Suggestions for accumulating Inkles

After 12 months of serious trading (only 5 trades before 9/14/07 – 11,499 as of 9/4/08) I have accumulated 5MM inkles and have held the #1 position for several months. It strikes me as good time to retire, or at least significantly reduce my level of activity which at times may have approached obsessive levels. I have exchanged comments/suggestions on trading strategies with a number of folks but thought I’d more broadly share some suggestions here.

First, I would suggest reading Onemike’s profile and Zakarria’s August 2007 Inkling Blog interview. Both provide the basic winning strategies from the early “Top Dog’s” and were very helpful to me in thinking about how to approach Inkling Markets. They are well worth the read.

My additional 2 cents in elaboration:

From 5000 to 100,000 – Hang around markets that are close to closing so payoff will be near term. Final sports league standings are usually a good choice for low risk Inkles. Sporting events in general are an excellent source of low risk Inkles, particularly if the market creator lets them run until after the games are over – opportunity for in-game trading and rather sizable pay-offs if the underdog wins. Mvguy’s movie market is quite attractive for weekly gratification as well.

Also when you sign in to Inkling, check recently created markets for something that just opened for trading. New markets appear somewhat randomly but they tend to show up in bunches. With the default opening prices, unless someone has adjusted them, there are almost always gross mispricings to take advantage of. Buy the obvious but leave room for someone else to come in afterward to bid it up further so you can sell and take profits – no need to tie up Inkles until the market cashes out when you can redeploy your short term gains back into an expiring market.

100,000-250,000 – See above and keep doing it. But now it is worth trolling through older markets that folks have forgotten about but don’t show up on the first page or so of “expiring markets” that everyone else is looking at. “Big Inkles” can be had here but if all you have is 5000, probably not worth the opportunity cost. You may find markets that will close out in a month or so that were “year away” pay-offs when set up so no-one traded them then and no one is paying attention to them now. In some cases, you will find something where the answer is known but the market was never cashed out due to the market creator having left Inkling or just having forgotten about the market.

A big chunk of how I got to 250,000 was by doing just that last October when I was bored one weekend and started looking at older markets. For example, “What will be the award price for Magat Hydro?” was probably a relatively obscure question when market was created so no one apparently traded it. Presumably because timing of answer was uncertain, the market wasn’t scheduled to close until December 2007. A quick Google search revealed that the award had been made earlier in the year. I recall I dumped everything I had and bought as much as I could and let the market creator know what the final answer was. After a week or so with no response, I contacted Inkling who promptly closed out the market based on the evidence of award and price that I provided. I cleaned up a number of these in the 4th quarter, generally leaving Inkles on the table, but I was investing all I had.

Surprisingly, opportunities like this still exist from time to time. The first week of April 2008 I ran across a market on what band would announce a 2008 tour first. A quick Google search revealed that Metallica, which was trading (or, more precisely, not trading) around 10, had just announced their 2008 tour at the end of March. Good for a quick 50,000. I’ve probably exhausted most of these but a number of these probably still exist from time to time.

250,000 and beyond – See above and keep doing it. But now you can leave some Inkles in new markets past the early trading or invest in longer term, thinly traded markets where there are great buys or riskless arbitrage opportunities that, unfortunately, may take a while to pay out. At 5,000 Inkles, absolutely pointless to play most of these given the opportunity cost. But once you have 250,000 or more, it is probably worth the investment. For what it is worth, you will some of these opportunities in the thread “Lock of the Week” in the Support Forums. [Note – some of the locks may be worth playing even if you have a smaller Inkle balance depending on what else is going on.]

Also, if you can get in early on markets like the “US Constitution” market (e.g. “Man on the Moon”, “24 Premier”, “787 Delivery”), they are a good place to park Inkles while boosting your net worth in a theoretically no risk proposition, albeit with cash-out well into the future. Not a bad piggy bank either – if you see something good, sell 20 or 100 shares and reinvest after taking profits. Having said that, it is worth keeping at least 100,000-200,000 Inkles “outside the bank” – more as your balance builds – to take advantage of trading opportunities. Selling more than 20-100 shares can put a dent in your nominal net worth and may spook any otherwise like minded long term co-investors in the market into dumping shares, really cratering net worth (though that would create a lower cost reinvest opportunity for your trading profits). Alternatively, the price drop from a large sale might entice someone else to buy in cheap driving your re-invest price up. Note, however, my comments on the Constitution market for potential pitfalls of jumping in to one of these markets late.

General comment – As noted by onemike and zakarria, it is amazing what a very simple Google (or your favorite search engine) search can uncover.

Finally, for anyone who is interested in accumulating Inkles, it may be worth a visit to the Lock of the Week posts in the “Traders” section of the Support Forums. Some may be more lucrative than others, and some may take time to pay off but maybe some Inkles to be had in markets you hadn’t noticed.

Good Luck everyone.