All posts by Jason Alt

Jason is the hardest working MTG Finance writer in the business. With a column appearing on Gathering Magic in addition to MTG Price, he is also a member of the Brainstorm Brewery finance podcast and a writer and administrator for Brainstorm Brewery's content website. Follow him on twitter @JasonEAlt

The Greater Fool Theory


“Jason” people are always asking me “why are your finance articles so boring and heady when your articles over on Quiet Speculation are so fun and so closely resemble fart jokes?” I honestly don’t know how to answer that. I suppose my goal with this series is to delve a bit into some of the things I’ve learned over the years and write a serious article series just to keep people guessing. After all, isn’t that the greatest possible fart joke there is?

Joking aside, I want to launch into a topic that may help you not end up making poor investments in the future. I think there are two types of speculators in the markets, and both are essential to the process. You want to be one of those kinds of speculators and the other kind you do not want to be. At all. Let’s name the two kinds up front and then talk finance.

The first kind of speculator we will call an “Initiator”. If that term sounds somewhat arbitrary I want to assure you that’s only because it is. It’s totally arbitrary. I have a great name for the other kind of speculator but I had to just wing it for this one. I hope it sticks. It certainly sounds cool – you want to be an “Initiator” don’t you? Sure you do. Initiators initiate things. They take initiative. You want to be both of those things.

The other kind of speculator has a few different names. One of them is “bagholder”. Is that equally evocative? I hope so- you don’t want to be a bagholder. Bagholders are trying to sell Master of Waves for $14 on TCG Player right now and no one wants them. Bagholders are pretty upset about this because they bought Master of Waves at $15 when it was on its way to $25 and they thought they were pretty slick. They saw the price going up and thought “hey, me too!” and now they’re struggling to only lose a dollar on the hottest card of last weekend. What happened?

Well, put simply, they didn’t take the initiative. There is a theory in economics that helps us know when to buy and when to sell a card like Master of Waves that seemed like it was on its way to $40 just one short week ago. It’s the eponymous “Greater Fool Theory”

On a market gone mad

A lot of people watched the coverage of Pro Tour Dublin and thought “Wow, that Mono-Blue devotion deck looks incredible”. Thassa shot up from $12 to $25 overnight. Nightveil Specter went from bulk to $5, and Tidebinder Mage shot up from $1 to $6 at its peak. Team Starcity was all over those cards and raised their prices. When that happened, all hell broke loose on the markets. There was a sudden run on those cards. Many stores cancelled or modified orders because they didn’t want to “lose” money selling into such a price disparity. They were perfectly happy getting $1 for Tidebinder Mage 24 hours earlier, but that’s another article. Master of Waves went from $5 to $10 to $15 to $20 to $25 some places in a ridiculous frenzy of buying over a 48 hour period. If you saw that they were $20 most places and $25 others, you were smart to buy in at $12-$15 if you could, right?

And since the prices were rocketing up so quickly that many sites didn’t have time to register the increments between $5 and $20, who on earth was selling at $12-$15?


On history repeating itself

Let me explain. I watched coverage like everyone else, but while many saw the next Jund, I saw the next UW Geists. When Dark Ascension came out, Huntmaster of the Fells was not a card anyone was excited about. It seemed like a durdly werewolf that took a lot of effort to flip back and forth and it wasn’t obvious where the card fit in. At the first few events where the set was legal, the card started to prove that even a small amount of advantage in the form of a wolf and some life made the card worth playing, but at the Pro Tour, no one was talking about Huntmaster of the Fells because Jon Finkel had broken the format.


Finkel took third place with a Delver of Secrets deck that utilized Dungeon Geists, Drogskol Captain, Phantasmal Image and Lingering Souls. The Drogskol Captain kept them from being able to target your Phantasmal Image and kill it, so you could either copy their best creature or make a bunch of copies of Dungeon Geists and keep their creatures tapped forever. The deck was all anyone wanted to talk about. The prices for Phantasmal Image, Dungeon Geists and even Drogskol Captain went up precipitously.

However, the deck would not rule Standard forever as everyone had anticipated. By early March, jund midrange and other Huntmaster decks were running roughshod and Delver decks took a different tack, dropping the durdly Dungeon Geists for more spells. A deck that took a PT by storm, was designed by Jon Finkel and looked invincible was nowhere to be seen.


It was with this in mind that I watched the coverage of Pro Tour Dublin and by Saturday morning, every copy of Nightveil Specter, Tidebinder Mage and Master of Waves I had were gone.

The greater fool theory

The greater fool theory is an economic theory that says, basically, that in a situation where the price of something is not driven by its actual intrinsic value (which isn’t $5 for Master of Waves but also isn’t $20) but by expectation and speculation, irrational buyers will set the price. Therefore irrational buyers will justify purchasing at a price that is above its likely intrinsic value by theorizing that someone even more irrational will come along and buy it from them. They are buying to sell to a greater fool than they are.

There is a problem with that. You’re taking a sure thing, like Master of Waves tripling and betting on something less sure, like Master of Waves quintupling. If you bought into Master of Waves around $5 (something I didn’t think was a good idea so all my copies came from packs) you had two choices. You could sell to a fool for $15 or hope to make $20.

However, fools had a much broader range of choices. They could buy in at $10 and hope their order wasn’t cancelled (good luck). They could buy in at $15 and hope to sell to a greater fool. They could buy in at $20 and try to trade them out at $20 when they arrived. They could stay out of it entirely, and if they had any $5 copies, they could hold onto them.

Why you sell at $15

Who is buying at $5 and $10? These are the Initiators. They either predicted the trend and bought at $5 or they saw the trend beginning and bought at $10. They took initiative in recognizing potential, and they initiated the precipitation of the price with their buying activity.

Now, the easy way to answer “Why do we sell at $15?” is to simply ask “Who is buying at $15?” Bagholders, that’s who! If people were able to sell at $15 that means people were buying at $15. Now, some of those were people intending to play with the cards, and in a sense they were kind of savvy since they bought the card before it hit $20 and therefore virtually made $5. But given the card’s eventual settling at $12, they virtually lost $3. The people who weren’t intending to play with the card and who bought in at $12-$15 thought they were being smart. You probably think they were being smart, too. After all, $25 wasn’t an unreasonable goal for the card and buying a $25 at $12 is 100% profit, right?

Not so fast. Let’s bring this all full circle. It may seem like those bagholders were buying into a guaranteed 100% profit, but they were in fact banking on being able to sell to a greater fool for $25. A spec is only worth what you can actually realize when you sell it, any other numbers are purely theoretical. If there aren’t enough greater fools buying the card at $25, did you actually realize a profit? Now, the fools who bought at $15 take less of a bath when the card maintains $20-$25, that’s true. But my analysis was that the Mono-Blue devotion deck was a deck, not the deck, and therefore the hysterical high point of $20 was likely very short-term. I realize I gambled, too, but I picked a wager where my worst case scenario was that I tripled up.

In summary, it’s sometimes best to sell a card like Master of Waves that you don’t feel is going to be able to maintain its peak price for long at a price point where you have all kinds of fools buying, both greater and lesser. Don’t speculate after a card has gone up a few times hoping that it will peak at a much higher price- to do so is to fall victim to the greater fool fallacy and to be left holding the bag.

  • A lot of people in the finance community are saying now is the time to buy Thoughtseize. I can’t agree. MODO redemption has not kicked in yet. MODO redemption is going to inject more copies into the market, diluting the supply. This will mitigate the demand for Thoughtseize in two ways. It will either lower the price or it will not be enough to bring it down. Injecting more copies is not going to ever bring the price up so you can only benefit by waiting. When the MODO redemption copies start to hit the market, if the price does not go down, buy. If it does, wait for it to go back up a smidge and then buy. You only benefit by waiting.
  • M14 is about to be completely forgotten. Redemptions have slowed and boosters are not selling as briskly. This may be the floor for Mutavault. More mono-colored decks means people can get ballsier with their manabases and Mutavault is seeing play. This is an eternal-playable card and this is the cheapest they’re likely to be, ever. A reprint is extremely unlikely.
  • I think the weapons are bad specs. Yes, I realized this after I bought a big pile of Hammer of Purphoros. Thanks for reminding me. Even as nutty as Bident is (in that one deck), it’s likely to be a 3-of max and more likely a 2-of. Couple that with it having been a giveaway card and the other weapons being in pre-cons and you have a recipe for price stagnation.

That’s all for this time. Join me next time where we’ll discuss the Keynesian Beauty Contest.

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

 1-In which skepticism is admired

What I think all of us here at 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?

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.

  • 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 and I’ll be all over it.

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Tools of the Trade

By Jason Alt

EDITOR’S NOTE – Check out the “Free Money” Arbitrage Tool after reading the article!

Confession time- I’ve never really written a finance article.

I came to that realization very recently and it floored me. How is that possible? I’ve been writing articles for Quiet Speculation for almost two years and Gathering Magic for over a year, but I’ve never really written a finance article.

I’m also the cohost of what basically amounts to the only M:tG Finance Podcast in existence and have been doing that for over a year, but when you actually take a look at the work I produce, I’ve never written what I would consider an article about finance. Bear in mind, this occurred to me after I accepted an offer to write a finance article. Make no mistake, I’m comfortable writing articles and M:tG finance is absolutely my wheelhouse. I was just worried that I wouldn’t know what to write about.

I asked Ryan Bushard, who, for those who don’t know is my podcast co-host, an accomplished writer in his own right, and a close friend, “What do people want out of a finance article?” He didn’t think about it for more than a few seconds before he said “People want to know the easiest way to make more money.” I waited for him to elaborate, and when he didn’t, I realized that it was distinctly possible that, truly, that’s all there is to it.  That may sound like an oversimplification, but isn’t it the truth? And if you don’t know how to make money, telling other people how to do so is an impossible task, no matter how simplistic it sounds.

Readers, I do this for a living. I write articles, I podcast and I engage in the business of M:tG Finance. I don’t have another job right now. I’m not sure I want one. Today I restocked the case I rent at my LGS, traded with some friends at another shop, wrote a newsletter and spent some time answering questions on reddit and in the QS forums. I got a lot done, but it’s not exactly what anyone would call “hard work,” but I still put in a full day. Since I don’t have another job, it’s necessary for me to have a lot of revenue streams going at once.

“What about those of us who don’t have as much time to devote to this?”

I’m glad I pretended that you asked that, because those of you who feel that having another job puts you at a disadvantage are actually not as disadvantaged as you may think. You have the luxury of engaging in M:tG Finance for fun. And let’s not kid ourselves- it is fun. Correctly guessing a card’s going to go up and being ready with a binder page full of them, dumping your copies of a card right before it tanks, having your good idea validated feels great. Best of all, I have a few passive revenue streams in place and you can do the exact same things, devoting a few mere hours a week to it and reaping the benefits. I’m going to teach you techniques I’ve had to learn out of necessity and who you how you can apply those to your own situation to meet your financial goals.

My hope for this column is to show you the “tools” I use on an everyday basis to make this children’s card game do some serious work for me. I’m going to avoid talking about individual cards and there is a good reason for that. It’s not because I’m afraid to be proven wrong- Listeners of the podcast and readers of my weekly columns will know that I do quite a bit of naming individual cards each week and absolutely love it if I am wrong about a card but can learn from it. No, the reason I am going to avoid it is because I want to focus on teaching you techniques so you don’t have to wait for my article each week. When the Banned and Restricted list updates, you won’t need me, you’ll know what to do. If you identify something that seems incorrect in the market, you’ll know what to do. If you see an opportunity for arbitrage, you’ll pounce.

Folks, I don’t need to tell you that we live in an age of Marvels. That device in your pocket that you use for sexting and playing Candy Crush has a more powerful processor than all of the combined processing power in the first manned craft that landed on the moon. M:tG Finance is an up-to-the-minute game, and the internet brings us unprecedented access to cards, to data and to information. The place you connect to the internet is the primary place you’ll be engaging in M:tG Finance, but it doesn’t have to be the only place.

Over the coming weeks I aim to teach you about the ins and outs of all the revenue streams I have established, define some commonly-used (and sometimes commonly-misused) words in the financier’s vocabulary so that everyone is on the same page and to teach you to recognize when there is financial opportunity and pounce before someone else does. I realize that was a pretty long preamble, but I feel like it’s important for you to know what to expect out of me each week.

Since I have your full attention, I would like to start out by defining a term I used earlier and talking a little bit about what it means, how it can work for you, and how you can utilize the software developed by MTGPrice to identify the opportunity for it and cash in before anyone else notices.

The term is arbitrage.

Ar-bi-trage  noun  \ˈär-bə-ˌträzh\

business : the practice of buying something (such as foreign money, gold, etc.) in one place and selling it almost immediately in another place where it is worth more.

Markets are getting more efficient, that is to say they are getting better at correcting by themselves, correcting faster and avoiding discrepancies. However, anyone who has ever been to a Grand Prix or even a large PTQ knows that the more dealers there are, the more chance of mistake, discrepancy or inefficiency there is. Since the price of Magic cards changes by the minute, unless every card priced by every dealer is re-priced every minute, also, prices are going to be wrong at some point. That sounds obvious, and before you pat yourself on the back too much, think about how often you try to exploit that. Is it something you look for? When was the last time you took advantage of a mistake or discrepancy to make money?

When you really sit down and think about it, it seems like it would be very difficult to pull off. The biggest, most obvious discrepancy is the difference in price between the major online retail sites. Some sites sell cards for much more than others, but you could hardly buy cards from a cheaper site and then sell them at the price commanded by the more expensive site. You’re not in a position to do so. You have to play to your outs, and your outs as an individual are limited. Likely you will sell on eBay or TCG Player, you’ll sell to a buylist, you’ll sell at a retail location if you can or you’ll out on Puca Trade or MOTL or something like that.  However, a large enough discrepancy can be noticed and exploited immediately.

The lower in price a card is, the less significant the dealer’s margins are. 40% on a Mox Jet is significant. 40% on a Merfolk of the Pearl Trident is not. If a dealer wants people to sell to their buylist, they’ll pay close to 50-60% of a card’s value in most cases. Sometimes they will pay more than that, and that is where you have arbitrage opportunity. If an established retail price is a certain value, and a dealer decides to pay, let’s say 70% because he wants them in stock, you’ll often be able to find that card for 50-60% of the established value provided the value is a little inflated or the card is underutilized. At the time of writing, but perhaps not the time of publication, there are several cards that have a negative spread. Spread is the difference between the lowest sale price and the highest buy price; the lower, the better. A negative spread indicates an arbitrage opportunity.  The highest buy price is actually higher than the lowest sale price. The best thing about a trusted buylist source is that they will honor the price they were asking when you complete your order and commit the cards to them, even if the market corrects in the mean time. That means you can scoop $0.25 copies of a card and ship them to a buylist who will pay you $0.45. You make twenty cents per copy, which doesn’t sound great. However, that is twenty cents per copy on as many as you can buy quickly and have bought from you, and it is mere seconds of work. What if you only made $10. Was it not worth doing if it took under a minute? I discover and exploit an arbitrage opportunity on a weekly basis, and often I was going to send cards to that buylist anyway.

It’s even easier at a Grand Prix where one dealer is paying a certain high price on a card in order to get them in stock, blissfully unaware that another dealer is selling them for less than that in an attempt to draw customers to his booth. You can make actual money walking copies of a card from one booth to another.

I need to wrap this up. Now that I’ve established who I am and talked a bit about the concept of arbitrage, I hope to return in a week or two where I can discuss how to identify opportunities for arbitrage as well as how to cash in on them quickly before the market corrects or the buylist lowers. I hope you’ll join me.

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