Colorless Transparency

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(Credit for the cover photo alterations goes to Sean, @SeanOhhhh on Twitter.)

So, uhhhh… how about that Jace, eh?  Actually, I really don’t care about the card. I’ve never even owned an Origins Jace, and I certainly don’t plan on buying in at $80. You’ll hear about the mono-blue mind master in much more detail from several of my colleagues this week, so let’s move onto something much more interesting.

Something Much More Interesting

You know what? Let’s check out “today’s most interesting cards” from this past Monday, because that sounds like a fun day that I definitely picked at random.

nointerestingcards

Oh, darn. According to my ProTrader email, nothing interesting happened that day… OH, WAIT.

spawnsire today

spawninterests

So that finally happened, although I don’t think it’s a coincidence that last week’s article was literally all about Spawnsire of Ulamog and why I thought it was a good spec target at $3. When I wrote that article, the card had crept up to $4, and I even advocated *not* buying in anymore if you were trying to make a profit. Parroting last week, buying in at $4 means that you’re hoping for the card to hit $8 or $9 before you can start to see worthwhile and noticeable margins. As a personal rule, I don’t buy unless I’m confident in my ability to at least double up.

As you can see by the pictures and timing of the whole thing, my article looks like it was the final stroke required to convince some number of people to buy the last 30 or so copies that were available on TCGplayer, and the half dozen left on eBay. I seriously doubt that these people are going to make any money, if it’s any consolation to you.

My hope for the rest of this article is to show two things. First, I want to be as transparent as possible about all of my suggestions to speculate on Spawnsire, be clear exactly where I made money, when and how I bought and sold each of my copies, the areas where I went wrong, and how I would change my approach in the future. Second, I want to explain the concept of the greater fool theory, a topic that Jason Alt first intertwined with MTG finance a couple of years ago back when Theros first came onto the scene. It’s been a little while since then, so I’ll provide a refresher.

Time Warp

Alright, let’s take a trip down the magical mouse-wheel and scroll back to about five weeks ago.

Pucaspawn

August 30 was the first time I mentioned Spawnsire on Twitter. I subsequently grabbed a dozen or so copies on PucaTrade, because I very rarely buy into a spec target with cash. Most of my “speccing” comes from buying large collections or lots of singles at buylist or below, and setting aside the cards that I’m anticipating will go up for later. While I don’t always get the quantity or card that I’m specifically looking for by using this method, I’m almost guaranteed to not lose money in the long run if the end result is different than my vision.

spawnsire3x

foilspawnsires

Fast forward to September 4. I noticed on my daily check of the MTG Stocks interests page that the foil version of Spawnsire had doubled, seemingly out of nowhere. I didn’t own any foils, but I did see that the non-foil was still hanging around the bottom of the interests page. At this point, I was very confident that the card was primed and ready to spike within a couple of days, following the trend of the foil.

I bought the copies that you read about in my article last week from Star City Games, because I saw a perfect storm of reasons to pick them up there: SCG was the cheapest place to buy, I could get 36 copies at once, and I was guaranteed that they would ship. I continued to check the stock on TCGplayer for several days, and it continued to teeter anywhere from 33 to 50 sellers at any given time. There were stores listing new copies, and then they would get eaten up, although I’m not sure if that was the work of non-competitive players looking for their copies, or speculators following the feed of information that I was providing.

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Spawn3

And here we are about a week after I bought my copies from SCG. Unfortunately for me, they simply restocked another 40 SP copies a day or two after I cleaned them out, so it meant that there were still a lot of casual players who would need to pick up their Spawnsires at $3 to $4 before I saw any sort of profit. I didn’t want to buy anymore than I already had to force the market to move. Getting rid of 50 copies of a casual card that was likely only a one- or maybe two-of of in a deck was hard enough, so I held back.

In hindsight, I should have also tweeted here that SCG still had 40 copies in stock.  I focused too much on the TCGplayer and eBay stock affecting the price, and should have tweeted back on the 13th that SCG still had a bunch of copies, and that they were probably the place to buy them if you needed Spawnsires to play with.

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That was my last tweet before the last of the supply on TCGplayer and eBay disappeared on the evening of October 5. I really wish I had written my last week’s article three weeks ago so that it didn’t coincide with the actual release date of Battle for Zendikar. I would be interested to see if Spawnsire’s available supply decreased at a similar or identical rate without my article, simply because of the set release allowing casual players to get their hands on Battle for Zendikar and start crafting their Eldrazi decks.

Similarly, I wonder if my article would have been enough of a match in the powder keg to spark a buyout three weeks ago, without the set being released in the same weekend. As things played out, though, I think it was the combination of both factors that made the buyout happen. Now, let’s take a look at what I did that night as a result of the buyout, regardless of who bought the copies that started it.

VICTORY

This screenshot was taken on the night of October 5. As you can see by checking your own TCGplayer mid prices, Spawnsire has settled since then at around $6 to $7, right where I was hoping for. Immediately after I noticed this jump, I went to TCGplayer and listed my own copies. I put up 37 NM copies for $6.99 (if you’e been keeping track, I only got 15 or so NM copies from PucaTrade. I graded all of the 35 SP copies that I got from SCG, and I personally felt that almost half of them were NM. SCG’s grading system is extremely rigid). I also put my 17 SP copies up for $6.49 and crossed my fingers.

While I waited to get lucky and hopefully sell some Spawnsires into the hype, I went to SCG to see if they had been bought out as well. Did the instigators of the buyout really grab all 40 of SCG’s SP copies? Well, not exactly.

spawn7

SCGpostspawn

While the cheapest copies of Spawnsire on TCGplayer were my own at $6 to $7 and eBay was completely empty, SCG still had 40 SP copies on their website sitting at $3.35 each. Huh. While this is definitely a risky move and I wasn’t sure if I would be able to sell all of these, I felt that I would be able to slowly move them on TCGplayer or through trades at $6 to $7 a piece, eventually making a strong profit. It would take a while and tie up my money, but I didn’t really put a lot of time into thinking about it. I was concerned that someone else would snap them up before I did, so I hastily jammed them all into my card and swiftly made it through checkout.

Ugh. Now I had to move almost 100 of these things. I went to bed that night thinking of strategies of how I would move more than 90 freaking Spawnsire of Ulamogs. Maybe if I got lucky, one buylist would hit $4.50 or $5 and I could just sell them all en masse for a small but safe profit. Facebook would probably be a strong outlet, as there are a ton of non-competitive players in all of the groups that I’m in. I could jam a few in my display case, because I mostly market myself to EDH and newer players out of the store. I’m sure some of them will want to build Eldrazi decks, and slam Barrage Tyrants and Desolation Twins into play with Spawnsire. Hmmm…

Greater Fools

Alright, now we’re almost caught up to present day. I got out of my sports psychology class Tuesday afternoon to check my email, and I was happy to see an email from TCGplayer. I had a Spawnsire sale! The first of many, I’m sure. Although it would be a slow process, I would eventu—

TCGspawns

Uhhhhhhhh…

Well, alright then. Either this person knows something that I don’t, or he has a really weird thing for tentacles. One person bought out all 37 NM copies for $6.99 each, so I suppose that solves one of my problems. Obviously no player buys 37 copies of a single spell that’s not a Shadowborn Apostle or Relentless Rat, so this is a purchaser looking to make money. I’m assuming that this person doesn’t read my articles, because I suggested the exact opposite of what this party did. If you buy in at $7, then you’re looking for Spawnsire to hit $13 or $14 before you sell, and you plan to sell 37 of them at that price?

According to the greater fool theory, irrational buyers will set the price of a commodity when that thing’s price is not driven by its own intrinsic value. In this party’s mind, they’re not the fool. They’re going to sell to some other guy who’s a greater fool.

“I can’t wait to get these 37 Spawnsires, so I can sell them to some guy for $10 each. I’ll make like a hundred dollars because I’ll get approximately $3 profit off each one.” –Spawnsire Sam

The problem here is that you’re assuming that person exists, and that the market will still be as volatile as it was when you bought my copies. I’m shipping those Spawnsires out on Wednesday afternoon, so the buyer probably won’t get them in the mail until Monday. Do you still think Spawnsire is going to be $10 on Monday? Hell, it dropped below $10 already, and it’s probably still going to be $7 when this article goes live on Thursday.

When I bought Spawnsires three weeks ago, I had a choice when I saw the spike happen. I could either sell them immediately by racing to the bottom of TCGplayer (an option that I only have because I had the luxury of having copies in hand from three weeks ago), or I could take a greater risk and try to predict that the price would stay at $10, $11, or predict that it would go to something like $15. The choice I made is pretty obvious: I took the safer route. Move the cards, lock in the profit.

The party buying my Spawnsires had a different set of choices. They could either buy my $7 copies, hoping to sell them for $10 or $15 as soon as they get them in the mail (what they did), or they could stay out of the game entirely. The bus already left the stop, and this guy is trying to take the elevator to the fourth floor of his apartment building and parkour from the top of a roof to land on top of the bus, all so that he can hand out free Spawnsires to all of the little boys and girls. I didn’t feel confident that my copies of Spawnsire would be able to sell at anything above $7. More specifically, I didn’t expect any fools to come along and believe that there would be any greater fools to buy at $15.

Unfortunately, I’m still not out of the woods yet. I have to sell the 40 copies I’m getting from SCG in the next week, and that’s going to take, uhhh… a while. Only one buylist has hit $4 as of right now, and I doubt there will be many that go above that. In hindsight, buying these additional 40 wasn’t the best move, but at least I won’t lose money on the purchase.

End Step

Are you tired of Spawnsire yet? I hope so. It’s been a while since I’ve dissected a spec to such a degree, but it was a lot of fun writing both of these articles. I hope everyone learned at least a little something, even if it was, “Don’t buy 37 copies of Spawnsire of Ulamog at $7.”

Let me know what you thought of my article through Facebook, Twitter, or in the comments section below!

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24 thoughts on “Colorless Transparency”

  1. There’s a difference between speculation and manipulation. Interestingly, what you’ve described falls distinctly under manipulation, and is essentially a fulfillment of everything the average magic players hate in the finance community. When you personally buy out most of the cards listed on the major avenues hoping to catalyze a price jump to cash for yourself, you’re just being a jerk to the people who are creating casual level demand for a card.

    An interesting article, but I can’t say I think your influence or methods are a healty way to participate in the community.

    1. Honest question: Does it make a difference if I only bought cards from one store (SCG) at one point in time (a month ago) before the spike? Even then, SCG restocked another 40 immediately after I bought the 36 copies from them, so I didn’t just constantly spam-buy them out until they were completely empty. I didn’t buy out the 25 different stores on TCGplayer whenever a copy showed up under X price, and my article from last week said (paraphrasing myself here) “Hey, I don’t think you should buy this card if you’re trying to make money anymore. I don’t think it will work.”

      I can completely understand that this ended in a really shitty situation overall. I haven’t actually sold any of my other copies other than that massive order from one guy on TCGplayer. I’m continuously racing to the bottom to try and sell out mine before they stagnate, and if there ends up being no authentic demand then we’ll probably see the price settle somewhere closer to the original price.

      This was my first time I’ve ever pushed a “spec” this far on social media and in my written content, because I saw a sort of planetary alignment in factors that I thought would lead to a surge in authentic demand for the card. I definitely learned my lesson and don’t plan on doing the “buy and hype” combination again, but I think it’s at least worth talking about after the fact of what could have been done better.

      1. The thing is, this isn’t really manipulation. What SCG does is manipulation in a macro sense, but the first commenter was upset over one card? Can the market be manipulated for one card? I suppose so…but it should (and often does) regress close to its original price point relatively quickly.

        1. I need to rephrase…not “can the market be manipulated for one card” but, how much influence does one person have over just one card?

      2. I think zeroflame is making a more general case for the mtg hobbyist against the interests of the mtg financier. Both live in harmony where the former plays and generates profit for the latter.

        Naturally, the financier wants to maximize profit, which comes at the expense of the hobbyist. The hobbyist who can afford the cards is in a good position (albeit slightly annoyed if there was a recent price spike), but the hobbyists without a lot of money ultimately gets shafted.

        I get it, magic (especially competitive magic) is “pay to compete”. I’m not advocating that 12-year-olds have the ability to buy a T1 modern deck after saving up a couple weeks’ allowance. Spawnsire doubling in price probably won’t keep most casual players from an eldrazi deck, but by targeting a casual card you are also targeting an audience that is more likely to include players of a limited financial means. If kitchen-table players are priced out of not-quite-bulk-rares then where does that leave magic as a whole?

        Spec’ing and buying out cards is more and more popular as an increasing number of hobbyists are trying to make money off the game as a third party. This makes a lot of sense for competitive staples since there’s almost no substitute for the best fit in a deck. Spikes already understand that playing a competitive deck is costly. But doing the same thing to casual cards that otherwise have no competitive merit? Some could view that as raising taxes on the poor. To some, this is sacred ground where financiers should stay away.

        I don’t have much an opinion on it since I can afford to play at a competitive level, but it adds an extra hassle since I don’t make enough to not care about a deck staple I need doubling in price.

        1. This is a well-framed and accurate summary. I have no lack of funds to play the games of magic I want to play, but I feel that any attempt at a buy-out for financial spec purposes (like TRYING to force a price hike) on just about any card just because you think you can make a few $ on it seems like it disenfranchises players who are in it for the game, not the money, and I think that’s toxic to the community as a whole. It’s behavior like Johnson’s that disrupts casual players.

          @Douglas Johnson:
          Your intent was to push a price hike on a card that was not forthcoming as a result of organic market interactions, as far as I’m concerned, that constitutes ill-will towards the community. This is entirely distinct from opportunistic or speculative investing, where one looks at trends and tries to ride them. You were intentionally trying to snake money out of cards not from popularity, but due to an artificial scarcity you were attempting to create. Now, you failed to do so effectively, but your intent is why I call this behavior a detriment to the community.

          @f0rceofwill:
          While SCG does engage in some pretty questionably ethical practices, at the end of the day they represent and follow the market in a less disrespectful manner to the playerbase and without the ill-will that comes with this pump-and-dump tactic for moneymaking.

          1. Do you think I’m lying when I tell you that I believed there was organic demand for the card? I felt that it would slowly decrease in stock over the first few weeks of BFZ release, similarly to the trends of the Dragons back when Dragons of Tarkir came out. I did look at the trends for Spawnsire, as I stated several times in those tweets and articles, and saw a steadily decreasing supply in the weeks following my purchases.

            I was genuinely surprised when I sold 37 copies to one individual, because I thought it would take weeks or even months to unload all of the first 50 or so cards that I acquired from Puca and SCG. My plan was to sell to casuals who were trying to make new Eldrazi decks in the wake of new synergies in the set, not maliciously reduce the number of copies of Spawnsire on the internet to zero while non-competitive players were unable to finish decks without buying from me.

  2. Remind my why you spec’d on Spawnsire in the first place? I’ve been reading your posts for weeks and I don’t understand (or remember) why you’ve been so in love with this card. Was this purely a casual spec, EDH???

    I do think you manipulated the market some but that was half the point wasn’t it? You are however stuck with copies of a card that others must believe is not worth the cost. I didn’t do all the math, are you still below your break even point for all these cards and how much do you have to sell before you see a profit?

    And yes, if I never hear of some card I never plan on using and the rollercoaster financial impact it has gone on for a month I wouldn’t be too upset 😀

  3. He said 100 copies @ 3.5…his sale was 270 for 37…also technically profiting he needs to claim taxes on it, if he doesn’t it would be considered evasion…just saying

    I don’t mind people speccing, but writing pieces then going back and saying I told you so seems pretty lame. It also doesn’t teach good mtg financing, and is harmful for the community…I would consider this a pump and dump penny scheme to get rich quick…people that follow this behavior are the greatest fool…or the one at the end and can’t sucker anymore…quite frankly the fact you would call fellow magic players fools as well is not noble…

    I pride myself on being the go to guy to help people get what they want and not dicking them over. I don’t go around say hey I think you should buy this because it’s what everyone else is doing…the true fianceer has their cards in place well before the spikes and doesn’t pump it…they sell their investments then go enjoy a nice cocktail or beer and don’t mention it again.

    I didn’t gain anything from reading this article, except disappointment. It’s also what I get for reading something from a college kid taking a joke of a class called sports psyche…

    My advice take comp sci and get a real job. At a minimum the article was well put together, gl on your future specs…

    1. Are you really delve into ad hominem to support your argument? For your information (so you don’t get your facts wrong the next time you berate my career choices), sports psychology is a completely legitimate field of study, and I’m not even studying to become a sports psychologist; I just enjoy the professor who teaches the class. I am a psychology major, and going into graduate school next year for a focus in mental health counseling. I’m sorry if you don’t consider that a real job, but there’s more to life than computer sciences.

      The reason I wrote this article is because I’ve heard a lot of complaints in and outside of the finance community of a lack of transparency, and financiers hiding what they’re buying and selling. My goal was to be as open and transparent about my purchases and sales, and I apologize if it came off as being a braggart. I’ll go back to articles that focused on Q&A and collection buying, because I had a lot more positive feedback for those.

      If you’ve read any of my other articles (Which it doesn’t sound like you have, based on your comment), you would know that I pretty much never speculate on cards anyway, and almost always write about the ways to make money in MTG finance that aren’t speculating at all.

      Lastly to address your first comment: while I’m not an expert on taxes or the IRS, I’m pretty sure one needs to make over 10k a year or something around there in order to require filing a tax return on their income source. I definitely don’t make that much, so I’m sorry to disappoint you there.

      1. On the contrary, I found this set of articles quite interesting and would appreciate some sort of update in the future (weeks or months from now) detailing how much you sold, your race to the bottom, and overall profit/losses.

        Sticking to articles that only net you positive feedback is boring. What have you learned? A few people thought your methods were shady and unethical. How can you address this in your future writing?

        I also think it would be very interesting to see an after-the-fact spec article where you don’t do a series of articles beforehand. It would be the equivalent of writing only one spawnshire article like, a month from now.

        Props to the anonymous shout-out in Chas Andres’ scg finance article today!

        1. Thanks, this is exactly the kind of comment I was hoping to see. You asked a lot of great questions that I’ve saved and written down for later, and I definitely plan on coming back to talk about this, probably only after I’ve actually sold almost all of them though. I’m sure everyone’s sick of Spawnsire by now 😉 Contrary to what Zeroflame has been saying, there *has* been organic demand for the card; I’ve been selling 1-2ofs for the past week with some consistency at $6.

          As for articles that don’t always show me winning, I wrote two articles a *while* back on this website where I went through my spec box, and pulled out losers that I had given up on and explained where I went wrong.

          http://blog.mtgprice.com/2015/04/16/beaten-by-avacyn-and-ixidron-part-1/

          http://blog.mtgprice.com/2015/04/22/beaten-by-kruin-outlaw-and-kitchen-finks/

          If you find those interesting, let me know 🙂

          Also, I don’t have SCG Premium. Would you mind quoting a paragraph or something from Chas for context?

  4. I don’t understand all the hatred toward Douglas. So he made a profit. So he bought out some stock. It’s not like the people who bought out storm world and re listed them at $800.

    Why insult his degree or business acumen. Do you also get mad at your local game stores that up the price on high demand low supply items like BFZ fat packs or MM?

    I’m mad my specs have not done so well. Best thing I’ve done thus far for short term is buying Kolaghan’s command at the 3-5 dollar point. I’m still sitting on too many copies of Soul Flayer and See the Unwritten for my taste…

  5. @Zero flame

    I dunno if you read DJ’s previous article where he even said not to buy anymore copies bc the ship had sailed on profit. Are you mad because you missed the boat? Again, I argue that he didn’t buy every copy, push for it, and then sell into the hype. He bought a store’s stock, and didn’t touch TCG’s.

  6. @zeroflame

    After rereading your previous posts I see where you are coming from, but disagree on his attempt to artificially do anything. If I think a card is going to go somewhere why would I not buy a bunch of cheap copies? Again he didn’t buy all or even the majority of them, from what I can tell. If I buy all of my local store’s copies of a card thinking it will spike does that make me a bad person when I show up the next week to trade them for higher value after they do spike?

    1. No, it doesn’t make you a bad person, but you’re not writing an article on the internet on a well-read MTG finance board suggesting people speculate on it right after you’ve bought a ton of copies to sell to the “greater fool”. There’s a difference, and it’s huge, I hope you can see that.

    2. The problem is the “ill will” he had towards people in the process. While the reality is that he didn’t buy out most of the copies, he tried to. He wasn’t successful in making it the next storm world, but he intended for it to have a similar (less intense) effect of increasing a card price and taking everyone fool (his words) enough to even listen to him along for a ride at their own expense.

      I didn’t miss any boat on this non-spec, and I try not to base my speculation or buying decisions on car-salesmen level scum. But I also take exception to this being advertised in this article as a positive strategy, because I believe that the more people who engage in this type of behavior the more toxic the MTGFinance community becomes to the MTG community it is a part of.

      1. If I tried to buy out most of the copies, wouldn’t I have gone on eBay, TCGplayer, and then SCG again once they restocked? I literally said multiple times where I expected the demand for this card to come from, and I’ve already sold 10 of my SP copies on TCGplayer as single or 2-of orders to who I assume are casual players, at the new price (oh no, there I go bragging again by trying to prove a point and explain that there was organic demand). How did I encourage people to buy at the new price? I said in the previous article “Hey, don’t buy this card anymore. I don’t think you’ll be able to make a profit.” You’re saying that I tried to encourage everyone to be a fool and buy my copies, when I did the exact opposite. I encouraged other finance enthusiasts to NOT buy in anymore.

  7. As a law grad, the issue seems more about ethics than laws or rules: he did nothing “wrong” (legally)…..what he did do wrong, morally, wasn’t about the speculative activities: it was the comflict of interest and duty, between his speccing interests, and his journalistic integrity, not to use the platform for anything other than bona fide mtg finance writing.

    Had this been about anyone but his own activities, no problem. But here, its a case for mtgprice to decide if this was legitimately and solely in the spirit of writing and being published for its own (and directly related) sake ONLY.

    I love intrigue. I just wouldnt have proferred so much info if i was the writer.

    Well played, sir (from the guy who made the world realise the CORRECT value of a Lego Darth Maul keyring all those years ago…)

    Remember: mtg finance is a small world where we can enjoy the unregulated insider trading world of Wolf of Wall street…..hate the game, not the player:

    Dirty Boxing Forever: this is chess, not checkers!!!

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