LotRO Mired In Gloom (And So Is The Market)

moria goat

Last week I was impressed with the LotRO writing. A Moria revamp resulted in more friendly dwarves deep in the murderous murk, and more connecting quest sequences.

Sometimes you get the impression that the devs don’t play their own game, or can’t see the forest for the trees. The revisions reflect the opposite, the perspective of a lot of time actually playing the content.

Strong characters were a dire weak point when I left the game a few years ago, but the current LotRO writers are bringing a good game with the Bingo Boffin quest line for example. If you see a character’s name mentioned frequently in World Chat, you’re probably on the right track.

I was questing with my Lore-Master in Ringlo Vale in Gondor. The characters were actually outstanding, especially Jajax. I hope I see that guy again down the road.

On the other hand, Ringlo Vale was dark, all the time. It’s the “Dawnless Day”, and inexplicably the world has no sunlight. So all last week I was in Moria and Mirkwood with one character, and in endless dark with another character. I logged into my third character hoping for a 50% chance of daytime in Rohan, and it was day, but actually pouring rain.

Over and over you hear people mired in Moria, tired of the dark. Just last night a kinmate expressed enormous relief at emerging from Moria, and another kinmate echoed him. This is on top of LotRO being 50% dark just from the day/night cycles. Sometimes I log out when it’s night, or take a break.

The point is that happy sunlight = happy games. Happy games = happy players. We all know what happy players bring.

LotRO needs a lot more sunlight, and more 100% daytime set areas, instead of 100% dark. I’ve always disagreed with the 50/50 day night cycle for reasons, so this isn’t a revelation. Darkness should be the dark side of the golden ratio, otherwise it isn’t special. It isn’t the deadly underdog.

Gaming Stocks

Last week I discovered a Youtube video game news series by a pro Wall Street analyst. It’s called the “Pachter Factor”. Here are the links from the last couple weeks (I didn’t mean to get the videos themselves – oh well? D:)

To follow the whole series at SIFTD:


Pachter likes Zynga and Activision. He says if Zynga’s release of Dawn of Titans game is a success, the stock could double. He says Activision will make a lot more money off of King than people expect.

Pachter likes EA in the near term, noting it has great assets and some phenomenal games coming out. Battlefield is coming out without a lot of competition, for example.

Tuesday was a pivotal day last week. A higher inflation number came in, resulting in a big selloff. Many had written off an interest rate hike in June (including me), but inflation puts it back on the table.

The estimated chance of a rate hike went from 5% to something like 30% midweek, but by the end of the week, analysts were more skeptical. The market held steady.

T.J. Maxx (discount retailer) reported strong earnings on Tuesday, which I was looking for as a signal on Ross (ROST), but the stock went nowhere. It went down on Wednesday instead of up. So I didn’t buy Ross into their earnings on Thursday, even when Walmart also reported very strong earnings.

This was good. Ross ended up flat on its face, the disappointing result of the three.

NVidia (NVDA), Electronic Arts (EA), and Activision-Blizzard (ATVI) all made the CNBC coverage on Tuesday. NVidia was picked as a “final trade” by Guy Adami http://www.cnbc.com/guy-adami/ on Fast Money, and was surging for the rest of the week.

Electronic Arts was called overbought after its earnings surge, and at risk for a reversal, while Blizzard was smashed for over 3% on one day, rejected at its previous peak around $40. Blizzard received another vote of confidence, however, by Paulson & Co., a large hedge fund that reported taking a new stake of 3140000 shares of ATVI last month.

E3 hype hit on Wednesday with Sony announcing its plans for E3, and the stock was up almost 4%. Sony also announced a new beautiful Xperia Ultra smartphone.

Sony also announced a major push into AI (Artificial Intelligence), since they are lagging behind. This is the same AI that’s going to ruin the job market in coming years by replacing humans.

I was watching Yandex very closely this week. It has pulled back, but I noticed it had 19% short interest in April, which means the big move after earnings was in significant part a short covering rally. Volume also seems not particularly high. So I remain wary and watching for a more extended consolidation near the new level.

I was also watching ANET. The stock is surging strongly, more than my other picks last week, and is just about too high for a buying opportunity now.

Overall, the market is lurching forward with huge bearish sentiment, with lots of cash on sidelines. As many have noted, the high P/E ratio of the S&P, with earnings in modest decline, has a lid on the market.

Bulls nonetheless expect an upturn later this year, because that’s what bulls do, while a rate hike is expected to make things more difficult. The U.S. needs to hike, while other countries can still ease, and this is a problem for the U.S., which is has been already been squabbling with China and Japan over the currency issues.

This is so exciting. Yawn. Except wait, every time I abandon the market and don’t pay any attention, I seem to go along with the crowd. When the crowd abandons the market, it tanks, and then there is a buying opportunity. Ideally the market needs to go down to relieve the pressure from inflated P/E ratios (and other things).

So I can’t blink and fall asleep. This kitty must remain on guard in the dark, ready to pounce on any opportunity.

About Silverangel

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4 responses to “LotRO Mired In Gloom (And So Is The Market)

  • wumpus

    Middle Earth light should depend on the area. The Shire should have Scotish (or at least Northumbrian) summer seasons (practically midnight sun). Presumably same with Rivendell (except oddly clear stars). Not so sure with Loth Lorien, but I’m guessing pure sunlight will work (I stopped in Loth Lorien when I was essentially told I had unfinished business in Moria). Other areas vary, obviously places like the Old Forest and the Barrow Downs.

    Other areas vary. Moria can’t tell. At some point, Gondor will fall under shadow, which will be difficult to deal with on a MMO (I’m guessing just a more winter like season). The whole thing seems too complicated to bother with for a dying MMO.

    Speaking of dying, are there recommended servers to move to?

    There are analysts still pushing Zyngna? Why am I unsurprised. I’m a bit more curious about nVidia. They might have wanted to bury a bit of the show a few Fridays ago, but not enough for a “Friday after COB launch” (the VR sound explanation was pure marketing, they could have shown it just like a movie. I wasn’t listening too closely for the rest of the BS. Hardocp.com (which seems a very hit or miss site) had a nastygram over the “paper launch” and other shenaigans, but it seems like they are launching an expected incremental improvement in the face of no real competition. I’m sure that says nothing about investment other than there must be some better place to put your money (i.e. nvidia is pretty neutral).

    A quick google tells me Activision/Blizzard is sitting on a P.E. ratio of 30 (Apple’s is 10). This screams *SHORT*, except I have no idea what timescale it will collapse (the market can remain irrational longer than you can remain solvent). Blizzard’s unbelievable cash cow is growing old, and don’t expect the same company to pull off another one (or anyone else, but Activision/Blizzard is especially incapable). Activision’s specialty is sucking the money out of existing IP’s (pretty much the same as any Hollywood/video game company) until they are dry and buying more. Can’t see the point of a P.E. of 30. Certainly don’t buy here.

    Ross/T.J. Maxx. Retail is a tough game, and certainly touchy to the economy. I wonder if there are beer/liquour distributors that are public? That might be a safer hidey whole. While I’d stay away from AmBev and the debt/international issues that I couldn’t begin to understand, I’m sure there are plenty of entrenched distributors that have a license to print money (don’t ask about Pennsylvania beer laws, there is a reason to stick to buying your beer South of the Mason Dixon line. I’m sure Utah is crazier, but Pennsylvania is weirder).

    • Silverangel

      Hi wumpus! ~ As an artist, having designed a level or two back in the day, I can say it’s a huge artistic and aesthetic advantage having a set time of day in a given area. I like it. So you didn’t want to go back into Moria? Too funny! I don’t blame you.

      I really hope Gondor doesn’t literally “fall under shadow”, because ugh – don’t think I can cope. Recommended servers in LotRO are anything left. The pops are high due to the merges plus returns for the level cap increase.

      Word on the street is that Arkenstone is for PvP (could add that to my guide, actually). Landroval and a few others for RP. Europe and NA are located the same server center now, so doesn’t matter as far as that.

      P/E ratios can be very deceiving. ATVI reads 30, but that’s last year. A growth stock usually has some forward pricing, so next year they forecast $1.84/share, which is more like 21 P/E. And this is also how growth stocks can be smashed if they slip below expectations on a report. Facebook and Amazon are the most notably big P/E offenders right now.

      Microsoft shows 38 on TD Ameritrade, but if you do the math by hand, it’s more like 21, and maybe less according to analysts. An anomaly like this can be due to one-time charges/write-off things.

      Distributors are indeed very interesting in retail. There are a few mentioned from time to time on CNBC for the food and beverage businesses – cups, plates, packaging, etc. I don’t know about liquor. I think I heard last week the rest of the world is drinking less, except us Americans. Cheers, have a beer on me! (not literally) ~ J

  • wumpus

    Saw that MSFT’s “official” PE went wonky roughly a year ago. I guess that kills my idea of some sort of PE-arbitrage between the two (MS’s cash cow is more profitable and longer term, otherwise the companies are close enough to arbitrage. Had MSFT’s still been 10, it would make a ton of sense.

    Booze is more the bearish pick (people don’t stop drinking during recessions). The distributer idea was more that retail is hard and well known (also Ambev is making a lot of bets that I can’t begin to understand and have little to do with beer). But in plenty of places the distributers (especially beer and similar) have a monopoly and a license to print money. The tech and gaming stocks (especially if showing a PE of 30 on a company basically milking a peaked cash cow) seem like poor choices. Drinking the beer now.

    And it looks like Zynga has a long way to go to delisting (it doesn’t happen when you are over $1.00, doesn’t it?). The silly webpages I hit to get the PE ratios seem to like it. Still needs to drop a dollar for delisting (I blame them for a lot of what went wrong with MMOs and cash shops. Looks like you are certainly right about how the cash shops ended up).

    • Silverangel

      I like your idea! 🙂 I’ve looked into water companies as an investment on drinkable water and infrastructure spending, but the big water companies, as utilities, are interest rate sensitive. So it’s bad timing for that, and I don’t really have the expertise to identify healthy levels of debt.

      Check out what the FIW ETF is doing right now, though (First Trust Water Index).

      Some distributors then would be Nestle, who was just blocked last week from bottling any of Oregon’s water (could be a trend), Coca Cola, etc. Things to think about. I know I can’t drink Phoenix water unfiltered/untreated. Ugh.

      Game company earnings are lumpy depending on when they decide to release a game, and when they open it for pre-orders, etc., which seems to open up opportunities for buying and selling video game companies. Example: if you had bought Electronic Arts last quarter when it tanked on a lousy report, you would now be sitting on a big gain after the more recent report. Next quarter maybe it will get hit again. The following quarter is likely Battlefield release, which Pachter said had little competition.

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