1) A good portion of the cards in Modern had been out of Extended for a year, and saw no little-to-no Legacy play. Magic Online has a very efficient
economy, and if the supply exceeds the demand on a card, it drops in price pretty quickly. When the supply far outstrips the demand, card prices sink
like a rock, and most of the big Modern cards were in that boat.

2) Legacy had taught people about the value of building collections for non-rotating formats. Everyone remembered (or heard of) the time when dual
lands were $15-20 (or less), and Force of Wills were $15. People didn’t want to miss the boat on the next Legacy. But people didn’t want to just get
their feet in the format, they wanted to make a profit on it, and bought a lot more than they needed.

3) Because the format was not officially supported or sanctioned, there were no tournament results to rely on, and people were far more willing to buy
cards on potential rather than actual use. The price jumps impacted everything that could see play, not just the cards that would see play immediately.

If you were someone who made a conscious decision to start speculating the day of the Community Cup announcement, you would have had to make some very
poor decisions to have not seen a 300% return in the last four months, and returns over 1000% on many cards was possible. This is not normally how
Magic Online works, and if you just got into speculating during this time, don’t expect it to work like that in the future — you’ll be sorely
disappointed.

When dealing with sets still eligible for it, redemption keeps cards at a price similar to that of their physical counterparts. After all, if an online
set only takes 100 tickets to put together, and can be sold for 200 once redeemed, the bots and large dealers who are frantically trying to complete
sets to double their money will eventually bring the price up to a more standard level. Essentially, the demand for the cards in the paper world have
an impact on the digital versions.

Sets beyond redemption, though, are different. The prices of cards are related solely to how much play they are seeing online, and nothing else. Cards
that have a history of being tournament staples will hold a high value longer (as people are fine with holding on to them until they can get a good
price for them), but otherwise, it’s hard to retain much value unless the cards are seeing play. It’s not at all unusual to see these older cards at a
fraction of the price of their paper counterparts — until the demand comes back, and then the prices jump back up.

So, what does that have to do with the future of Modern speculation? The truth is, at this exact second, I would find it hard to invest much further
into Modern, until we know what the fate of the format is. Modern has breathed life into hundreds of cards, like the shocklands, that seemed destined
to collect digital dust forever, but the question remains — for how long? The dailies have shown a format that while exciting, has some real settling
to do. Combo is a little too powerful, and control is far too weak. The format is as fast, if not faster, than Legacy, and an unhealthy number of games
end on turn 3 and 4. Barring a real change in Philly than the decks we’ve been seeing, or a shakeup with Innistrad, we will probably see some changes
to the banned list, which could “fix” the issues with the format… or it could just create new ones.

No matter what happens with the format, though, one thing is almost certain: we are due for a price drop in the near future. Once the metagame is
established, and more traditional roles of supply and demand have returned, people who put their money into decks that are not viable will either sell
them off for decks that are, or get out of the format entirely.

How far card prices drop, and how much of the format is affected, will all come down to how much people want to play Modern on Magic Online. The
question is this: Is this a format people want to play because it’s an awesome format, or a people format want to play because it’s used for
tournaments? Over the last few years, Extended only saw any activity during the PTQ season, and consistently saw tremendous drops in card prices as
soon as the season ended, and would rise again as the format came back the next year.

Legacy and Classic, on the other hand, see card price fluctuations that are much slower. Those are formats that are not pushed as heavily on Magic
Online — but the people who play them want to play them, and as such you don’t see a huge crowd of people rushing in to buy the cards one week, with
the intention of selling them in four. People also put more value in having a collection of the format online, and are willing to sit on their Goblin
Welders or Phyrexian Dreadnaughts, knowing they will play them in the future.

It’s possible to make money in either kind of environment, but you would be best to tailor your strategy towards the kind of format that Modern
becomes.

The first possibility is that Modern is a “pump and dump” format that sees huge price increases during the active season, and a return to the baseline
at the end of the season. The likelihood that Modern becomes a PTQ format appears to be very high; although we haven’t seen an announcement just yet, I
have little doubt that it will replace Extended at some point in the rotation next year, if tradition holds, around January. That means you should make
whatever moves you want to make before then.

The hardest part about investing in this kind of format is that you’ll have to make long-term investments to make the big money. Card prices hit their
lows in the weeks following the end of the season, before casuals and other speculators empty out all of the players who are trying to put together
Standard for the next PTQ season, and creep up slowly over the next nine months. But it’s hard to make a real profit until people are willing to rebuy
the Cryptic Commands for fifteen that they sold off for six the year before.

The second possibility is that Modern picks up steam as a popular constructed format on Magic Online (and maybe even in paper). If StarCityGames.com
decides to run Modern regularly as large side-events at their Open Series events (or if they even begin to replace Legacy events there), then chances
are people will view this as a year-round format, and will be less likely to dump their cards when they feel they are not going to be relevant for a
year. If this is the case, then you are looking at treating the format much more like Standard — though without the benefit of getting cheap cards
during release events.

The short-term investing strategy here is just to keep your ear to the ground, and rush to pick up whatever the new hotness is every week. If Vengevine
decks have a big breakout weekend at an event somewhere, and their price online is low, pickup a few and resell them to people who want to build the
deck. Stay up until midnight EST on the night of the banned/restricted list update, and be ready to rush bots for anything taken off the list, or any
card heavily impacted. If Bitterblossom were to come off tomorrow, you could definitely make a profit picking up Bitterblossoms at 7.75 (which is
historically closer to twenty when it is in favor), or you could pick up Mistbind Cliques at around .50, and plan on selling them off for 1.50! It all
comes down to what your cash-flow looks like.

The long term investing strategy is to track the price of the perennial all-stars in the format, and pick up them up as they fall out of favor
temporarily, and their prices drop. As an example, since the general consensus is that control is not very good in Modern, Glen Elendra Archmage is
currently at eighteen tickets. Even when Modern wasn’t yet a format, she only bottomed out at about five (thank its usefulness in Commander and the low
distribution of Eventide), but she hit eighteen tickets during the last Extended season. It’s a pretty safe bet that at some point in the not
too-distant future, control decks will come back to Modern, and she will rise in price.

While there’s still money to be made in Modern, it’s not going to be the easy-mode game that it has been for the last two months. Anyone who wants to
make money in it is going to have to learn things like bankroll management, taking advantage of seasonal trends, and the importance of diversifying.
More than just that, it will require research, good timing, and patience.

Our second guest spot today is comes from Magic Online master Bing Luke. In addition to taking down Magic Online Championship spots year after year
(he is once again qualified for Worlds via an MOCS win), Bing is an avid and accomplished speculator who regularly helps me pinpoint targets for my
own buying and selling. Here, Bing provides some basic info for new speculators and a look back at some of his greatest hits.

Bing Luke on Picking Your Spots

Overall, prices on MODO represent their current value. Transaction costs are almost negligible. The buy-sell spread on bots is usually less than 15% of
the card’s value (compared to 50% in real life). If people want to stop playing Caw Blade this week and pick up Splinter Twin, they can switch decks
without losing too much value in the process.

This means making money off of trading on MODO mainly comes from informational advantages. In the short-term, a new deck can make a splash on the Pro
Tour and immediately cause a wave in demand, instantly causing shortages of supplies or quickly updated prices. If you can find bots with the old price
that still have inventory, you can instantly double your value on the cards you manage to get. In real life, this is akin to finding little kids at
your neighborhood store and trading with them based on a month-old perceived value.

The problem is that the velocity of information is incredibly fast on MODO. Cards with outdated prices get snatched up incredibly quickly, limiting
your throughput. The recent Jace, the Mind Sculptor / Stoneforge Mystic bannings, for example, caused Jace to correct itself literally overnight to a
third of its old value.

In the medium- and long-term, the informational advantage comes from identifying underpriced cards based on future demand. In the medium term, this can
be based on something as simple as knowing what cards will rotate with the next set release because MODO players generally value cards almost
completely on current play-value. The tricky part is knowing what decks will become the next Best Deck compared to what people are playing today.

Evaluating Picks in the Medium Term: Decks, not Cards



One of the things to note is the raw power of individual cards rarely drive prices (with the minor exception of Commander generals). Demand on MODO is
fueled by Constructed players, who play decks, not cards.

The Titan cycle contains five of the most powerful creatures Standard has seen simultaneously. In the last year, however, they have all independently
seen spikes in their prices from a minimum of 25% (Primeval Titan and Grave Titan) up to 400% (Frost Titan). Fluctuations in the metagame caused each
Titan at times to be best positioned in the best deck, and the prices moved accordingly.

On the other hand, at any given time there are incredibly powerful rares that just don’t have a home in any deck and thus don’t have the current
demand. Examples from the previous Standard that come to mind are Baneslayer Angel, Lodestone Golem, and Ajani Goldmane.

Not only do strong decks determine what cards people want to play with, they impact what people play against those decks. When Master’s
Edition 3 introduced Bazaar of Baghdad to MODO, the card that increased in value the most wasn’t Bridge from Below or Ichorid, but Leyline of the Void.
Bridge and Ichorid definitely increased in value, but Leyline increased in value more and later due to the nature of the Classic metagame. Even if a
deck dominates, it may only fill 40% of the metagame. On the other hand, colorless or splashable hate like Leyline can be a four-of in any deck. During
the brief dominance of Thopter-Depths, Damping Matrix underwent a similar stratospheric jump in value in the span of a week or two, from something like
.3 to four tix.

Of course, one of the biggest predictors of cards is raw power. The important thing, however, is figuring how a card will work in terms of the format,
as opposed to in some abstract sentiment of “this is really powerful.” Evan Erwin gets a lot of ribbing for his reaction to his preview card, Warren
Instigator, which he instantly dubbed an automatic $40 mythic. It’s not hard to see how you get there, considering it represents a legitimate aggro
threat coupled with one of the best abilities to be printed on a creature ever. The reason it never got off the ground, however, was that there were no
cards in Standard that make Warren Instigator into a deck. Siege-Gang Commander and Goblin Chieftain are nice, but Goblin Matron and Goblin Ringleader
are what made Goblin Lackey broken.

To date, my biggest single play was in Nissa Revane. I started looking at her right about the time of Worldwake spoilers, when she was priced just
above five tickets, down from a high about fifteen after the Andersons crushed a StarCityGames.com Open. I bought 110 copies, plowing just under 600
tickets into it (including most of my spare bankroll). My reasoning was as follows:

1) Elves was a proven deck. The tools were there for it to be played.

2) No one was playing it, so Nissa Revane was priced pretty low. I wasn’t banking on the deck to be a Tier One deck, but if even it established a 5-10%
of the metagame at any point, it would be a substantial increase.

3) An early Worldwake spoiler included Joraga Warcaller, indicating the deck might get better.

4) Casual players like elves. Casual players also like Planeswalkers. This would set a floor that would limit my losses.

5) If Worldwake didn’t pan out, each set release through M12 provided the opportunity for a major metagame shift, giving me five additional
opportunities for elves to have its day in the sun.

6) Most importantly, even though I had 600 tickets invested, I only had thirty to forty play sets of the card (depending on how the deck was built). I
didn’t need a rise in prices to have a prolonged plateau; any spike could let me get a quick exit.

Worldwake didn’t pan out the way I hoped, nor did Rise or M11, but Scars of Mirrodin gave me my opportunity. Blue control decks solidified its
dominance of the format, finding tools to beat Valakut, and Elves was a natural foil to a control deck. It wasn’t the Next Big Thing, but it was a
solid tier two deck for a couple weeks. I exited at 8 tix each, letting me clear 300 tix.

Evaluating Picks in the Longer Term: Knowing Formats


Ted previously discussed his big bet on dual lands
as a medium/long-term position. This isn’t a bet on individual cards, but rather on the format itself, namely Commander and Legacy. Dual lands were
part of his basket to bet on the growth of those formats above and beyond any natural growth in Magic Online.

Knowing formats, both how they work and how they grow, is another significant factor. When Extended was a real format, for example, there would be a
massive flood into the format during its season, and then it would be basically a niche format at any other time. There was significant money to be had
just by buying Extended staples after the season ended (or after they rotated from Standard) and just waiting for the next season. A similar dynamic is
happening with Modern now, which makes an interesting question of what will happen to prices off-season and in a time of flux for organized play.

One of my first big hits was related to the MODO Pauper format. Pauper is a commons-only format that is incredibly popular on MODO, rivalling Block and
Extended/Modern. The format is eternal, and forgotten cards like Crypt Rats and Prohibit have become format-defining all-stars. Despite being common
(and thus having relatively large print runs compared to Mythics other chase cards), some cards have the benefit of being in shorter-run sets,
propelling commons to prices upwards of 4 tickets.

I made my move after seeing Serrated Arrows reprinted in the Garruk vs. Liliana box set. Someone noted that it was “printed” as common, which would
otherwise be a meaningless distinction — except the rarity symbol now made it Pauper legal. I thought that its previous printing as a Time Spiral
purple would be similar to a common in a smaller set and thus the ceiling could be pretty high.

The card itself fit nicely into the format. Rats was one of the big players, meaning Obsidian Acolyte was a widespread hate card. Arrows gave them a
legitimate out. Goblins was also starting to take off, and it was great there. I bought 150 at between .20 and .25 each and a bunch of other people on
Goodgamery bought maybe 150 more. When a blue Teachings deck started doing well, Serrated Arrows jumped to two tickets and I sold most of them for 1.5
tickets. Even with a generous buy-sell spread, it was a nice profit for an opportunity that would have potentially gone unnoticed without knowing how
Pauper worked and its effect on the market.

I hope you have enjoyed hearing the thoughts of other successful speculators this week, and you should feel free to flog Stod ( @samstod) and Bing (@prolepsis9) to write more in
the comments section below. I should be back next week with more of the usual combination of insight and inanity.

— CardGame

@NextLevelSpec
for financial and MODO thoughts

@mixedknuts
for everything else (including what has turned out to be a pretty popular EPL feed)