Don’t say “Free Money” – Caveats for Arbitrage

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 1-In which skepticism is admired

What I think all of us here at MTGPrice.com learned is that you should never emphasize that an aspect of MtG Finance is easy, because people lose their minds. “If it were that easy, everyone would do it!” was the overall thrust of the responses I got to my first article wherein I talked about the principles of the technique and gave a few examples. People were skeptical, which is fine- everyone should be skeptical, especially when something sounds too good to be true. A few of you asked me some follow-up questions to get a better feel for what I was talking about, and that’s cool. A few of you pointed out a few things that make an arbitrage opportunity seem better than it is, and I promised to write a follow-up article about caveats, this article, and that’s also fine. A few of you called me a liar, and even that’s fine. I got a good laugh out of it, especially considering this isn’t exactly a revolutionary technique I’m claiming to have invented.

Another thing that I think we all learned is that years of the internet have made people foam at the mouth when they see the word “free”. “Nothing’s free! WARGARBL!” was the general thrust of the responses the launch of the “Free Money” arbitrage tool got. I recognized that it was meant to be tongue-in-cheek. Many people on the internet did not. They saw a side ad that said “A schoolteacher figured out this easy trick to get free money from card websites. Card sites hate us! Click this link to get your free money or at least make your penis 3 inches longer XxVIAGRAxX!!!!!111eleven” Again, it’s cool that you’re skeptical. Is the problem here that people think I made the concept up? Did I make it sound like it’s too easy? I’d apologize for that, but, well, it kind of is really easy. It’s just harder than you might think.

2-In which caveats are discussed

 The Aribtrage Tool on this site is just that; a “tool.” A Screwdriver is also a tool. Your fingers are poorly-suited for screwing pieces of wood together so the tool helps leverage the power of the wedge and the inclined plane and all sorts of wonderful simple machines to help you in your task. You don’t just hold the Screwdriver in your hand and say “It’s assemblin’ time!” and wait for a fully-formed Ikea coffee table to appear in your rumpus room. You’re going to have to apply some torque to some metal. The Screwdriver isn’t garbage because of this limitation- what it did was save you lots of time. Similarly, the Arbitrage tool is saving you time by not making you check lists of every card for sale everywhere and check them against every buylist. You are, however, going to have to verify that there is indeed a genuine arbitrage opportunity there, but the time you saved will be invaluable, especially to those of you with a half-assembled coffee table in your living room.

The first caveat, therefore, is to verify that there was no electronic mistake. Verify that there are copies for sale at the target price. Verify that the buylist in question is buying copies at the target price. This will take a non-zero amount of time. This is not an issue because it is on the order of seconds and minutes, not weeks and months. A lot of “false positives” only take a cursory glance to rule out. Is the card sold out and that’s why the price is wrong? Did someone miss a decimal point? Either someone missed a decimal point today, or Brassclaw Orcs is a big mover now that someone has them for sale for $20.00, making the average price $17 and change and making me laugh. Remember, you’re not going to be able to retire because you found an arbitrage opportunity where a dealer is paying $400.00 for a card you can buy for a nickel. You’re going to make a percentage on each copy, but enough of a percentage that it’s worth doing. Huge discrepancies are the first to check because those are most likely to be mistakes that don’t lead to an arbitrage opportunity and it’s best to rule them out first. Also, big discrepancies pay the best, so why not make sure you have those on lock right off the bat?

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Another important caveat is to have a sense of which buylists are inclined to not honor the price if it takes you some time to get this deal together. If a site is overpaying on Hammer of Purphoros today and you can buy them cheaper on eBay, I’d leave it alone. They want them NOW. Generally, if you commit to sell them at that price and complete the buylist “checkout” procedure, they’ll honor the price as long as you get the cards to them in a timely manner. This is good news if you’re sitting on X copies of Hammer of Purphoros and they want X- it’s less ideal if you can buy them and have to wait for them to show up. Hammer’s a new card, its price is volatile and the waiting for the copies to come in is a great way to get burned. A few rules of thumb should help you.

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  • Older is generally better. The buy prices are tied to restocking due to the card being sold out rather than there being a run on the card and the price will be ignored by many and honored for longer
  • Rare is generally better. Again with the Hammer of Purphoros example. How many different people have enough loose copies to fill that order in a day or two? Now imagine a store wants to buy an Italian Mana Drain or a JSS foil Volcanic Hammer. Not too many people are sitting on those so you have a chance to find a cheap copy online and ship it – your window is a little bigger.
  • Don’t forget to check eBay if you see a good candidate card! Try a search with a few misspellings- hard-to-find auctions receive fewer or no bids and are a great opportunity to buy for cheap.

Finally, make sure you’re not going to end up holding the bag. If this price discrepancy is most likely caused by acute, short-term demand that is not going to be sustained, you likely won’t have time to flip your copies unless you’re sitting on them already or find them at an LGS. The “Older is better” point is crucial because older cards are less likely to spike due to short-term demand and you’ll find people eager to sell out. This gives you time to find cheap copies online and ship them out- this isn’t something you can do when a dealer is paying $3.50 on Burning Earth due to an emergency and you can buy copies cheaper than that on Cardshark. That’s a scenario where you likely end up with a lot of copies of Burning Earth to try and break even with because someone else shipped them faster. Don’t forget, dealers don’t want infinite copies of everything- they will almost always state how many copies they want, and when they have that many, the price goes way down.

Once you do this a few times, you’ll get a decent feel for which opportunities are good ones and which are bad. You will also get a feel for which dealers are more likely to be slow to update their list and therefore less likely to drop the buy price while you’re still waiting for the copies to show up. Online discussion forums are filled with feedback from people who ship to buylists and you’ll quickly get a feel for which sites you want to be shipping to. Quiet Speculation and MTGSalvation both have good discussion forums and Quiet Speculation in particular has an entire section devoted to reviews of dealers you should either sell to or avoid. What I can say is that there are a few sites who are slow to update, almost always honor their buy prices and frequently pay the best (overpay, since we’re talking about arbitrage, here). You’ll ferret those out right away.

Armed with these instructions, you’re now ready to go try and scoop some “free” money. It’s not really free- you have to buy cards up front, hope the buy price is the same when you get the cards, do some leg work and a lot of research. It’s also easy, not that time consuming and a good way to spend your time at the computer or killing time on your phone. Account for the breakage associated with shipping costs by placing decent-sized orders (sites that undersell for one card will have other cheap stuff to mitigate the shipping costs, sites that overpay tend to pay well on other stuff, too), don’t wait too long to get stuff in or ship it out, watch out for stores that don’t pay in a timely manner or honor their buylist prices, and learn how to use the tools we’ve provided. I know you’ll have some fun, and if you have any questions about the process, let me know. I’m here to help.

3- In Which Tips Are Given

  • Master of Waves is really making waves at the PT. Regardless of whether the card is actually good, you’ll want to watch what it does this weekend. If there is hype, you’ll want to sell into it, and scooping any copies under $7 right now if you can find them is a good way to be prepared. The consensus is that there is low downside to buying in under $7.
  • You’ll want to watch all of the PT Dublin coverage. A lot of aggro cards spiked as a result of the two SCG Opens of the new season of legality. Pro players in Dublin are more likely to make control cards spike, so stay glued to coverage. Ashiok could spike, Elspeth could move, Detention Sphere could leap up. Also, all of those cards could really take a big hit if they don’t perform. We saw the aggro spikes already- watch Dublin coverage for everything else.
  • Speaking of Dublin coverage, any aggro-type cards that are moving upward already will really benefit from success at the PT. Did you buy Advent of the Wurm? This could be the first chance it has to see real upward movement, and a huge spike could make it a good weekend to sell. Monday morning everyone will be trying to build PT decks. Be ahead of them.
  • What was the deal with Beetleback Chief this week? Generally an unexplained spike like that is something to ignore unless you can figure out why the card spiked. In this case it seemed like there was nothing to back it up and the card is back down already. Sell into the insane hype in cases like this. People who bought Chief at $2 or $3 thinking they were smart are going to lose money, here. People who had copies lying around and sold to those people are laughing all the way to the bank. Remember- sell into hype, don’t buy into it. If you were able to buy chief at $0.50 you may be ok because price memory should see the new price stabilize a bit higher.

All this talk of Beetleback Chief leads nicely into a discussion about the “Greater Fool Theorum” which would be a great discussion for another day.

Were you hoping I’d cover something I omitted? Hit me up on Twitter @JasonEAlt or message altjason17@gmail.com and I’ll be all over it.

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