Reflection in the Doldrums

November 4, 2013 Jared Yost

By: Jared Yost

Currently we appear to be in the doldrums of the Magic finance sea. The trade winds haven’t yet guided our course towards buying into Theros staples, as the floor on most cards hasn’t been found yet. The winds also aren’t quite right yet to pursue other avenues of Magic financial interest, such as starting to acquire recently rotated Innistrad block staples or future Modern prospects. (Seriously Wizards, you stuck Modern season in the middle of summer?) Nothing is at the point where I feel comfortable acquiring or selling. It seems no matter which way I hold my compass I can’t find my way back to shore.

At times like these, some retrospection is a good idea. Looking back on past successes and failures may be a great way to find a path forward.

Success!

Jace, Architect of Thought

Some background – I started to seriously get into Magic finance back when Return to Ravnica first hit Standard. I wanted to know what was up with the crazy price swings of cards that at the time I didn’t fully understand.

Earlier in my Magic career, I never kept track of prices very closely – I just picked up cards when I needed them for decks. Over the years, due to dumb luck and the massive influx of players, the demand for the old cards that I never got around to trading away skyrocketed. I suddenly found myself with many cards that were two, three, sometimes four times more than what I originally bought them for. I found myself asking “What is this wizardry?”

I started researching Magic finance more earnestly because I wanted to understand what was going on and why these newer cards that I owned seemed to be going through such large price swings in such a short period of time, and also why my older staples seemed to always be trending upwards. Ever since, I’ve always kept up with the most recent trends on card prices because it fascinates me to no end. I stumbled upon a few websites like MTGPrice, and the rest is history.

Back to Jace – This is one of the first cards that I decided to acquire as many copies as I could rather than just one or two for collection purposes. I was able to pick up several Jace’s back when they were as low as $8.

After Jace’s huge crash, nobody wanted him – I was able to pick up copy after copy. I recently cashed out on half my stock for $23 each. I didn’t pull the trigger on selling off all of them because I felt that maybe I could get more for the remaining Jaces if they became really popular. I still may yet have that chance, however the recent duel deck announcement certainly makes that less likely. I’ll be looking to move the rest in the near future.

Blood Baron of Vizkopa

I also did well when I decided to target this card. I got in on Blood Baron when it was $8 this summer, and recently buylisted all my copies for $14 each. That is $6 profit per, which is fantastic as far as I’m concerned. I used the same logic here as I did with Jace, and this card also payed out welcome dividends.

Deathrite Shaman & Abrupt Decay

Both of these cards screamed “LEGACY!!!” to me, and I started grabbing them up as soon as they were spoiled. I was very bullish on Deathrite Shaman – so bullish, in fact, that I was preordering Deathrite Shamans at $4. I liked Deathrite so much that I was still picking them up when they already doubled to $7-$8 each. Both decisions turned out positive for me. As for Abrupt Decay, I waited for it to drop in price after the initial hype died down and then became bullish on it when it was $3-$4. My only regret is not picking up foil copies of either card when they were low.

Other Notables

Ash Zealot – Buy in $1.25, Buylist @ $2.45
Wurmcoil Engine – Buy in $7.00, Buylist @ $10.50
Batterskull – Buy in $6.00, Buylist @ $9.50
Burning Earth – Buy in $1.00, Buylist @ $3.00

I wasn’t as bullish on these picks but they still paid out pretty well for me. I was able to get fairly good cash prices for these cards when they spiked (Ash Zealot & Burning Earth), or I held onto them for a while and then decided to buylist for a profit when it came time to liquidate (Wurmcoil Engine, Batterskull).

Failures, Misses, and Bad Calls

Nykthos, Shrine to Nyx

I had an idea about the power of this card because it reminded me of Cabal Coffers and how good that card is in a black deck. I decided to hold off because I didn’t know if devotion would be a thing or not in Standard.

Well, it was. I missed big with this land. I might still be able to buy in later after more product is opened, though I can’t foresee Nykthos ever dipping as low as $4 again.

Heliod, God of the Sun & Underworld Cerberus

I was bullish on both of these cards shortly after the release of Theros. They have both gone down since I bought into them, and so far I am in the hole. At this point, I think my best bet is to continue sitting on them and hope they spike.

Voice of Resurgence

I thought that there was a lot of potential when Voice was first spoiled, and I spent a lot of time thinking about at least picking up a play set. I talked myself out of it, and suffice to say missed out.

Beck & Call

I was bullish on this card when it was $4. I started picking them up at that price, was astounded when they continued to drop, and started picking up even more once they hit $2. They are now less than $1, making this my biggest flop.

Epic Experiment

I started picking up a lot of these at $2 each because I felt that it had a lot of potential in Modern, with a possibility of also being good in Standard later on. My prediction so far has not come to pass, and I’m sitting on a lot of copies that are lower than what I got them for.

Niv-Mizzet, Dracogenius

Now at a measly $2, I was very bullish on Niv-Miz when Return to Ravnica prices had bottomed out. I bought in when they were $2.50, so I haven’t lost too much. At the end of the day they’re all still sitting in a box though, making this a loss, even if it isn’t a big one.

Lessons Learned

So, what have I learned about my endeavors with a year of experience? I’ll try to summarize for you:

Success Lessons

The common theme of my successes is that I carefully studied each of the cards and made notes of all the potential upside and downside that each had. Once I felt that I understood the pros and cons, I made an informed decision that each had a positive outlook and started picking them up accordingly.
One thing I want to be doing in the future is paying more attention to mythics rather than rares. Mythics provide the largest gains over time when their peak has been reached. I made some decent profits from Deathrite Shaman and Abrupt Decay, but those types of success are harder to realize.
When looking at rares, the card’s eternal playability is an important factor. When I saw Deathrite Shaman and Abrupt Decay, I knew that they could be good Standard cards and at the same time they would be even more amazing in other formats. I now take this heavily into consideration.
Capitalizing on format shakeups – When a format is being “shaken and stirred” so to speak, I’ve relied on my research and past experiences to help make the most of a changing format. This is why I recommended targeting aggro cards right before Theros released, because I knew cards like Ash Zealot would likely see an uptick in price due to the typical increase in aggressive strategies shortly after rotation.

Mistake Lessons

More research is required before diving too deeply into any given card. I bought into a lot of cards that weren’t proven and that didn’t have a power level that, in retrospect, I’ve noticed is clearly lacking.
While occasionally missed calls end up working out for other reasons, in the meantime I am stuck with cards that no one wants. I was taking on quite a bit of risk with some of my picks. I’m going to stay with more liquid cards in the future to try to mitigate risk.
I’ve learned the hard way about which factors actually make a card well-positioned. that isn’t to say that I won’t ever miss again, as surely there will be other errors in judgment in the future. Today though, I can say I am a much better evaluator of a card and its potential.
Crowdsourcing is a powerful tool. I need to learn how to better realize the many tools that are available for Magic finance in order to understand card trends and what the community chatter is about a card. It can be good to pick up a few copies on the advice of others who have much more experience with Magic finance, you know?

Still stuck at sea with my sails unfurled hoping for a breeze, I’ve used the time to learn about myself and a bit more about the workings of Magic finance. I hope that my personal musings on my own successes and failures will provide some guidance for you as you set your own course.

*Correction – In the comments for my article last week, it was noted that I incorrectly associated Hasbro with Wizards of the Coast in respect to my writing of Chronicles. Hasbro acquired Wizards in 1999 (from the Wikipedia page), whereas Chronicles was released in 1995. My reference to Hasbro was only in passing however it was an oversight on my part and I wanted to make sure I set the record straight. Sorry for any confusion! Hasbro did not influence Wizards choices in regards to Chronicles.

Casual Fridays

Commander 2013

November 1, 2013 Cliff Daigle

It’s finally here; what was promised to us way back in 2011. A new set of Commander decks has arrived, complete with new toys to play with and to spend a lot more money on.

Commander has really taken off, enjoying a growth period that Wizards really wants to encourage. They’ve shown their eagerness to push Commander by releasing cards in each expansion, such as Theros, that are perfect for the format. If you’re new to 100-card decks, buy any of these new product and have a blast.

For more experienced players, the retail price of $150 for all five decks is a big cost. Is it worth it?

Before I get to the discussion, let’s see if I did well in some of my predictions a few weeks back.

I never would have thought Sol Ring would come around again, but I’m strongly in favor of Swiftfoot Boots being reprinted over and over. I’m impressed that they gave us new Zombie and Bird legends, and enable new strategies using the Command Zone.

I was right about a Naya beast legend, wrong about Angels and Sphinxes (ugh, Sharuum *again*?) and totally wrong about fetchlands. C’est la vie.

Perhaps the big surprise is the Portal:Three Kingdoms reprints. These cards have popped up before: Cao Cao and Sun Quan in FTV: Legends, Xiahou Dun as a judge foil, Loyal Retainers and Diaochan, Artful Beauty in Commander’s Arsenal, and now three legends (Hua Tuo, Honored Physician, Kongming, “Sleeping Dragon”, and Lu Xun, Scholar General) plus three spells (Spoils of Victory, Strategic Planning, Borrowing 100,000 Arrows). None of these are overpowered legends, though I can easily see someone building a control deck around Lu Xun.

I would expect the prices of these reprints to stay reasonably low. Their original incarnations won’t budge much (see Loyal Retainers,) but these will be available.

As I mentioned last time, the price spikes in the sealed Commander sets from 2011 is due to both the Legacy playability of the cards as well as the sheer value of the rest of the cards. For example, in the 2011 Heavenly Inferno deck, Kaalia of the Vast, Sol Ring, and the Command Tower make up the MSRP, while everything else is a bonus.

There is a lot of value in the five 2013 decks, and the flag bearer is the Grixis deck, since True-Name Nemesis and Baleful Strix are in there. Those, plus Thraximundar and Sol Ring, easily put you over MSRP.

True-Name Nemesis alone is pre-ordering for around $40. That is more than the MSRP. More than any other card in this set. I can’t see it holding this price for long, not when big box stores like Target get product. Scavenging Ooze is the historical example, and that hit a high around $40 before tapering off and getting reprinted.

It doesn’t seem like you can go wrong buying the Grixis deck and moving the singles, especially while the hype and demand is at its peak. With the price of Nemesis and Strix being so high, this looks to be the chase deck and might well depress the price of everything else inside. I’d get rid of everything I could immediately. Sell into the hype, as Jason Alt likes to say.

Again, everything is gravy… if you can move it.

As someone who bought eight of the first decks, allow me to toss this stone from my glass house: I will be trading for specific singles this time around, not buying complete decks. The reason is because aside from some of the brand new cards, I don’t need anything from these sets. I’ve still got most of those cards sitting in a box.

I know, I know. I could buy the deck that has what I want and trade away everything else.

The problem is that it took me 18 months to find someone who wanted to trade for my Commander Sol Ring. It sat in my binder forever! I preach patience but really, that drove me crazy. It is possible to extract the value from the decks, but the process is not a fast one. Keep in mind that lots of other people will be trying to do the exact same thing, and Wizards has indicated that they will reprint these decks if the demand is there.

So this weekend I’m going to start trying to trade for a few select cards. I suspect that the Legacy chase cards will be True-Name Nemesis, Unexpectedly Absent, and Sudden Demise. Unexpectedly Absent is fantastic if you have WW open and they use a shuffle effect; cast it for zero in response and put whatever on top of their library, which results in them being forced to shuffle it away. Keep an eye on Angel of Finality, because it’s cheaply costed, an effective beater, and has a very relevant ability. You’re paying two colorless more than Rest In Peace and getting a 3/4 flyer!

If you don’t want to spend the cash on the decks, you’ll be fine. If you’re a Curse player, you’ll be able to trade for the new ones cheaply. If you want one of the new legends, you’ll found one before too long. If it’s the last two 8-drop forces you crave, they won’t be difficult to find.

Before you run out and spend your cash for the value stuffed into these decks (and there’s good value!), do yourself a favor and evaluate which cards you want. Singles may be the better path for you.

City of Traders

What Good is Money if You Can’t Spend it?

October 30, 2013 Travis Allen

This past week I realized I had no good winter footwear, and given that I live in Buffalo, this was a problem that needed solving. I set out on a search with a pretty good idea of what I was looking to purchase. After viewing somewhere in the ballpark of 7,000 shoes (thanks Zappos!), I hadn’t found anything I liked for an amount of money I was comfortable laying out. I did find one pair that was exactly what I wanted, but they were about two to three times more than the budget I had set for myself. It was while I was moving some cards around and thinking about the shoes that I skimmed past some duals in my trade binder. Suddenly, the answer was clear. Within two days I had sold a few duals and purchased the shoes.

My experience refreshed in me the idea that it was sometimes completely ok to take cash out of my collection sometimes, not just always roll profits over into more stock. I am not alone in this practice. Cliff Daigle, the writer of Casual Fridays here on mtgprice.com, just sold several Ulamogs in order to subsidize washing machine repairs. After all, what is the point of squeezing value out of these cards if we can’t make use of it every once and a while?

It’s very easy to get caught up in the process of expanding your collection. We focus on making good trades, searching for the next bubble that’s about to burst, flipping collections, buying low, and selling high. The entire activity can feel rather insulated if you never step back and consider it in the grander scheme of things. There’s an interesting cognitive dissonance that occurs with some players with regards to how they treat Magic money and real money.

You may haggle in trades over $1 worth of value on a $40 trade, but blow cash on lottery tickets every week. Maybe you go out to the bars every Saturday and drop $100 on $20 worth of alcohol. Perhaps your financial vise is a $6 cup of coffee every morning that you could easily make at home or work. Whatever the case, it’s not inconceivable for one to be fastidiously stringent with regards to their Magic transactions, but sloppy with actual currency elsewhere in life. The expression “Penny wise, pound poor” comes to mind.

This mental compartmentalization of types of assets is what occasionally prevents some Magic players from being aware of their ability to cash parts of their collection out to finance real life activity. Has there ever been a time in which you told yourself you couldn’t buy a new game and chose to pirate it instead, all while sitting four feet from $10,000 worth of Magic cards? Don’t be afraid to capitalize on some of that value you’ve accumulated through shrewd trading and speculating.

I don’t feel bad about selling duals in particular either. To begin with, there aren’t many players in my area that will even trade for them. My local scene is very Standard heavy, as I’m sure many these days are, with 95% of my trade partners restricting themselves to the roughly 25 Standard pages of my trade binder and ignoring the 200 non-Standard pages. I also don’t feel bad about the lands possibly appreciating in value. In the next two years, how much more could they be worth? $20, $30 maybe? I am in essence paying myself $20 not to buy shoes that I need. That seems silly.

Remember also that Magic cards are a commodity in nature. While that carries with it a great deal of implications, how does it matter in this context? It means that this Tarmogoyf is no different than that Tarmogoyf. Just because you sell a currently-unused goyf today for $100, that does not mean that you can’t own the card again down the road. (Nearly) all Magic cards are completely replaceable. When you remove emotion from the equation and understand objectively that selling a card doesn’t mean it is gone forever, you’ll find yourself far more able to occasionally let go.

To be clear, I’m not claiming that you should be looking to ship cardboard every time you want to buy a sandwich. I was comfortable selling what I did because they represented a small portion of my total inventory. If a few duals were 10% of my Magic assets, I wouldn’t be making that type of move. When what you’re selling won’t even be missed from your collection though, don’t feel bad about letting the cards provide something for you that you actually need.

Your takeaway from all this should be that your Magic collection represents what can be a considerable amount of real value. Cards that are collecting dust and taking up space in trade binders can easily be a good chunk of the cost of whatever it is you’ve been eyeing recently, whether it’s a new mattress, car repairs, fancy jeans, or the latest video game. While I’d recommend you avoid doing it frequently if you want to continue growing your collection, don’t be afraid to dip in occasionally.

Mid-Week Card Watch

Nykthos was seen splashing around GP Antwerp this weekend. It didn’t manage to Top 16, but I doubt this is the last we’ve seen of it in the format. You know what was in 10 of the top 16 decks? Spellskite.
Zur the Enchanter saw a huge spike a week or two ago. His price hasn’t settled yet, but it looks like he will be somewhere between $7-$15.
Mutavault started climbing from it’s low of ~$12 and hasn’t stopped yet. It’s currently pushing $20, and $25 is not a far cry.

Uncategorized

The Greater Fool Theory

October 29, 2013 Jason Alt 4 Comments

“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 Starcitygames.com 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?

Me.

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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