Previously published on SCG Premium on 7/27/2011.
Last week we started out with a tiny taste, an amuse-bouche if you will, of what clever card speculation on Magic Online can bring you. This week I’m going to outline some basic rules that should guide you in selecting the cards you want to bet on, but first *puts genie legal hat on* there are a few provisos, a couple of quid pro quo…
First, speculating on anything means you are undertaking a certain level of risk in the hope of future reward. There is the potential to both lose and make a lot of money by doing this. Thus far, I have made a good chunk of money doing it (much more than my initial investment), but I’m also doing it with money I can afford to lose and look at it as a hobby. If you are spending your rent money on speculating (or hell, even your drinking money), you are doing it wrong.
To put this another way, last week I mentioned the swing Baneslayer Angel took from 50 tickets to only 3.75 in the course of a year. If you bought them at 50 and held on to them, you would likely be a very sad panda right now. That said, you’d still have more money in your grubby little hands than you would if you’d bought Lehman Brothers stock.
Second, this isn’t quite the sort of thing you can just dive into and make money right away, especially if you don’t have experience working with other financial markets. I look at it a bit like when I got started playing poker before Dave Williams finished second at the WSOP final table. I started with $100 in my account, took my lumps, and eventually cashed out $950 before deciding the game was a bit too boring for me to enjoy, even with money involved. Start small in your speculation, enjoy the learning process, and if you aren’t having fun with it, don’t do it.
Third, I can’t bring people back from the dead. It’s not a pretty picture. I DON’T LIKE DOING IT.
So yeah, it’s not strictly like sports betting or stock trading, but there are enough similarities that if you know a lot about those, you can feel comfortable here. One E-normous benefit you get when speculating on cardboard is the items you are speculating on are still Magic cards. This means you not only get to enjoy looking at them and potentially making money from buying and selling them, you can also enjoy playing them. Try doing that with your 401K program…
Rule 1) Timing is everything.
Of all the rules you need to know, this is the biggest and most important of them (this assumes you all know â€˜Buy low, sell high,’ which you obviously all do or you wouldn’t be clicking on this column). If you regularly throw away significant percentages on cards through hesitation on whether or not to buy or sell, you’ll probably end up losing money speculating in the long term. At this point, the market is immature enough that you have margin for error (especially with proper analysis backing up your picks), but it’s still not big enough that you can regularly buy at 2 instead of 1 or sell at 6 instead of 9 and come out ahead.
Do your research; pick your targets; and strike when the timing is the most likely for you to see significant returns. [Note: We will be returning to this topic in more detail many times in the coming months.]
Rule 2) Mythics and short-print rares are king.
Price is determined by supply and demand. Finding cards that have limited supply delivers a bigger multiplier on the price when they become popular. The only cards on Magic Online with relatively short supply are mythic rares, rares from non-Standard-legal sets, and certain promos.
To give an example of why I tend to focus in this area, let’s rewind to the end of 2010. I felt like Elves was a pretty solid deck coming out of Worlds, so I bought extras of all the rares from that deck but didn’t buy any extra Nissa Revane. Unfortunately for me, the rares stayed about the same, while Nissa went from (I think) 4.95 to 6.50 or so. If I’d focused on the mythic, I would have made a small profit, but I screwed up and took a small loss instead.
To give another example, Wasteland is an uncommon, but it comes from a set that has an extremely short print run online and is virtually required to play Legacy, which is why it costs you 48 tickets to obtain a copy. Supply matters a lot.
Rule 3) Reprints are bad, mmkay? Promos are merely annoying.
This rule is the inverse of rule 2. If a card is reprinted, it dramatically increases the supply, which will likely drive the price of those cards down, even if the art is different.
Promos are limited-run reprints that have different art than the normal print of the card. What usually seems to happen with promos is that they end up carrying a price premium over the normal card based on promo rarity but don’t generally adjust the price that much. They do, however, seem to lower the potential ceiling for a card, so keep that in mind. To explain a little moreâ€”foils from the Top 32 of a MOCS are like mythic foil rarity, base MOCS are often somewhere between rare and mythic, while cards in the lower and middle tiers of MOPR are basically common, as are Prerelease promos (which were an annoying drag on the price of Sun Titan for the last 12 months).
Rule 4) Percentages Matter.
I mentioned on my Twitter account recently that Blade Splicer seemed like a decent buy, both for right now and the medium term. Someone replied that they thought it couldn’t be expected to rise past 6 or 7 tickets. My reply was that I would be perfectly happy with a 20-25% increase on an investment of 3.5 tickets a copy, and 7 tickets would be amazing (100% profit!).
Sam Stoddard reportedly bought 250 copies of Hypergenesis at something absurd like .08 tickets each during the Community Cup. After Aaron Forsythe announced they â€˜would be moving forward with Modern very soon,’ prices passed .80â€”or ten times what he bought them atâ€”turningÂ Stod’s 20 tickets into more like 200 in a couple of months. As of this writing, the price on Hypergenesis was still rising.
Anyway, once you get your spec legs, you’ll quickly start to realize that buying one or two things for 20 tickets and seeing 3 tickets profit per copy is much less exciting than buying 40-50 things for that same amount and getting .50 tix profit on each of them.
Rule 5) The competitive value of a card doesn’t always matter.
Tell me something… why is Doubling Seasonâ€”a Ravnica rare that sees no competitive play whatsoeverâ€”an $18 card in the real world?
It might not seem like that big a deal, but forgetting this rule will cause you to miss extremely juicy targets and could cost you Scrooge McDuck-caliber vaults of gold in the long run.
(You might think this doesn’t apply very well to Magic Onlineâ€”I am here to tell you that going forward, that vein of thought would almost certainly be wrong.)
Rule 6) Information is key.
Speculating on cards is a form of competition, and making money off it requires intellect, information, and sometimes speed. You will be competing against other speculators, the dealers who run the bot networks, and the whole spectrum of competitive and casual Magic players. Therefore you will need to do research on what to buy, when to buy it, and particularly when to get rid of cards. Without superior info, you are just another dude plunking down chips on a roulette wheel and hoping your number hits. With superior info (gained from reading other financial guys, looking at decklist trends, studying market cycles, etc.), you become smarter, more nimble, and consequently more profitable. You wouldn’t expect to just be able to design a deck, take it to FNM, and win with it without playtesting or giving any thought to the metagame, so why would you expect to just buy some cards and have them increase in value so you can sell them at a profit without doing work?
On the other hand, the vast majority of Magic players don’t think about this aspect of the game at all except to complain when things get too expensive, so it’s not that hard to get an initial leg up and stay ahead of the curve. As more and more people get involved, competition increases, and you end up having to work a little bit harder to grind out the dollahs. That’s not meant to discourage you, but it is something to keep in mind.
Rule 7) Learn to Fold.
If Flores was writing this, he’d say something like â€˜don’t be afraid to kill your darlings,’ but my translation of this is more like,
â€˜There are some times you absolutely, positively will lose. Don’t be afraid of that, and don’t let fear stop you from minimizing your losses.‘
Just like in Magic, you don’t control everything. This means that some of your speculation will invariably go wrong. When (not if) that occurs, cut your losses and move on.
Incidentally, this is rule number 1 when working with new traders at Pinnacle as well, except there we call it â€˜Don’t Get Run Over.’ Everyone there gets run over at some point, but recognizing what is happening and minimizing your losses when it occurs is what separates the dudes from the greats.
Just an FYIâ€”To prevent timeline clutter, I’m moving my finance tweets to @nextlevelspec. Included there will be occasional Buy and Sell picks as well as general Magic discussion. If you have thoughts about the articles or questions/ideas for future things you’d like to see me discuss, hit me up.
Bonus Section — Reviewing Squadron Hawk
Squadron Hawk continues to be part of one of the most dominant Standard decks of all time, but its inherent power isn’t immediately apparent to most players. Let’s take a look backwards at M11 set reviews and see what was said about one of the more annoying 1/1’s in Magic history.
Dave Meeson — M11 Top Commons [link]
Hawk didn’t even get an honorable mention just in a commons review.
Verdict: Caught looking for a called strike 3.
Cedric Phillips — Overrated and Underrated in M11 [link]
Overrated Card # 2:Â Squadron Hawk
Maybe I just don’t get it with Squadron Hawk. Maybe I am missing something that is so elementary that I need someone to knock some sense into me. But for the life of me, I don’t understand why I would want a bunch of 1/1’s in my hand or in my deck. I understand that for 1W I am drawing three cards, but if those cards don’t actually do anything relevant, why does it matter? I understand that Squadron Hawk is good in combination with Vengevine, but how many more cards do you need to make Vengevine good? We already haveÂ Ranger of EosÂ and Bloodbraid Elf in addition to just holding creatures in your hand.
My gut is telling me that Squadron Hawk isn’t a very good card, but I wouldn’t be too surprised if I was wrong.
Verdict: Nossir! To be fair, if this card said â€˜Creature — Kithkin’, Ced would have nailed it.
LSV — Magic 2011 Set Review — White [link]
Screwing around with a bunch of 1/1 fliers seems like a giant waste of time, but any card which draws you three cards for two mana is worth investigating. The problem you have to overcome is that those three cards are the aforementioned 1/1 fliers, but if you can solve that you may have a winner. TriggeringÂ VengevineÂ is cute, but Ranger of EosÂ just does that better, and any sort of plan involvingÂ JaceÂ andÂ Brainstorm ing is just ridiculous. If you are Brainstorming with Jace, you don’t need fodder; you are winning anyways!
Verdict: The whiff. (And no puns to make up for it eitherâ€”that’s like a strike â€˜em out, throw â€˜em out double play.)
Adrian Sullivan — The M11 Cards That Matter for Standard [link]
This card’s power cannot be denied.Â BitterblossomÂ “only” made a 1/1 flier a turn, too. Of course, the power of BitterblossomÂ didn’t come from the card advantage, but from the relentless and free nature of it. IfÂ Bitterblossom read, “each upkeep, spend B1 to make a 1/1 flier,” it wouldn’t be the card that dominated Magic for so long (and might again). So, to make Squadron Hawk do something, you’re going to have to be willing to do work. 1..
Essentially, there is something here that can be tapped, but it is going to likely be particularly specialized. In decks that can recycle dead Hawks, this could be an incredible long-term game plan, essentially always having out three Hawks for 3WWW, but at that point, you almost need to ask yourself why you aren’t doing something else for the mana that gains card advantage, like making a Titan. This card is likely to be, essentially, theÂ Squee, Goblin Nabob of the format, providing card advantage that is really potent, if it gets help. Now it just needs the help. This is pretty low on the list, but worth keeping in mind if you’re looking for engines.Â Fauna ShamanÂ comes to mind, for example.
Verdict: Foul ball. Adrian saw potential, but this line kind of kills the credit I want to give him for it: â€˜The most common cards to do this are things like Jace, the Mind Sculptor, but at that point, it almost feels like too much work, despite the card advantage.’
Squadron Hawk has an obvious home in Next Level Bant, where synergies withÂ VengevineÂ and Jace seem extremely potent, but it might also have uses in some new, more aggressive deck that can make better use of a bunch of evasive 1/1 attackers.
Conley Woods — M11 Review — Cream of the Crop [link]
I think this guy is flying below the radar currently and will be quite the pair withÂ Fauna ShamanÂ who is obviously an insane card on her own. Feelings seem to be mixed here, as some think the bird has just too low of an impact to see play as a 4 of. Still, the interaction with things likeÂ Vengevine,Â Fauna Shaman, Jace, the Mind Sculptor, along with any other cards that reward repetitive shuffle effects makes the Hawk a silent but powerful 1/1 flier. It is not as though a 1/1 Flier for 2 mana is completely irrelevant anyway, especially with Exalted still sitting in Standard. Aaron Forsythe had a Shaman deck at the Prerelease with a full 4 Hawks and I was able to see the power of the little flier. Keep this guy in mind as you build your decks, he is more powerful than one would expect.
Patrick Chapin — Format Changing Effects in M11 [link]
“I know, let’s make a super strong tournament playableÂ Welkin Hawk!”
For those that don’t know, Mike Turian lovesÂ Welkin HawkÂ more than anyone else in the entire world. Squadron Hawk is basically just aÂ Welkin HawkÂ that gets all three instead of just one at a time. That is not much of a difference in Limited (though it is a little), but the real difference is with Constructed. Think about it for a minute, for two mana, you get FOUR CARDS. That is absurd. You spend two mana, and yes, one of the cards is a 1/1 flier, but so what? You now have three cards in your hand. Yes, they are all two-mana 1/1 fliers, but if you have anything likeÂ Sphinx of Lost Truths, Vengevine,Â Enclave Cryptologist, Blightning, or whatever, then a card is a card. Additionally, they work great with Equipment, and they are powered up byÂ Honor of the PureÂ with the best of them. They even work ten different ways with Jace. Yeah, not only do you draw 3 and put back two Squadron Hawks, but you use the last one to get the other two, so you are just casting Ancestral. Obviously, you can keep it going by using Jace to bounce your Hawk too, if you like, though like Scroll-Tax, your opponent probably won’t last long under these conditions.
I think this is a card that will probably be initially overlooked by many, but I have a feeling his day will come.
Verdict: Got there!