Manipulating the (blog) market

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17 Apr 2003

I’m wondering how much influence a single blog can have on the Blogshares price of a blog. For instance, I am now the majority shareholder in a blog called the Spastic Yak. Yay for me. On a related note, my blog has an outgoing link value of nearly $900. So what happens when I link to said Spastic Yak? Will the share price shoot up and make me a rich man?

Protect and Gamble
April 17, 2003 7:46 PM

Not much, instead of being worth $0.49 your shares would be worth $0.18 more, that's $0.67. Since you have 3900 shares, that brings your investment from $1911 to $2613, that's a small $702 more. Now when Movable Type links to somewhere, it sends it an additionnal value of $20000.

Adam Kalsey
April 17, 2003 10:29 PM

Since I wasn't seriously playing Blogshares, I didn't spend much time figuring out how it works. But now that I've RTFM (read the fine manual), that makes perfect sense. But since the stock price went up when I bought all those shares, my initial investment was only $1092. So that $2613 is a fair increase in value.

Trey
April 24, 2003 10:31 AM

Actually, I don't think linking to the blog will _necessarily_ raise its price. Only selling/buying change the price. What it will do (when it is indexed next time) is lower its P/E making the blogshare more 'attractive', and thus more people might buy the blogshare and THEN the price will go up (and I have a sneaking suspicion that the amount the price goes up actually depends on the P/E, but I'm not sure). But if no one buys the blogshare, even with its greater valuation/lower P/E, the price won't change. (for example, if all shares are already owned, none can be bought, price remains the same) At least that is my take

Adam Kalsey
April 24, 2003 11:49 AM

Blogshares does use incoming links to value the blog. That's what the "outgoing link value" is all about. How much links from your blog are worth to other blogs. The p/e is then used to calculate how much the blog value and incoming link affects the share price. The reason that my experiment didn't work is that Blogshares didn't index this site for a few days. And when it did, the link had falled off the front page.

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