B$ Strategery

What follows is a basic primer for shares math in Blogshares. Some concepts will be greatly simplified, for additional background, read elsewhere in this blog for more information, starting with the earlier entries and moving forward.

Some months ago, the way that shares values were calculated changed, old caps on values were removed, and other tweaks to the math were added to keep things interesting. This has thrown much of the shares market for a loop, but as with any game change, if you understand the math involved, you can make a profit.

For the purposes of this article, it is assumed that you have one or more claimed blogs in Blogshares. If not, go to your favorite blogging site, and get with it! Now, on your claimed blog, you will have incoming links (folks that have links to your site on theirs), and outgoing links (links on your site to other folk's blogs). The value of your blog is the total of your incoming links, plus B$1,000 for the base value of your blog.

The fun part is the outgoing value, under the old math, this would simply be the total value of your blog, divided by the number of outgoing links, with a cap of B$25,000. The more outgoing links you had, the less the outgoing links were valued. With the new math, this is now quite the reverse.

Outgoing values now are variable, depending on the number of incoming links relative to the number of outgoing links. If your outgoing link totals are very similar to the incoming link totals, your outgoing value will be your blog's total value, divided by the number of outgoing links. So, say your blog had a total value of B$ 1,000,000, and you had 10 outgoing links, these would have an outgoing value of B$ 100,000 each. However, if you had, say, less than 5 outgoing links, these may only be worth about B$ 25,000 each or less, but if you had 30 outgoing links, they could have a value of around B$ 500,000 each.

There are various thresholds in the new math, and I haven't collected enough information to know where all the danger spots are, but for this article we'll stick with the basics.

The first point is to have 10 or more incoming links. This point shouldn't be hard, as many folks trade links all the time, sometimes just linking to another player's blog will turn up an incoming link back to you within a few days. The second point is slightly trickier...

Ideally, you want to have about 3 times the number of outgoing links as incoming. If you have 10 incoming links, you want to have 30 outgoing. If you have 20 incoming, you want 60 outgoing. If you have 75 incoming, you want to have 225 outgoing, etc. Again, there are thresholds in place, so you can go slightly above or below these values, but too far out of range will see your outgoing values crash.

For shares play, keeping your outgoing value high by maintaining a good link list is critical. Generally, you will want to link back to those that link to you, this will add value to their blogs, which will in turn potentially add value back to yours. For other links, those can go almost anywhere, as long as the sites are listed in Blogshares.

Reindexing a blog in Blogshares will cause its total value to be recalculated, and will also cause ideas to be produced, based on industries the blog is voted into. Math 101 gave the basics of outgoing shares values, Math 102 covers reindexing as it relates to shares math.

Reindexing is very straightforward, when this happens, the total values of all incoming links are added, and the blog's base value of B$ 1,000 is added, to give the blog's current valuation, which is then used to calculate the blog's outgoing valuation as outlined in the Math 101 article.

The key point to understand here is when it is appropriate to reindex a blog. The most elementary concept is to only reindex a blog when this will result in an increase in the blog's value. The Stock Broker function in Blogshares is very handy for this, if you own any shares at all in the blogs you are interested in reindexing, as it will tell you exactly how much a blog may gain if reindexed at that particular moment. The second most common way to determine this would be to pull up a blog's page in Blogshares, and add up the incoming values yourself with a calculator.

Ideally, the blog should gain at least 2% in value to be worthwhile to reindex, if a blog is worth B$ 500,000, and will gain B$ 10,000, then reindexing would be good, if it may only gain B$ 5,000, then reindexing may actually harm the blog.

One new change in the shares math is the use of a multiplier that can cause a large boost to a blog's outgoing value, if it has roughly 3x the number of outgoing links as incoming (as detailed in Math 101). The multiplier varies on a daily basis, I hope to have more exact details on this posted soon. There are times in the cycle where a blog can actually lose a small amount of incoming value, but gain outgoing value, but there are other times where a blog may gain a small amount of incoming value, but lose outgoing value. The 2% rule above will generally guarantee that a blog will have more outgoing value, assuming all else stays the same.

The things that are likely to change, of course, are the number of incoming and outgoing links. When reindexing a blog, either your own or someone else's, you should check the blog's page in Blogshares, and see what the current number of incoming links are, and compare that to the value from when the blog was last reindexed. If the outgoing total from the last reindex is still roughly 3x the incoming number, and the blog's value will be going up, then it should be safe to reindex. If the incoming link total is significantly different from the last reindex, reindexing may cause the blog's outgoing value to crash. If you are not the owner of that blog, contact the blog's owner, and advise them that they may need to add (or possibly remove) outgoing links to avoid their value crashing.