The Wild West

December 23, 2013 Jared Yost

By: Jared Yost

Sometimes it feels like we are in the wild west of Magic: the Gathering when it comes to sudden price spikes and card buyouts that seem to affect the market on a weekly basis. It feels like every week I am hearing that this card or that card was bought out and the price has gone up 200%-400%. Just like a shootout, it seems as if the first person to draw their gun (or in this case, their wallet) and fire (click “add to cart”) is the winner. And it only seems to get worse as time goes on.

Let’s ponder for a quick minute – who the heck is actually pulling the trigger on these calls like Disrupting Shoal and Phyrexian Obliterator (which even seemed to spike twice?) Is it individuals that have amassed enough ammunition (money) and have good enough aim (experience) to hit every single target faster than the rest of us? Are they the Billie the Kids and Jesse James of the Magic market? Is there a domino effect of casual speculators with more money than sense?

The answer is probably yes to both. As the popularity of Magic increases, it looks like the sky’s the limit for the prices on some of these cards when someone discovers that they are undercosted and acts quickly to drain the market. If you are one of these individuals, my hat is off to you. Congratulations. You have done your homework, discovered an undervalued asset, and have capitalized on that asset. I’m not sure if there is any advice I can give you except to avoid the trap of getting in on a card too late, which you’ve probably avoided in 95% of the cases (there is always the potential for the double spike, though it doesn’t happen often – Jace, the Mind Sculptor did it in Standard). Just remember to strike while the iron is hot: those Disrupting Shoals aren’t going to sell themselves.

But It’s not even Modern cards that are experiencing these price hikes. What about cards like Wheel and Deal and Forced Fruition? Nekusar hasn’t been out for long and isn’t even the flagship commander of the Mind Seize deck, so why did these random cards that only fit into a narrow strategy in a specific causal format go up in value? I might have an idea.

Those holding the bag of cards that spike and then quickly plummet are similar to the penny stock investor, who decided “investing” in penny stock assets would result in a great return. However, the asset in this case is not a random number on a roulette wheel or any single name in a list of penny stocks – the asset is actually something that all of us are emotionally invested in. The first reason that these spikes happen is because players and speculators are both emotionally invested in the game of Magic.

Everyone that plays Magic is emotionally invested in the game to some degree. Otherwise, why play the game? There are literally thousands of other games that could be played instead, so what makes it so special? The answer is that playing the game is fun, the wonderful community is welcoming and friendly, the feeling of opening packs and sorting a collection can’t be beat, the feeling of chasing a collection and acquiring all of the particular cards you desire is amazing, the great feeling of putting a deck together and calling it your own is the best, and the support by the company that produces the game is fantastic. Without all of these factors, Magic would falter and slowly go away. It is stronger than ever now because all Magic players are able to get emotionally invested through all of these other aspects besides playing the game. There are hundreds of websites dedicated to Magic out there, whether they sell art related to the game (card alters), offer game accessories (dice, tokens, deckboxes, playmats, etc.), or are just reflecting on the community (Cardboard Crack). All of these factors help to cement good feelings in players’ minds about how sweet Magic is.

Right, so what does emotional investment have to do with price spikes? Well, when you get pretty emotional about something, it’s much harder for logic to factor into the equation. Do you want to buy those Disrupting Shoals at $10 because you think they’re cool and there is no way they could go down due to their awesomeness? If this is your train of thought, speculating might not be for you. Speculating requires a certain amount of cold logic and forethought that a lot players don’t want to apply to their favorite past time, which is supposed to be about fun.

Besides emotional investing, I believe another reason that these price spikes are happening is due to the rarity of the older cards compared to the newer ones (Wheel of Fortune anyone?). Back when Magic first came out, they had no idea how popular the game would be. They created the reserve list out of a fear of killing the game via reprints, and it seemed to work for a time. Because these cards can’t be reprinted, when a new card is released that synergizes or combos well with an old Reserve List card, that card can wind up spiking in value very fast. Even a rules change or unbanning could do this – Gaea’s Cradle and Time Spiral are examples of these cases respectively. With the Modern format Wizards can better control prices of newer cards, but older cards that are in Legacy and EDH are anyone’s guess.

In addition to Reserved List cards that are never getting reprinted, cards that could also receive a reprint but have not gotten one yet are also targets for spikes. Specifically, cards in sets that are post-reserved but pre-Modern, like Masque’s (Rishadan Port), Invasion, Odyssey, and Onslaught – these blocks were printed in a time where the Magic community was only a fraction of what it is today. If a card from one of these sets is discovered to be very synergistic with a new card it, it will spike out of nowhere because the amount of copies that exist are marginal compared to the demand it will see from interacting well with a newer card. It is very hard to keep on top of all the potential combinations that exist without a good grasp on the community resources available to discover these interactions. So I will state that card rarity is always a factor in a spike, because even uncommons (Remand) can become grossly expensive without a reprint.

Just because because a card is rare or hard to find does not mean that its spike is warranted. Aluren would be a good example of this – it’s a card that has a legacy deck to its name and is a casual favorite that a lot of players remember having tons of fun with. It never sustained its price, though, because the deck failed to put up enough results compared to other currently existing legacy decks. Due to the lack of demand, it then dropped down close to the original price from which it spiked. In order to avoid buying high into potential scenarios like Aluren, you want to make sure you pick up the card before it has seen a massive increase in price, you want to make sure that it can fit into a deck that has proven results backing it up, you want to make sure that even if it isn’t tournament playable that it can be popular with casual and EDH players, and you finally want to make sure that it is from a set that had a relatively small print run compared to current sets (like the post-reserve list sets I mentioned above).

So in summary, the combination of emotional investing and card rarity are a recipe for a card spike. Whether the spike is real or whether it will ultimately become a bust can be hard to spot without extensive knowledge of the current tournament scene and correctly identifying the casual appeal of a card. With time comes experience, and I’m sure we’ve all made mistakes in the past in regard to cards and spikes – I certainly have. All we can do is to keep working at it and make sure that the characteristics of a card match up well with the reasons a card could spike. It can sure feel like the wild west at times with all of these card spikes, but realize that many of them can’t sustain those prices for very long and are mainly driven emotional investing and card rarity.

Casual Fridays

Creature Feature

December 21, 2013 Cliff Daigle

By: Cliff Daigle

It’s no secret that creatures are a primary resource in Magic. They are the easiest way to deal damage to your opponent and are the primary source of interaction. Can you stop your opponent’s creatures? Can they stop yours?

In the past twenty years of printing dudes, Wizards has given us a remarkable range of abilities for creatures, so much so that it’s possible to craft decks that consist entirely of creatures. It’s more likely to happen in casual formats, but it’s possible even in Standard. I have two EDH decks (Animar, Soul of Elements and Adun Oakenshield) that are creature-based, and it’s time I evaluate why these are powerful strategies.

Reason #1: You Always Have Something to Cast

There’s very few creatures that are strictly reactive. Mystic Snake and Plaxmanta are two that come to mind, but for the most part, creatures are reacted to, not reactions themselves. If they leave your creature alone you’ll gain enormous advantages just from attacking and blocking. The effect is amplified when it’s a utility creature, providing significant advantage above and beyond simply swinging in.

We have a tendency in EDH and other formats to include a lot of reactive cards that will be good in certain circumstances. I personally love to have Delirium in hand, just in case someone wants to get cute with Hamletback Goliath or a Blightsteel Colossus. Unfortunately, that’s frequently a dead card in hand and you’re stuck waiting for that perfect moment. Playing a deck with a critical mass of creatures ensures that you’re never waiting pointlessly, since you’ll almost always have something you could be doing.

Reason #2: Repeated Effects

The easiest way to get an effect over and over again is to put it on a creature. Usually it’s a tap ability, and it’ll be more powerful than an enchantment’s ability, because creatures are easier to kill than enchantments. Case in point: Arcanis the Omnipotent. Even his weaker little brother, Archivist, is good for card advantage over time.

These effects don’t need to be tap abilities; they can be continuous in nature too. Ruric Thar punishes other players’ spells. Sire of Insanity is a backbreaker. Fumiko the Lowblood is a very easy way to mess with everyone else’s plans, forcing all sorts of attacks that might not be to your opponents’ advantage.

Reason #3: Synergy

Creatures, especially ones who share a tribe, are prone to having effects that synergize very well. Whenever someone asks me what their first EDH deck should be, I answer Krenko, Mob Boss. His ability is powerful and straightforward, and when you add Goblin Chieftain or another haste enabler, he gets out of hand fast!

My new favorite combination is something old and something new: Hythonia the Cruel and Visara the Dreadful. They play nicely together, being point removal and a mass destruction effect together.

Reason #4: A touch of Something Else

Perhaps the best part of having an all-creature deck is adding a few noncreature spells. My Adun deck has five, one of which is the poster child for a bulk rare being so amazing in casual formats that its price just keeps creeping upward: Lurking Predators. (The other four noncreature spells? Green Sun’s Zenith, Garruk, Caller of Beasts, Domri Rade, and Xenagos, the Reveler.) With Lurking Predators in play, every one of my opponents’ spells is going to give me a creature roughly ⅔ of the time.

It’s not hard to build a deck where a resolved Primal Surge wins you the game with an enormous attack. That actually gets boring. Genesis Wave is much the same way, but I’ll never fault someone who wants to go big mana, throw a Wave for 10-15 mana, and then get the Wave back with the Eternal Witness they flipped.

Reason #5: Cheaper

It’s not universally true, but building a creature-based deck will often cost you less money. Chasing certain spells can add up very fast, but the utility of the creatures you add to a deck will lower the financial strain. There aren’t many creatures that get added to almost every deck, but there are plenty spells that many of decks demand.

The reason why I bring up these types of casual decks is because they are a type of deck that is very frequently built in EDH, and other casual formats. This type of deck requires certain types of cards, and we can expect Wizards to continue printing cards to enable these strategies. (Hythonia the Cruel, Garruk, Caller of Beasts, etc.) Such cards will probably not demand a high price tag, as seen in Genesis Wave, Primal Surge or Dread Cacodemon.

Keep this in mind as we start to move into the new year and the spoiler season for Born of the Gods. If a card is only good with a lot of creatures, that’s not a bug, that’s a design feature.

This week’s tip: Shocklands. People seem to be stocked up, and rotation won’t make these dip much. I would advise you to get out if you can get around $10 in trade for any of them, unless you’re buying them at $5 and going to hold onto them for years. Their post-rotation rise will be a crawl, since RtR block was the best-selling ever which means there’s a lot of shock stock out there. Personally, I’ve traded away more than 40 in the past month, moving into Theros cards and Modern.

Uncategorized

Equilibrium

December 20, 2013 Jason Alt 1 Comment

Hello, Constant Reader

In the last installment, we dealt with the Keynesian Beauty Contest and how thinking rationally and a few steps ahead can lead to your avoiding potentially ruinous decisions. Taking into account what everyone else will likely think in a given situation is how you make the best possible informed answer.

In my research for the last piece about the Keynesian Beauty Contest, I stumbled across some reading about the concept of Nash Equilibrium. Did you see “A Beautiful Mind”? Well, that John Nash, portrayed by Russel Crowe in the film proposed the theory. Stated simply, Nash Equilibrium is a Mexican Standoff. In a non-co operative game, situations can arise where each player who knows the other player’s best strategy will not benefit from changing their own. They are essentially in a deadlock, or in Equilibrium.

What defines this equilibrium is whether party A is making the best decision they can, taking into account the decision party B will make, and that all hinges on on Party B making the best decision they can accounting for what Party A is likely to do. This doesn’t even have to be a dichotomy, as any number of players can be involved and they will only be in equilibrium if they make the best decision they can given all of the other players’ decisions AND provided they don’t change their decision.

I got into this topic because I believe artificial price spikes are the kind of system that can be modeled using this theory, but I also believe that in the case of artificial price spikes we don’t have a true Nash equilibrium because I believe there is a party integral to the system that is not making the best decision they can for themselves but rather the best decision for the system based on faulty logic on their part. The result is the same, though, because the decision they make does not disturb the equilibrium of the system. I maintain, though, that it probably should.

In a lot of ways the “cog” in the middle of the great machine is most important and also most tightly-bound to the rules of Nash equilibrium. At its core, it’s a theory that says once equilibrium is established, no one can do better by changing their behavior. Unfortunately, that’s true.

Moving Parts

Why is it the middle cog that is so essential? It’s really simple – in this case, the guts of this equilibrated system are the greater fools we discussed earlier. To recap briefly, the Greater Fool Theorum as applied to Magic finance is a premise that means some people buy into a spiking card and can only expect to make any money if someone more gullible buys the card from them at a higher price. These greater fools are what makes it possible for artificial spikes based purely on hype and buying frenzies to occur, and their unenviable position makes these systems follow the rules of a Nash Equilibrium. The only reason this works has to do with how someone becomes part of the system.

If you are participating in a card spike, you get “in” when you buy in. The first buyer is a store or individual who bought the card for its pre-spike price either because they wanted to have it to play with / in inventory or because they saw the spike coming. There is hype, either from deck results, conjecture or someone initiating the price movement with a big buy-out of a site (it only takes one site, usually; the rest fall like dominoes) but the system is not in equilibrium until there are more players.

This is where the greater fools come in. They buy at a post-spike price that may be lower than the peak price, but once they buy in, they are sunk. They absolutely have to hope for even greater fools to buy from them at the spike price or they are sunk. Lots of people break even in this position, and it’s no fun to be in for a few reasons.

The hallmark of these artificial spikes is a card starting at X, spiking to 2X when it’s bought out, peaking at 4X at the peak of hysteria and going back to 2X as people undercut each other trying to rid themselves of copies of the card. Inevitably in these cases, a lot of fools who buy in at 2X end up bagholders and sell out for 2X again.

The worst part about their position is that they are locked in to Nash’s theory of equilibrium as soon as they buy in. What are their options? Sell out at 2X immediately? That doesn’t help them out of the jam they put themselves in. There really is nothing they can do to improve their position but wait and try to sell to a greater fool, and their inaction doesn’t violate the equilibrium of the system. They really have no options except for hope, and hope is not an investment strategy.

For the other actors, they have few options as well, and they get forced into their positions. I’m not sure you can have a true equilibrium as envisioned by Nash (who also envisioned people who weren’t there, so what does he know?) when people have their initial move determined for them, but I would argue that you have the option to stay out of it, so even making forced moves is still abiding by equilibrium because doing anything else but making the forced move (or staying out of it) is not going to give you a better outcome and therefore are bound to the system. So a player who wants the card to play with doesn’t have a choice but to pay the card’s price at the time they buy in.

One actor we’ve ignored until now is the actor who initiates the price spike. Could this person or persons act in a different way and end up better off? This is the true test of the theory as it applies to the scenario I have concocted. When you think about it, buying low and selling high is probably the optimal play, dumping as many copies onto the market as fast as they possibly can is probably the optimal play (for them) and maximizing their profit in the shortest time-frame possible is probably optimal. There is really nothing they can do to improve on this, and in so many of these cases, this is exactly what we see happen. This actor is in an enviable position, but that doesn’t mean there is any benefit to breaking the rules and making a different play than the one everyone expects.

The Point

Why do we care about the concept at all? Even if you agree with my analysis (assumptions) about the system, what good does establishing the system is a Nash equilibrium do?

I maintain that mtg finance is cooperative, as all system bound by the theory must be. If you buy cards, you help the seller. If you sell cards, you help the buyer. And if you buy an artificially-inflated card for 4X, you help the guy who bought them for X and knows that 8X is a pipe dream. Since this is the case and once you lock yourself in and pay 2X or 4X for a purpose other than just playing with them, you’re locked in. You will not benefit by doing anything other than what everyone expects, and if you think that position is unenviable, it’s probably best to win the only way you can.

Don’t play.

City of Traders

Needs Improvement

December 18, 2013 Travis Allen

By: Travis Allen

As 2013 winds down, it marks the end of the first year I’ve been operating as a “professional” Magic financier, and by “professional” I mean “for some reason someone pays me to talk about it.” I’ve been doing it in an ever-increasing capacity for about four years now, with being hired by MTGPrice being my foray into the public domain. I’ve really enjoyed the entire experience so far. Being given the platform to write and speak about a topic that engages you during your most valuable of resources, free time, is incredibly rewarding. Finding an activity in your life in which you feel emotionally rewarded is a requirement for a sense of self-actualization, something many of us will seek and few will find during our lifetimes. For me, getting to write and talk about Magic is a step down that path.

But for all I’ve gotten out of this field, both monetarily and mentally, I’m still just an apprentice. For each thing I do well, there are several things I do poorly, or even worse, I don’t do at all. Self-awareness and self-criticism is difficult and occasionally painful, but I feel it necessary that each of us is able to confront ourselves and own up to our mistakes and weaknesses. Being able to look back at your body of work and say “this is what I could have done better” leaves you open to critique and ridicule, some of it well deserved. Not all want to face that. In order to improve though, one must be able to accept these faults, admit them, and work to better themselves. At the very least, if you’ve made these shortcomings public then others can take you to task for a failure to do anything about them. A fear of public shaming may not be the most noble motivation, but its power to drive us to action is inarguable.

I have two hopes for this exercise. First, whether through inner motivation or public accountability, I hope to become a better trader, writer, and speculator. This will in turn give me the knowledge necessary to provide more valuable and helpful information to all of you down the road. My second goal is that through my own process of admittance, some of you will be able to recognize similar traits in yourselves. Perhaps your confidence level will rise upon seeing another underperform in the same way you do, or maybe you’ll find a way to improve you weren’t even aware of before. Either way, the end result is ideally the same: Everyone is better off. With that said, let’s see some of the ways I suck.

Pay More Attention

This is probably one of my more egregious errors. I write for MTGPrice.com, a website whose front page is a list of cards that have seen price movement in the last 24 and 168 hours. Yet it’s rare that I actually bother to check each morning when I wake up to see what has been active. You would think I would make an effort to look at the website who is kind enough to host my articles each week. There’s a lot of valuable information nested in those gain and lost lists if you’re willing to check them on a daily basis. Cursecatcher has jumped nearly $6 in the last two months, and if I had been paying attention, I could have seen the rise start, talked to others about it, and ultimately made a purchase. Instead, I read about it on Twitter after it was already over $7 and too late.

If you don’t do your homework, you can’t make money riding price waves. Reading about cards in articles is often too late unless it’s purely a spec call, and even Twitter often only gives you a window of a few hours. Sometimes you don’t even get that luxury, as the only people who saw the card rising kept their mouths shut so they could capitalize. In order to catch cards before they jump, I need to be watching closely and be open to buying into types of cards I normally gloss over because I know less about them. That leads nicely into my next problem, which is that I need to

Knock it Off With Pet Cards

I think we probably all do this a little bit, but I’ve become very aware of doing it myself in the last few months. As a player, I have a real affinity for green. I’m not entirely sure why, as I tend to deviate towards combo rather than beatdown any time I have a constructed PTQ or GP. It’s probably just a combination of loving to put lands into play and cool looking creatures.

Whatever the reason, I find myself frequently gravitating towards green. When browsing trade binders, I always pay special attention to the green pages. A disproportionate number of the cards in my spec box have green mana symbols somewhere. I’m more likely to pay attention to your case for a card if it’s green.

There’s nothing inherently wrong with preferring one color over another, but when that personal bias seeps into your business practices enough to result in potentially negative influences, you need to take stock. I’m more likely to make bad purchases (Vorel of the Hull Clade?) if they’re green, and less likely to buy into good opportunities if they aren’t. This bias will cost me money in two different directions. If I’m going to improve, I need to be willing to move on not just Simic cards, but Rakdos, Boros or Izzet as well.

Do More Research

Several months ago I read Nate Silver’s “The Signal and the Noise” and found the book quite interesting. (It was an excellent read, and if you enjoy the MTG market, you’re sure to find the material intriguing and relevant. I’ll be covering it more in a future article.) One thing that struck me about his baseball statistics breakthrough was that the information had been there for quite some time, available for anyone, but it wasn’t until someone really dove in and applied fundamentally good math that real knowledge became available. The information was just sitting there – how come nobody was capitalizing on it?

I find myself in the “not doing anything with it” camp more often than I’d like. I bought a bunch of Advent of the Wurm, and someone almost immediately informed on Twitter that it was in an event deck, which would surely suppress it’s price. (Hey look, there’s that green bias.) Oh. Whoops. If I had taken two seconds to look that up, I probably wouldn’t have bitten that particular bullet. If I spent some time doing price history analysis, looking for past behavior of similar cards, and digging in to buylist spreads, I’d definitely be further ahead than I am now. Instead, half the time I have reason to consider a card, I look up the price on a few websites, think about it for a few minutes (seconds), then make a decision. Hardly the most informed approach.

Take My Own Advice

At some point in the past, I believe I mentioned on Twitter that people should really be grabbing Mutavault, because it was $12 and highly likely to climb. Even if I didn’t say it out loud, I know for a fact I was thinking it. But I kept putting it off and putting it off, and here we are now, with Mutavault at $26 and I have a whopping three copies. I’ve felt similarly about Domri around the same price point, yet failed to purchase any myself, again missing the boat.

It’s possible that some amount of this is only seeing the calls I missed, and not the calls I connected on. Perhaps, perhaps. However, I seem to recall without any real doubt that both Mutavault and Domri would rise in price. There was basically no way they couldn’t. I think I hesitated to make the move because the price of entry was higher than I’m comfortable with. I’m completely ok buying into my hunches when the cards cost $.30, but much less so when they’re $12, even if the $12 card is a far better bet. In the future, I need to be more willing to make commitments to calls I’m sure of with less worry about the cost. If I’m that sure the card will rise, then the initial expense shouldn’t matter because I’ll come out ahead regardless.

This is only a few of my shortcomings when it comes to buying and selling Magic cards. There are definitely plenty of others, but I’m not sure my fragile ego can handle much more for now. In the meantime, I’m going to focus on improving this small selection. I encourage all of you to consider similar reflection.

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