep 'em comin' - we'll tackle whatever you like.
• Referrals: Like what you see? Tell people to stop by.

Here we grow!

Still Looking

I'm still looking for additional authors for Second Chaos, by the way. If interested, send me a coherent message in English, and you'll likely get an invite. You can write about whatever you like, but I think that by banding together with several different authors, we'll have more readership than individual blogs. Come on, it'll be fun!

Lessons in FM: Part I - Present Value

I'm going to start a series of educational posts about the basic concepts of Financial Mathematics, my major. These are not intended to be overly complex and I will do my best to keep the calculus out of it. There will be a mix of mathematics and economics, and the symbols used will likely be actuarial in nature. This convention won't bother those who are new to the topic, but might if you have some familiarity with it already from another discipline, like Finance.

Present value tells you the value of some amount at one point in time at another point in time. Usually, you're trying to bring payments at some future time back and find out what they're worth today. To find this, you need the future value(s) of payments (FV), the interest rate (i), and the times at which these payments will be made (t or t_k). We'll work with just one payment for now, and we'll also be using compound interest.

The equation we start with is pretty basic:

Present Value * Interest = Future Value

in symbols,

PV * (1+i)^t = FV

To solve for PV, we divide both sides by (i+i)^t. However, remember that actuarial notation I mentioned? Actuaries use this method (dividing by the interest factor) so often that they have their own symbol for it, v ("vee").

Definition: v = 1 / (1 + i)

Using this notation, we solve for PV and get

PV = FV * v^t

And that's it! Just plug your numbers in after that! So long as you have three of the variables, you can solve for the fourth.

So that's great and all, Guardian, but what if I have more than one payment? Well, fortunately, you can just add them up. Say you have two payments - one at time t = 1 and the other at time t = 3. To find what they're worth today, just add them. You get

PV₁ = FV₁*v¹
PV₃ = FV₃*v³

PV₁ + PV₃ = PV_total = FV₁*v¹ + FV₃*v³

The tricky thing is finding the interest rate which makes that equation balance. This is a problem that often has no direct solution and must be done iteratively using numerical methods. That's part of that scary math I promised I wouldn't get into. (As an aside, if people really want to see that mathematics, comment that you do and I'll whip something up.)

So what good does this do in the Second Life capital markets? Well, theoretically (and in Second Life, I mean very theoretically), that is what all the stock prices are based on. Investors value securities according to what they think the future value of it is, discounted with interest (this interest rate likely has a risk premium built into it, however). Whether that future value is based off of reselling the security, dividend payments, or both is something that each investor must decide for themselves. However, if you know your own preferences and you can make guesses as to the dividend amounts and/or stock prices, you can use this method to value what "your" price of the securities is and whether or not it's a good buy for you.

So what if there are a lot of payments, but they occur in regular intervals? I'll tackle that one in Part II.

Visibility

I'm trying to increase visibility of Second Chaos through claiming it with Technorati, and they make you confirm your blog via a post. That's all this is.

Technorati Profile

Design Tweaks

As you may have noticed, the design of Second Chaos is still being tweaked. I'm not the best at web design, especially with regard to browser compatibility, so if any of you open up this page to find it looking like a kindergartener's homework project or vomiting up random HTML, please let me know (particularly if you use something other than Firefox or IE).

I'm also still looking for writers, so if you know of anyone (or would like to jump on board yourself!) send me an IM/notecard/email/smoke signal (bonus points if you get that last one), and I'll get you set up.

For today's humor, please check out the argument between LNL's CEO Lindsay Druart and DGD's CEO Maelstrom Baphomet in the SLCapEx Forums.

JTF, CapEx, SLR, and Xavier Mohr

Well considering I cannot get to sleep right now, I figured it would be a great opportunity for me to test-drive Guardian Market's new Second Chaos blog.

I figured there's no better subject to start off with than my affiliations and perceived positions with JT Financial Bank, the SL Capital Exchange, and SL Reports (CapEx: SLR).

I receive the question time and again from random people if I have quit JTF and CapEx, if I have had some form of "falling-out" with the management and so forth. The answers to those respectively are "kind-of" and "no."

I do not work as much as I used to with JT Financial or CapEx. There are several reasons for this.

Primarily, the duties were simply too much for me at a time when I was having stress with my real-life job, and at a time that I should have been focusing on SL Reports.

I have recently quit my real life job - a nightmare publishing position that started out as one thing and evolved into something else far more stressful over the course of 2+ years - it's something I might tell you about later in a different post.

In my exit from real-life work, I considered approaching Arbitrage Wise - a fabulous long-time friend and owner of SLCX and SLR, among many other fine companies - about working more for CapEx and JTF again... but I didn't.

The reason was I started waking up every morning and loading SLR on my screen. I started realizing that we had loyal readers and investors waiting on me to do things I had promised long ago but failed to follow through with.

Now, do I think that I was lazy... that I screwed up... that I wasted time that I should have been spending on SLR? All of those months that I was wrapped up in the bank, Wise Metaverse, and the exchange? No, I don't.

I am rarely arrogant, and I rarely boast, but take this for what it is - defense of my actions. I feel like I made a difference in our SL financial community.

For those of you that don't know, in July of this year Investor Allen started requiring real-life ID from CEOs. I complied grudgingly, even though my on-again-off-again friend who we now know as "Kyle Van Leuven" assurred me I didn't need to, but the owner of SLR, Arbitrage Wise, would not provide his info to Allen - I guess now we see where he was justified in his distrust of Allen, which is neither here nor there.

For the record though we now know Thanh (pronounced 'tawn' so I hear) Ho quite well, with him having spoke at Southern Methodist University and on Metaversed's Metanomics. But anyway...

Allen mentioned to me one late evening because of Arb's failure to comply, SLR would need to be delisted from AVIX. I really did not care at that point, but I did contact Arb and let him know. It's funny though... when Allen threatened this to me, I went off... totally... I told him exactly what I thought about his failed Ginko buyout, his own ID issues, and probably some other things I would not remember without pulling up IM logs... which I cannot publish here.

But Allen did not respond hatefully. He responded as a tired and upset young man... probably the same as I would... probably feeling much the same way I felt... like he just didn't care and didn't want to deal with it. It was at that point I asked him, "Allen, would you consider selling AVIX to JTF?"

He replied positively, and at that point I messaged Arb and said, "Arb, would you be interested in buying AVIX?"

LOL...

The rest is history, but at that time... for me... it was "ID problem solved, delisting problem solved, and software development for our own JTF exchange problem solved."

I was involved with JTF & CapEx on throughout July, August, & September before my real life caved in around me. SLR was a site in need of major assistance, I was stressed out all the time with work in RL, work in SL, and I was at the breaking point. Some of you know, and some of you do not... that I almost followed the footsteps Jasper by simply logging off. But I didn't.

I simply started stepping back, taking breaks from SL... managing things from the sidelines. It helped. I remained involved.

Yes, there were arguments along the way - bad ones. Ones that in your wildest dreams you could not imagine. Not just with me, but with all of the CapEx staff... but they were part of us building a better exchange for the SL investing public. And I think our arguments... our negotiations... did a fine job.

I am proud of what CapEx has become. I am proud of the new ID policies, the more careful review of IPOs, the new fraud detection mechanisms, the circuit breakers, the market makers... everything.

Bottom line though is the drama I have been through has nothing to do with why I stepped back from that world. CapEx now has a fine staff: Bo, Arb, Reina, Kadena, Cash, Sky, all the reps and managers you see in-world, and all the affiliates out in the field. They can manage without me.

I still randomly comment on IPO applications and receive faxes for the exchange, but not much else. And it's because I know they are a top-notch bunch with the brains and brut strength to get the job done.

So what's with SLR? Well I am happy to report that traffic is extraordinary... every morning when I wake up I update the SL community with the latest market news, and even an editorial every once in a while... be it popular or not.

I am proud to have just interviewed IntLibber "officially" about ACE... a great article. I talk to him often usually complaining about some random thing because I know he will listen and he is too nice to tell me to "eff off." I guess this is our first official press thing together though.

But the ACE interview is just the first in a series about all the exchanges. I will also be profiling CapEx, ISE, VSTEX.net, and WSE. Guardian even mentioned that I should profile Anshe's DSE... we'll see (that might be interesting though).

SLR is going well. But how about me?

Guys, I don't promise to be here forever. I have screwed up in the past of defining my first life by my Second Life, and I don't want to get back into that habit. I do have a real life. That is one reason that I *know* my real name shows up on this blog, yet I keep it here... to remind me there is something more out there.

I love to travel, I love to shop and dine, watch movies, do real life work... and this time of year... I love to drive around Northwest Oklahoma City looking at Christmas lights with my partner of five years.

So what is my immediate future in SL? SL Reports will continue to grow and prosper, we have even talked about overhauling our web template. Traffic will keep growing. So will revenue.

After that, who knows? I can't lie... my eyes and ears are always open, searching for someone to take over as SLR CEO. I continue to search, for someone that can do a better job than I have... but also continue on with my dream and my work, which I feel have made a difference here.

I doubt I will ever totally leave SL. I will probably always be the loudmouth with an opinion on something. I will probably still write and comment on stuff around CapEx, SLR, SLNN, and everywhere else. I definitely plan to continue blogging at Second Chaos. I am proud of that... which brings me to our closing.

I will leave you with just a couple thoughts tonight. First is that no matter what you do in SL, always endeavor to make a difference... don't do what's popular if you know in your heart that something else is the right choice. Second, is that remember Second Life is always just that... a SECOND LIFE. Don't define who you are by what happens here. Remember that you have a family that loves you and a world of opportunity awaiting you outside your front door.

Make a difference in your Second Life, but enjoy your first.

Until Next Time,

Xavier Mohr, CEO
SLReports.net