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ProTrader, Sigmund Ausfresser, Unlocked ProTrader

UNLOCKED PROTRADER: Advanced Economics and MTG Finance – Part 2

May 4, 2015 Sigmund Ausfresser 16 Comments

Polling is closed and results are in. I am delighted to report that despite the fact that my article last week was untraditional and lacked money-making insights, the majority of readers commented their desire to read part two! This is an encouraging result for me because I truly have passion for this field of exploration. Combining MTG finance, real life finance (“RL Finance”), and economic theory is a niche area that really invigorates me. Glad I’m not alone.

So without further ado, I’ll dive into the second installment of advanced economics and MTG finance.

Where We Left Off

My recap of last week’s column will be brief. If you wish to explore the full background I encourage you to read the piece in full before proceeding to this one.

In last week’s article I introduced the field of Game Theory and explained why I felt Magic card buyouts were an example of a “game”. Then using certain assumptions I concluded that the outcome of the Magic buyout game is comparable to the typical outcome of the Prisoner’s Dilemma. Even though there is a strictly better outcome for the entire population, a non-ideal conclusion is reached due to everyone’s (understandably) selfish motivation to maximize profits.

Despite any efforts we as a community take to combat this phenomenon, I call almost guarantee that the suboptimal outcome will always be reached. Buyouts will continue to occur rapidly leading to a temporary, artificially-high price. This will result in some players overpaying for their copies and other players unable/unwilling to purchase copies at the new, elevated price. A few speculators who bought cheap copies may be able to out some for profit, but the net value across everyone involved isn’t optimal. It would be more favorable if everyone cooperated – purchasing only the copies they needed and encouraging others to do the same – mitigating price spikes and enabling slow, healthy price appreciation.

I used the term “healthy” to describe price appreciation that doesn’t reflect buyouts because gradual, natural price growth is often more sustainable. Many casual cards not dwelt on in Twitter chatter fit this mold. Corbin recently wrote a terrific piece describing why he likes casual play and its effect on finance. This would be one of my favorite aspects; namely the gradual increase in prices driven by natural supply and demand shifts. Avacyn, Angel of Hope comes to mind as a perfect example – the price chart shows a monotonic increase in price over years of time.

On the other hand we have Ragnar, a different kind of casual card that was suddenly bought out on the internet on Tiny Leaders speculation. The result: a $6 card is now a $30 card and players interested in picking this guy up for Tiny Leaders are now stuck between a rock and a hard place. Either pay way too much for a card with very narrow utility or sit on the sidelines and wait.

I don’t think I need to provide any further explanation as to why Avacyn’s price increase will be sustainable and continue further (until she’s reprinted). The jury is still out on Ragnar, however. His price certainly won’t tank – the card is too old and it’s on the Reserved List. But I’m not quite sure players are going to want to pay $30 for him, either. There are certainly other Bant options for Tiny Leaders. I suspect his price drops back down to the $20 range in the next couple weeks, as copies slowly trickle back into the market.

If you want a recommendation here, go buy Jenara, Asura of War. She’s a far better Bant general for Tiny Leaders and she hasn’t been forcibly bought out. Instead, the Bant angel continues to steadily appreciate in price. Barring reprint, she will continue to become more and more expensive as players and angel collectors alike seek out their copy. No one is buying this card out, so you can trust that the higher price is sustainable.

Application 2: Where You Buy

Let’s assume for a moment that you want to play the buyout game. You’ve decided you like the Ragnar spec because there are just so few copies in existence and the artwork is too cool to ignore. You notice the buyout is happening and you decide to act.

What do you do next? Likely you navigate to a well-known website like TCG Player or eBay and buy some copies…you and everyone else. Motivations for using these large sites vary. Some like the large selection and array of sellers. Others simply like TCG Player because they want their purchases to move the market (via mtgstocks.com).

But do you know what happens when many people flock to the same location to purchase their copies of a card? In Prisoner’s Dilemma style, people steal cards out of each other’s cart and cause that artificial price spike. Latecomers could potentially blindly overpay for their copies because of their assumptions that TCG Player (or eBay) is the best place to buy cards. Star City Games, Channel Fireball, and other major retailers also sell out quickly during these buyouts, but at least they go “out of stock” so you don’t end up overpaying.

This is where an advanced economic analysis could be beneficial. Because everyone is prone to “defect” and purchase many copies of a card during a buy out, the price artificially jumps. But do you ever notice that TCG Player is often where a card’s price jumps first? It’s naturally one of the first places most people go.

It’s comparable to a mad dash through a doorway into a room – everyone pushes and shoves their way through, causing significant discomfort with a few unhappy stragglers in the back. What would happen if some people would stop shoving in the largest, most heavily used doorway and instead walked around to the side doors? Those side doors would have far less traffic, making the experience much more enjoyable and less competitive.

Moving back to MTG, this would be comparable to purchasing a hot card from a less-popular website. How many times have you visited ABU Games upon discovery of a new buyout taking place (like during a Pro Tour)? How many people have shopped from Ideal808.com before? Who first visits Cardshark.com, Amazon.com or even Coolstuffinc.com before trying eBay and TCG Player?

I find I have the highest success buying from sites that do NOT use TCG Player as an alternate way to sell cards. Channel Fireball usually sells out with the rest of them because they also sell on eBay. The same is true for Troll and Toad. But ABU Games doesn’t list many cards on eBay or TCG Player, so they often have cards in stock hours or even days after a buyout. Because everyone is so fixated on the most popular sites, these smaller players have copies that remain after a buyout. By walking into the metaphorical room through a less popular side door, you can still get inside the room without any jostling. This is truly the optimal outcome.

And this is the key application of the Prisoner’s Dilemma to MTG Finance. It was my primary motivation for writing on this subject in the first place. By “cooperating” and visiting diverse sites when purchasing cards we can mitigate artificial hype and price spikes. What’s more, we’re more likely to grab the copies we want near the “old” price!

Knowledge is Power

You may be left wondering if this is truly practical advice. You may be thinking “this sounds logical in theory, but it would never work in practice.”

I have plenty of examples that prove that application of this knowledge can lead to profits. I’ll share three.

Example 1) A few weeks ago there was a mad dash on Foil Teferi’s Response. The card was bought out all over the internet, and the only copies still available for sale on TCG Player and eBay were in the $20 range. I sifted through various sites hoping to find copies at the “old” price. I was in luck.

ABU Games still had a few copies for sale, and although they were all played the price was too good to pass up. I pulled the trigger.

Was I able to out these for profit? Indeed. I sold one copy to a friend on Twitter and two copies on eBay. But do you want to know the best out for the remaining copies? I buy listed them right back to ABU Games again…for twice what I paid them!

Example 2) I suppose I should have seen Ragnar’s buyout coming, because it mirrors the earlier buyout of Tetsuo Umezawa almost perfectly.

The Legends rare suddenly jumped from $20 to $40 and then $50, likely due to more Tiny Leaders speculation. Rather than rush to TCG Player and buy copies there, I first went to one of my favorite go-to sites: Card Shark. I was in luck.

I grabbed these two copies the day after the card already spiked and proceeded to sell them on eBay as soon as they arrived. Shopping at less popular sites led to easy profit.

Example 3) The jury is still out on my most recent example, but I am confident this will pay out. Every day I visit mtgstocks.com to view the most active price movers in Magic. And recently the site added a new, foil Interests page. Last week’s foil Interests page looked like this:

Noticing the sudden jump in foil Pride of the Clouds and foil Fumiko the Lowblood, I did my usual, thorough search. Once again I struck gold.

It seems yet again ABU Games was forgotten in these buyouts, allowing me to casually visit the site, add copies to my cart, and make the purchase. I am confident I will be able to sell these for profit in the near future – if anything, ABU Games may up their buy price enough so that I can sell these back to them again.

Wrapping It Up

Game Theory is a powerful field. It predicts so many phenomena in real life, such as nuclear arms races and advertising. It predicts defection when cooperation would be the optimal strategy. Magic: the Gathering finance is not immune to the theory. Buy outs in particular are exercises of the Prisoner’s Dilemma, whereby people rush to buy copies from popular sites, causing unnecessary price jumps. Those too late to the game either overpay for their copies or sit on the sideline frustrated with their inaction.

But there is one way we can “cooperate” and avoid the hassle of the buyout. By searching less popular sites, we are afforded extra time to obtain our copies without the mad dash for profits. Let everyone else rush through the main doorway, causing jams and headaches. We know there are plenty of side doors with no line, allowing us to pull up a chair and watch the circus that ensues. And even if the price jump doesn’t stick, at least you’ve paid the “old” price rather than the rapidly rising buyout price. And who knows? Maybe a buyout will happen again, giving you the chance to move your copies. After all, selling into the hype is definitely more fun and more profitable than buying into it.

…

Sig’s Quick Hits

It’s only a matter of time before Lady Evangela gets the Ragnar / Tetsuo treatment. She’s another old-school Reserved List general option for Tiny Leaders. But for now, she’s not attracting as much attention. SCG still has a few in stock: NM at $12.99 and SP at $11.99. Watch this one closely for potential movement.
Engineered Explosives has really been hot lately. There’s now only 1 copy in stock across the two printings: copies from Fifth Dawn are $10.49 and Modern Masters are $9.69. These will both increase soon, I suspect.
Here’s a penny stock worth keeping an eye on: Retract, from Darksteel. The card is getting attention in some Modern brews. And although I haven’t seen the card in action yet, I did note that Star City Games is out of stock. NM copies are listed at $0.49 and foils at $2.99, but I suspect both numbers to rise soon.

ProTrader, Sigmund Ausfresser, Unlocked ProTrader

UNLOCKED PROTRADER: Advanced Economics & MTG Finance – Part 1

April 27, 2015 Sigmund Ausfresser 26 Comments

By now it’s no secret that I treat MTG investing very seriously. So seriously, in fact, that I compare the performance of my MTG portfolio loosely with that of the S&P 500. And why not? If I’m going to legitimately invest real dollars in original dual lands, shock lands, booster boxes, etc. then it only seems appropriate that I compare the return on these investments with that of other investment opportunities.

But my holistic approach to investing doesn’t stop here.

This week I want to dive into a more advanced economics topic out of the field of game theory by applying one of the most well-known truisms of game theory to our favorite MTG topic: buyouts. That’s right. I believe that we could potentially apply an advanced economics concept to understand something reactionary and emotional in the MTG Finance community. Think I’m crazy? Think it can’t be done? Well, allow me to at least try.

Nash Equilibrium

Before I jump into concept application, I need to establish a few assumptions first. These suppositions are not very far-fetched, so I don’t think you’ll have difficulty accepting my thesis because of these assumptions.

First, let’s assume that when a buyout of a certain card occurs, everyone attempting to purchase the card does so “simultaneously.” That is, when we’re ready to pull the trigger and make our purchase, we aren’t waiting for someone else to take their turn making a decision before us. We click the buttons as fast as we can to purchase the copies we want. And in the meantime, everyone else is doing roughly the same thing. In other words there is no turn taking or prescribed order.

Second, we have to acknowledge buyouts occur in a non-cooperative manner. For example, when Den Protector spiked during the most recent Pro Tour, I wasn’t colluding with others in an attempt to obtain the market price I wanted. No strategy was involved in this regard. I rushed to eBay and TCGPlayer and picked up a bunch of copies as quickly as possible. I may have mentioned my actions on Twitter, but this communication was ex post facto. And even if I had cooperated with a friend, it’s not like the whole MTG community speculating on a card would ever work together – it’s an aggressive business we’re in!

With these assumptions in place, I will borrow Wikipedia’s eloquent definition of “Nash Equilibrium”:

“In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.”

John Nash was the famous economist who developed this theory and later earned a Nobel Prize for his work in the field. You may also recognize the name from the movie showcasing his genius and his struggles with schizophrenia, A Beautiful Mind.

His Nash equilibrium concept describes motivations for people’s behavior when interacting non-cooperatively. (Aside: In game theory, any such interaction is referred to as a “game.” This is not comparable to playing a game of Magic – rather, the game I’m describing is the decision process of where we buy our cards and for how much during a buyout).

If we want to look at the definition of Nash equilibrium above, we can use specific terms to describe MTG buyouts. The first part of the definition describes the “solution,” or the actual outcome of everyone’s buyout decision (i.e. total copies purchased, where they were bought from, resulting price spike, etc). The second half of the definition is a bit more advanced. Essentially, the suggestion is that all parties involved know everyone else’s best strategy. In MTG buyout terms, we need to make one more assumption: the best action at the beginning of a buyout like Den Protector’s is to buy up copies at or near the starting price.

When a buyout happens due to legitimate demand, the card’s price jump is more likely to stick. Therefore, purchasing copies at or near the starting price during a buyout is definitely the best strategy – it makes you the most money! Everyone knows this, and everyone knows that everyone else is also eager to buy those $1.50 – $2.00 Den Protectors before they double or triple in price.

Thus, we say the Nash equilibrium of the buyout is that everyone buys up more and more copies of the card and the price catapults higher. This is the best strategy because those who bought at $1.50 – $2.00 can in turn sell their copies for profit.

Prisoner’s Dilemma

With Nash equilibrium established, I next need to define the crux of this week’s article: The Prisoner’s Dilemma. It’s this canonical example of game theory that I believe can be applied to MTG buyouts in a profitable way. But before jumping ahead, I first need to share another definition. Wikipedia defines the prisoner’s dilemma as “a game analyzed in game theory that shows why two purely “rational” individuals might not cooperate, even if it appears that it is in their best interests to do so.”

Originally framed by Merrill Flood and Melvin Dresher, the Prisoner’s Dilemma is a concept that can be applied to a diverse number of real-life interactions ranging from cola advertisements to nuclear stand-offs. My argument is that this sophisticated game theory dogma also applies to buyouts of Magic cards.

Explaining the Prisoner’s Dilemma is best done by example. The namesake explanation involves two strangers caught robbing a store together. They are brought to the police station where they are interrogated individually. The police do not have sufficient evidence to convict the prisoners of an armed robbery charge – only illegal possession of a weapon, which of course merits a much lighter sentence. So in an attempt to drive out a confession, they offer each prisoner separately the same deal: rat out your friend by confessing, and you will be rewarded with no imprisonment.

What’s the Nash equilibrium in this case? Put yourself in the shoes of one of the prisoners. If you assume your partner in crime is going to confess, then there are two possible outcomes: you don’t confess and take the fall, letting your partner walk freely while you suffer 20 years in prison for armed robbery and lack of cooperation with the police; OR you do confess, earning you and your partner a lighter, yet-still-strict sentence of 5 years in prison for cooperation. Given these two options, your best choice is to confess at least ensuring you avoid an unnecessarily long prison sentence.

Now what happens if you assume your partner is trustworthy and he is going to remain silent? Once again you have two choices: if you also remain silent, then the police cannot convict you of the armed robbery (there’s too little evidence) and you both receive a one-year sentence for illegal possession of a gun. On the other hand, if you confess, your partner would go to prison for 20 years while YOU get to walk away a free person. Given these two options, your best outcome is still to confess, since it means you don’t have to do any time in prison! That’s the best possible outcome for you!

The picture below depicts this interaction in a 2×2 grid.

No matter what you assume your partner will do, the best decision you can make is to confess. And that’s what happens – both prisoners confess netting themselves the five-year prison sentence.

The advanced part of this comes into play when we compare the actual outcome with the optimal outcome. It is undeniably ideal for both prisoners to remain silent – it nets them the least number of total years spent in prison! But because of the selfish assumptions of Nash equilibrium (i.e. there’s little emotional motivation for helping the other prisoner), both prisoners end up with a worse outcome because they do not cooperate.

How does this apply to Magic? I’ll argue there are two applications.

Application 1: Instead of dealing with prisoners and robberies, we’re dealing with purchasing a quantity of a Magic card at a particular price. We’re all faced with the same decision point during a buyout – do you pull the trigger quickly and grab copies or not? The more copies you buy, the more opportunity you have for profit.

In this game, buying up a ton of copies is equivalent to confessing and cooperation involves collusion. How do the outcomes look?

If everyone rushes out and purchases a ton of copies in an attempt to make bank, many participants in this game are stuck paying too much. As we’ve seen many times in the past, a buyout leads to a card’s spike followed by a race downward in price as people try to sell their copies for a quick buck. Savor the Moment is a recent example of this trend.

Notice how copies are scooped up aggressively starting in the $2.50 range in late March and ending in the $5.50 range, only to see a drop back down to around $3.25 most recently. When everyone decides to aggressively buy, the price jumps too high, too quickly. In these cases many people are left holding excess copies they are unable to sell for much profit because the higher price inevitably leads to a glut of supply as people try to cash in on the spike. Of course, those who don’t jump in with their hard-earned cash are in the worst shape of all. They own zero copies and they are stuck either paying a higher price or waiting for a drop that may never occur (usually the price ends up higher than the starting price but lower than the peak). No one wants to be in this scenario as it’s the worst possible outcome.

So what does everyone do? They all buy up as many copies as they can, sending the price higher and higher! Missing out on the “next big opportunity” is just too painful.

My argument is that this is another example of the Prisoner’s Dilemma. We all “defect” by purchasing a ton of copies while leaving those on the sidelines regretting their inaction. But this leads to a subsequent market glut and difficulty in liquidating copies at a profitable price. I’d argue the best possible outcome would be if the people who wanted copies most purchased the playset they need and those who don’t really want copies just ignore everything. Such cooperation would mean that the people who want copies would get their copies, but those who don’t simply stay away. The price may tick up a tiny bit, but there would definitely not be a huge spike. Then people who decide they don’t want their playset anymore could sell for a small profit and there would be no race to the bottom. And those who didn’t buy before aren’t faced with paying 50-100% more should they decide they want to obtain copies.

To me, this is the very definition of a healthy market. When a card increases or decreases in price it does so slowly and due to the natural shift in supply and demand. Crucible of Worlds is a great example of a card that has never been “bought out,” therefore leading to healthy price appreciation and no huge drops.

Wrapping It Up

So what’s the course of action here? Unfortunately, there is really little we can do to avoid the trap that is the Prisoner’s Dilemma. There’s a reason why both prisoners tend to confess, and Coke and Pepsi choose to advertise, and countries choose to invest in nuclear weapons, etc. etc. It’s not the optimal outcome for the entire population, but it is what inevitably happens thanks to Nash equilibrium.

I think the best thing we can do is at least make ourselves aware of this phenomenon before buying into the next spike. It would be naive of me to believe everyone can suddenly cooperate – it’s against human nature. But if we could at least communicate a little better as a community then perhaps we can soften the blow for those left holding the bag in a buyout. For example, when we make our purchases we could be more transparent with how many copies we’re buying and how much we are willing to pay for said copies. We could also make it public what our strategy is for selling – timeline and desired sell price.

Lastly, we could strengthen our relationships with others throughout the community. One thing Nash equilibrium always assumes is that everyone behaves rationally and in their best interest. Friendships and emotional attachment are disregarded. But of course these things DO exist in reality. By developing stronger ties with the rest of the MTG community, maybe we can all be slightly more sensitive to market manipulation. We’ll never eliminate price spikes altogether, but maybe we can help our friends avoid losing money by buying into the hype too late.

I’m out of words for this week’s column, but perhaps you’ve noticed something. I only shared one application, but I said there were two! In similar fashion to a “You Choose the Scare” R.L. Stein novel, I’ll pose the question to my readers: did you enjoy this topic enough that you’re curious to hear my second application as a Part 2 to this article? Or would you prefer I moved back to more traditional MTG Finance writing? Leave your opinion in the comments section, and we’ll let the majority rule!

Until then, thanks for reading!

…

Sig’s Quick Hits

There’s another reason I used Crucible of Worlds as an example in my article. Nonfoil copies of the rare are completely sold out at Star City Games. Tenth Edition copies are sold out at $30.79 and Fifth Dawn copies are sold out at $32.35. If these don’t see reprint in Modern Masters 2015, there’s no reason they won’t continue to slowly chug higher.
I honestly thought Bosium Strip was a forced buyout that would result in a subsequent price drop, just like my Savor the Moment example. But this has not been the case. Perhaps not enough copies of the card exist for the market to truly be “flooded” by eager speculators. In any event, SCG is sold out of the card at $4.89 and Channel Fireball currently has a buy price of $2.50!
Another card that has healthily grown in price over time is Umezawa’s Jitte. The card has always been popular in various formats where it isn’t banned, but it’s never really in the spotlight. Star City Games has only 3 total copies in stock, with 0 NM copies at a $36.55 price tag.

Sigmund Ausfresser

My Love/Hate Relationship With Foils

April 20, 2015 Sigmund Ausfresser 11 Comments

By: Sigmund Ausfresser

I’ve got a confession to make: I don’t really like foils all that much. Their tendency to bend and become clouded causes me to be extra cautious when handling them. Horror stories haunt me—the ones where players are disqualified for having only certain identifiable cards as foils in their decks. Not to mention nonfoil copies do the exact same things as foil copies in a game of Magic (well, placing Super Secret Tech aside).

So why am I dedicating an entire article to foils in MTG finance? Because the more the game evolves, the more critical it is to include foils in any robust MTG portfolio. To do otherwise could have some detrimental effects.

Allow me to explain…

A Few Case Studies

One significant case for speculating on foils is that they have seemingly limitless upside potential. While this is a bit of hyperbole, there is at least a hint of truth to the statement, especially when it comes to older foils. Something as common as Daze can flounder around the $4 mark for years and years. Yet in 2014, foil copies of the oft-free Counterspell finally cracked the $100 mark. Would that be a sensible price ceiling? You may think so, but the card has still continued its climb!

With a $4 price tag for nonfoils and $126 for foils, we’re talking about a multiplier of 31. How about that for potential upside!

Another point in favor of foil investing is that they often hold their value really well, even in the face of reprints.

Consider a recent example: the Magic 2015 reprint of Urborb, Tomb of Yawgmoth. When this card was spoiled in a core set, the Planar Chaos nonfoil version promptly tanked from $40 to $10—a full 75 percent drop in about a month’s time!

The original foil copies, however, have yet to blink an eye. In fact even the release of a foil reprint in the FTV: Realms set still did not punish this card’s price (though I’ll admit upside is limited significantly as a result of both these reprints).

Still, the point is clear. While nonfoil Planar Chaos copies were dropping 75 percent, foil copies dropped about 30 percent in that same timeframe (not to mention that the card’s price has promptly recovered to near its pre-reprint high in the time since!). This is yet another compelling reason to include foils in a Magic portfolio, especially in light of the nonstop reprints we’ve been facing recently!

The last benefit of foil speculation I want to touch upon has a more somber rationale. Namely, I want to talk about the recent explosion of counterfeits.

A little over a year ago, Chas Andres wrote a terrific piece on reprints and their detection over at StarCityGames.com. Others have also discussed this subject at length. What I particularly like about Chas’s article from January 2014 is that he lists all the cards of which we need to be most scrupulous due to counterfeits. He also included a picture to show what some of the counterfeits look like.

I’m sure by now you know where I’m going with this. I see no foils in the picture above nor do I read any mention of foils in Chas’s article.

Does that mean zero foil counterfeits exist? Absolutely not! I know there are methods of dissecting a foil card, removing a foil layer, and applying it to other cards. But I never hear concerns about such a counterfeiting process becoming rampant. Perhaps the procedure is far too tedious. Perhaps the finished fakes don’t look nearly convincing enough. Or perhaps it’s just plain easier to dodge authorities by sticking with nonfoils. Either way, the fact that you read less about foil counterfeits than nonfoil is definitely a consideration I take seriously.

So Just Buy All Foils?

By now I’m hopeful I’ve convinced you to at least consider picking up some foils to round out your MTG portfolio. If you’ve been hesitant in the past like I have, perhaps the case studies above help you gain some confidence in the endeavor. The data is certainly compelling.

We must proceed with caution, however, because while there are certainly ample positives to foil speculation, there are also a number of real downsides. I would be remiss in my writing if I left these out.

Foils have a tendency to bend and cloud over, so they do require care when handling.
Foils can be a bit less liquid, and the bid/ask spread (the difference between a seller’s asking price and a buyer’s offer) can become a bit wide, causing some small inefficiencies in the market.
Foils are more valuable and fewer in number, so you won’t be able to buy as many copies when speculating.

These concerns are not negligible, and we need to take them into consideration. In fact, these very concerns are what lead me to encourage a diverse approach to MTG investing. In other words, I’m not advocating a portfolio of only foils—I’m merely stressing the importance of including foils in your broader portfolio.

In no way am I encouraging a foil-only portfolio!

So How Do I Proceed?

Not every speculation target should be acquired in foil. Oftentimes foils are actually terrible targets. Cards played strictly in Standard are awful to acquire in foil because there’s often a very low multiplier for such cards. Sometimes when a card is reprinted in foil, previous foil copies develop a lower price ceiling, as we saw with Urborg, Tomb of Yawgmoth.

And consider one of the most painful foil reprints I’m aware of: the FTV: 20 reprint of Jace, the Mind Sculptor. When that card was reprinted in August 2013, both foil and nonfoil copies got absolutely crushed by about 50 percent. Suffering a loss of $100 on the nonfoils was a bad beat, but those who watched their foil copies drop from $1300 to under $600 suffered one of the worst value declines in the history of Magic.

My intent in showing this data point is not to discourage you from foil investing, although you may fee compelled to do so. I’m merely emphasizing that foil investing, like anything else, merits consideration and strategy. One simply can’t buy any foil and expect immediate profit.

How do you go about choosing which foils to invest in? I’ve got a couple suggestions, for starters, and I’m certain there are financial experts who specialize in this area. Jason Alt, for one, has a valuable perspective since he’s so well-versed in EDH—a popular format for foils. Legacy and Vintage experts could also share insights into this matter.

While I don’t claim to be a world-renowned expert in any single format—not even close—I believe I have enough experience to at least recommend a few targets myself. Please take these in stride, and remember to do your own research before committing cash to an investment.

Sigmund’s Top 3 Foil Picks

RTR Block Shock Lands

It’s true that shock lands have not paid out the way many speculators expected, myself included. I continue to sit on superfluous copies of the Modern staples, waiting patiently for any sort of price appreciation. It’s been a difficult wait and I’m losing patience very rapidly.

Foil shock lands, particularly from Return to Ravnica block, have not yielded such underwhelming returns. Consider the chart on foil Overgrown Tomb, the second most played shock land in Modern (after Steam Vents).

No one is going to pay off their mortgage by sitting on foil copies of this card. On the other hand, it’s difficult to ignore the upward trend. I cannot emphasize this next point enough: while the nonfoil copy of Overgrown Tomb is nearing an all-time low, foil copies have appreciated from $25 to $40. So not only are foil copies increasing in price, the multiplier is also increasing. This is a great scenario, because should the nonfoils ever catch a break and go higher, the foil counterpart will jump even more.

Foil shock lands from RTR block are a solid place to have investments right now, and I’m glad I have one copy of each. These should see solid appreciation going forward, as long as they dodge further reprint, and that seems unlikely for now because nonfoil shocks have become so inexpensive—Wizards of the Coast has bigger fish to fry when it comes to reprints.

Cyclonic Rift

The blue instant is everywhere in EDH. Despite being reprinted in Commander 2014, nonfoil copies have maintained a $3 price tag, and they’ve inched up a bit in value lately.

At $10, we’re looking at around a multiplier of three for foils. While this isn’t necessarily screaming “opportunity,” I still really like picking up foil copies in this price range. Assuming the card isn’t banned from EDH, we can expect nothing but upside from foils. It may take time, but these will inevitably climb higher. Only a reprint could undermine this investment, and being so recently printed and reprinted, I can’t imagine we see these again soon. And even if they show up in every Commander set going forward, so what? Arsenal aside, Commander sets aren’t foil!

Tasigur, the Golden Fang

My favorite foil target today is Tasigur, the Golden Fang. I’ve become increasingly vocal about this target because I continue to hear buzz on how good this creature is in Legacy. He’ll never be a four-of, but he has certainly earned his status as “Legacy-playable card.” In fact, one copy even showed up in last weekend’s Grand Prix Kyoto’s Top 8, played by Yousuke Morinaga.

I’ve been acquiring a few foils with cash in the $25 range. And while I don’t intend to drop thousands into this investment, I really like the upside potential of a virtual one-mana 4/5 creature in Legacy. He’s even better in Modern, I hear.

Wrapping It Up

Foils are an unnecessary evil. I don’t like handling them, I don’t like playing them, and I don’t like having to unload them. But I can’t argue with the benefits of speculating on foils. Something like Tasigur, the Golden Fang has only so much upside when it comes to nonfoil copies. I could see them hitting $10 eventually, for example. But with foils, I see so much more potential! And while I’m waiting for these gains, I don’t have to worry about potential Event Deck reprints. No foils there!

All I recommend is that you consider holding a spot in your MTG portfolio for foils. If you’re unsure which targets are best, ask around. The MTGPrice forums are a great place to make inquiries because many of the site’s writers read through the threads there and share their thoughts. And if there’s one thing I learned throughout my experiences with MTG finance, it’s that I trust the experts in their respective fields.

Happy foiling!

…

Sig’s Quick Hits – Foil Edition

Star City Games has three SP nonfoil Academy Ruins in stock from Modern Masters, for $9.79. The reprint certainly hurts this card’s upside potential, but foil copies from the same set are only holding a multiplier of two, selling for $19.99. What’s more, SCG is out of stock of these foils! That seems a bit odd to me, given how popular this nonbasic land is in various formats.
Summoning Trap has been a nonplayer for a while now, but we can’t discount how powerful its effect is. Nonfoils are virtually bulk, yet their foils show signs of life. SCG is sold out of NM foil copies at $4.99 and they have only five SP ones in stock at $4.49. I wouldn’t go crazy here, but in terms of cheap foil pickups, you could do far worse—this card only gets better as more powerful creatures are printed. Eldrazi in Battle for Zendikar block, anyone?
This last one is a bit baffling to me. Everyone knows how ubiquitous Snapcaster Mage is in Legacy and Modern. I even jam a copy in my Tiny Leaders deck. But if the card is played so much in eternal formats, why in the world are foils less than three times the nonfoils? SCG has six nonfoil copies in stock at $56.85 but is currently sold out of foils at $149.99. I see foils occasionally selling for as low as $120! The older these get, the higher that multiplier should grow. And with no Innistrad in Modern Masters 2015, you can be confident your copies won’t see a reprint for at least a year.

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On Pro Tours and Booster Boxes

April 13, 2015 Sigmund Ausfresser 43 Comments

By: Sigmund Ausfresser

Throughout the past few weeks, a number of readers have asked me the same question in different ways. The most common form of this question involves some form of investment in Khans of Tarkir booster boxes and whether or not they’re worthwhile investments. I remained demure on this subject, but not for lack of ability or willingness to answer these questions. Rather, I knew they would merit a lengthy response in order to do them justice.

On the other hand, I would be remiss to neglect last weekend’s events and their impact on the MTG finance market. Pro Tours have a reputation for significantly and permanently moving card prices, and last weekend was no exception.

Therefore, by waiving my writer’s creative license card, I will embark on addressing both topics in this single article. Let’s hope this works.

**Pro Tour Dragons of Tarkir Perspective**

I am choosing to lead with this topic for two reasons. First, the perspective is far more time-sensitive and therefore merits being digested while the Pro Tour is fresh in everyone’s minds. And second, I will be motivated to remain succinct in my analysis.

In fact there are really only a few key points I want to highlight from this event.

The most interesting analysis of the Pro Tour, at least for me, is the list of mythic rares played in the Top 8. This is an objective way of evaluating both which cards were powerful enough to show up in numbers on Sunday as well as which cards have the most upside potential and likelihood to stick. Naturally, I’ll focus on cards from Khans of Tarkir block since they have the longest remaining time in Standard. Below is a list of the mythic rares showing up in the Top 8 along with their MTGPrice.com prices as of Sunday morning (note that prices are likely to shift over the course of the day).

Whisperwood Elemental ($13.13) – 8 copies
Dragonlord Atarka ($13.48) – 7 copies
Ugin, the Spirit Dragon ($33.04) – 6 copies
Dragonlord Silumgar ($7.88) – 4 copies
See the Unwritten ($4.11) – 4 copies
Dragonlord Ojutai ($17.99) – 2 copies
Shaman of Forgotten Ways ($6.14) – 2 copies
Pearl Lake Ancient ($1.24) – 1 copy

Based solely on the numbers, I see a few trends leaping out at me screaming “opportunity.” For starters, if you’re sitting on copies of Dragonlord Ojutai after the recent run-up, I’d recommend selling. The card will certainly remain relevant in Standard, but there are some other Dragonlords I’d rather have my money in at this time—namely, Dragonlord Atarka and Dragonlord Silumgar. These are my preferred targets—Atarka in trade, and Silumgar possibly in cash at the right price. Both are cheaper and showed up in larger numbers in the Top 8. [Editor’s note: Sig was right on, and these have already spiked a bit between his writing and our publishing of this piece. Buying in now may be ambitious, but the logic for why he was buying at the old price remains intact.]

Whisperwood Elemental is already a $13 card, but showing up with two full sets in two separate lists certainly merits a closer look. I would advocate buying, except the recent price trajectory on this card is surprisingly negative. Perhaps it’s experiencing downward pressure because so many key cards in these decks come from Theros block? Perhaps the card was overbought and is now only settling at a more realistic price? Either way, I’ll maintain a hold on this one.

Ugin appears overpriced to me, but I’m generally biased against $30 planeswalkers. The card did show up in the most number of Top 8 decks, but usually as a one- or two-of. Nobody is going to jam a full set of these, and I believe this severely limits the upside potential on Ugin. If he wasn’t such an iconic card, he would easily be $20. As it stands, I’d pass on these. But I can’t blame you for holding since this is a popular mythic rare planeswalker from a smaller set. If nothing else, Ugin will remain liquid in trade binders.

I’ll skip over Pearl Lake Ancient—I’m not falling for this one again. Shaman of Forgotten Ways made an intriguing appearance, but I’m not moving in on them based on this performance. And even though See the Unwritten made a rewarding appearance for those speculating on the cheap mythic rare, I’m likely to skip over the trend. Though I’ll admit the Top 8 appearance does legitimize the card to some extent. I wouldn’t be surprised if it trends higher from here, though how high is tough to say.

Before wrapping up this analysis, I wanted to mention a rare card I bought into at the start of the weekend, which put up zero copies in the Top 8: Den Protector. Clearly the newest version of Eternal Witness caught the eye of speculators, since it more than doubled in value over the weekend.

What’s my take on the card knowing that it didn’t Top 8? I’m still optimistic those who bought in under $2 will make at least some profit. But I don’t see this going above $5 in the short term. I’d advocate selling copies you have in hand immediately with the hope of moving copies still in the mail rather quickly as well. Even if the card is as strong as some pros were indicating, the large set rare has a fairly low price ceiling unless it suddenly defines an archetype in Standard, a la Courser of Kruphix or Sylvan Caryatid. That being said, perhaps after rotation it will get a second wind. That’s a gamble you’ll have to accept if you choose to sit on copies through rotation. I’m not sure if I want to give up profits today to make that bet, but selling half now and half after rotation could be a balanced strategy.

Of course, there are dozens of other cards worth discussing. There were numerous rares from Khans block that showed up in the Top 8 of last weekend’s Pro Tour. But I can pretty much guarantee my article won’t be the only one to review the event’s metagame. Therefore, I will allow my assessment to remain fairly short and incomplete, in the hopes that the objective look at mythic rares at least provides a unique perspective of this highly covered event.

Sealed Booster Boxes

I’m eager to discuss this topic because it strikes close to home. Before sharing my recommendation, I want to first tell a story.

It all started about four years ago…

My spouse and I were on a weekend getaway in coastal Maine, when we happened upon a hobby shop on a stroll through town. Naturally I couldn’t pass up the opportunity to browse their Magic selection for deals. Most of their singles were fairly priced—no jackpots there. However, the store did have a couple remnant packs of Unhinged at a favorable price. The basic lands were already gaining traction and worth a couple bucks, and foil cards from Unhinged could randomly be worth big money. After endless deliberation I decided to roll the dice.

The contents of those packs were not as impactful as the ensuing thought process. At this point in time, Unglued booster boxes were already selling for $300 or more. Yet Unhinged boxes were selling for much less—well under $200. The light bulb went off. Unhinged wasn’t printed a ton, the game had grown significantly since Unglued, and the chance at getting foil full-art basics buoyed demand for sealed Unhinged product significantly. Still being fairly conservative and working with a limited bankroll, I made a move and purchased two boxes. They sat underneath my bed for months.

During this time, the price of Unhinged booster boxes skyrocketed to $300. I rang the register for a sizable profit (and of course, these readily sell for around $500 today).

This is when the gears started turning in my numbers-oriented brain. Could other sets have similar upside? Do all booster boxes rise in price over time simply because supply steadily dwindles? I set to work, researching the price of all boxes on eBay and Star City Games. As it turns out, a booster box from every single older set, with a few exceptions, increased in price over time. And those that didn’t were fairly obvious: certain core sets, Nemesis, and a couple others. And who would have wanted to invest in those boxes anyway?

The pattern turned into a realization—buying boosters boxes could yield almost guaranteed returns over time with minimal investment. Cha-ching! I began my shopping spree. Boxes of Coldsnap, Zendikar, New Phyrexia, Onslaught, and more all went under my bed. Usually it was only one or two boxes of each, depending on my level of confidence in each one. All of them appreciated nicely and yielded significant profit (and were all sold…prematurely).

Sometime during this endeavor, I decided to go deep on the set I was most confident in. It had already begun gaining traction in price and with such powerful eternal staples in the set I just knew it would take off. The set in question: Innistrad. At my peak, I had more money invested in Innistrad boxes than I had in certain stocks. It was a legitimate investment.

Impatiently, I watched prices rise. I tracked progress in a spreadsheet, noting small increases or decreases in the position’s value based on recent market prices. The inevitable climb ensued, and the prices of my boxes went from $145 (my average buy-in price) to $200. A delicious 38 percent gain. Surely I should have been singing and dancing, right?

Absolutely not.

A few realities set in. First, I had to overcome the illiquidity of older sealed booster boxes. It may come as no surprise to you, but I was severely disappointed with how difficult it can be to actually move these boxes at market pricing. Sure, people would offer me $170 on sites like MOTL, but I couldn’t bear to give up boxes for over 10 percent off fair pricing. It seemed that no one would be willing to pay $200 for the boxes unless I sold them on eBay.

The next issue was the timeline involved. I sat on these boxes for about two years and in this time I saw this 38 percent gain. I suppose profit is profit, but the opportunity cost of sitting on these boxes was brutally steep. Heck, I could have spent the same amount on foil Snapcaster Mages or Liliana of the Veils from the set and reaped a much larger return on investment for my money.

The booster boxes almost acted like an index fund for Innistrad. So while foil Snapcaster and Liliana more than doubled in value, boxes continued their slow and steady churn upward. Instead of honing in on the eternal staples in the set, I bought boxes, thinking the eternal staples would help drive box prices higher. It was naïve of me to not simply speculate on the top cards themselves.

The worst part of this whole endeavor was the cost to unload this product. I had to price my boxes competitively on eBay in order to sell them. Then I had to eat about 13 percent in fees and $11 per box in shipping. Suddenly, selling a box for $200 only netted me around $163 . Now my profit had shrunk down to a meager 12 percent. After two years. During a time when the S&P 500 increased by around 40 percent.

While I couldn’t have predicted the performance of the stock market, the comparison is no less painful to make. So in essence, while I did find an investment with nearly guaranteed upside and almost no downside, the risk/reward equation still didn’t quite work out as I had hoped.

As the dust settles, I look at my collection and realize that I (thankfully) only have a few boxes left—all of Return to Ravnica. At least with these, I got in at the floor. My average purchase price is around $85. But it’s already been over a year and these are only selling in the $100 range. Selling them here would actually lose me money after fees and shipping. So I continue to watch these boxes collect dust, hoping for some catalyst to move them higher in price.

What happened?! Why didn’t these boxes skyrocket like older sets? I had to think on this at length before coming to the inevitable conclusion: print runs. As Magic has grown in popularity, Wizards of the Coast has steadily increased its print runs. More and more stores are opening up each month, and they are all ordering more and more boxes to meet steadily growing demand from players. Often times, stores will max out their orders time after time to ensure they have enough product in stock for years.

With such large print runs, the time it takes for booster boxes of a set to run scarce takes longer and longer. Even with Modern and Legacy staples in a set, such as shock lands and Abrupt Decay, boxes just rise painfully slow nowadays. Yet again, I’m left wondering if I would have been better off putting this money into foil Abrupt Decays and shock sands rather than buying boxes themselves. They would at least take up less storage space.

So when people ask me about investing in Khans of Tarkir boxes, you can understand why I shiver inside. So much money tied up for years and years, the prospect of selling these boxes and eating so many fees, the storage space involved, the opportunity cost sacrificed…it’s overwhelming. Personally, I can’t stomach the endeavor again. If you are eager to throw money into a long-term spec, buy foil fetches. Or foil Siege Rhinos. Or just buy dual lands. At least those are on the Reserved List and are much easier to store.

Whatever you do, think twice before buying into new booster boxes. The return on investment just isn’t there.

Sig’s Quick Hits

Snapcaster Mage has really surged higher throughout the past few months. This is likely related to the fact that the card is dodging reprint in Modern Masters 2015. Star City Games has only 10 copies in stock, all moderately played at $45.65. Near-mint copies are sold out at $57.05. Why, oh why, didn’t I put my Innistrad box money into these???
Another reason I question See the Unwritten? The fact that the card made Top 8 of the Pro Tour, yet still sells for $3.99 at Star City Games. They have 40 copies in stock, too. If they really thought this card would move, they would increase price or at least set their stock to zero until the dust settled.
On the other hand, Dragonlord Silumgar is completely sold out at Star City Games with the increased price tag of $7.99. This is a strong indicator the card’s price will go higher. I’d much rather have money in these than in See the Unwritten or Dragonlord Ojutai (sold out at $17.15) right now. It just feels like there’s more room for upside.

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