Next Level Spec: The Battle Of The Specs

Ted Knutson appoints four apprentices (and you!) to learn about Magic Online speculation for one whole year, under his tutelage. Do you have what it takes to turn a profit?

A couple of weeks ago, Twitter follower @BrownDR asked if I had considered taking on an apprentice or two and teaching them in the ways of spec. I said that I hadn’t (last year was mostly spent learning how things work) but that it sounded like an intriguing idea, and for his excellent idea I gave him a foil Hallowed Fountain. One of the problems that I have with writing this series is that I don’t know what you don’t know. Because I have a strong background in practical market economics, I probably take a lot of bits of knowledge for granted that might prove important for others who are learning from scratch. Maybe it would be useful to take on an apprentice because interacting with them would introduce topics we could cover in articles…

My brain started churning ideas for how to make it work plus make it interesting, and this is what we (myself and my brain) ended up with:

[To the apprentices chosen]

One of my followers asked me if I had ever thought of taking on a padawan to teach them the ways of spec. This immediately blossomed into “Hey, I should do that and make it a sub-article series under the NLS header.” Shortly thereafter, that turned in to ‘OMG, I can get TWO or THREE guys to do this, and they can compete!’

The concept is: Take smart guys who are not doing any spec whatsoever. Have them re-read my work plus keep up with whatever other financial MTG news they want to and spec for one year’s time. See what happens. I have thrown a ringer into this in that Tom works for a dealer in real life. I like this wrinkle and hope that you guys will too.

So yeah, you four are the chosen ones. If you accept your mission, you can expect the following:

  • A freerolled 200 tickets to start.
  • The opportunity to keep a significant portion of your profits
  • You can ask whatever questions you like of me, and I will answer them frankly and forthrightly to the best of my knowledge with minor exceptions (Example: I will NOT tell you when to sell things. That is for you to figure out.)

In return, I expect:

  • a 1-year commitment (The contest starts on Jan 30 2012 and ends on Dec 31 2012)
  • Written participation on a bi-weekly basis (you can still write your own columns) where you have a forthright discussion with the world about what you are learning and what you do and do not understand.
  • Copious record taking in a spreadsheet. The world needs to know what you have bought, what you have sold, when and for how much.
  • A blank Modo account used only for spec purposes. Seriously – DO NOT PLAY ON THIS ACCOUNT
  • I may criticize your decisions publicly. That’s part of the game, but I will probably be gentle about it.

On Jan 1 2013 I will liquidate whatever is left on both accounts to a bot network (obviously you can liquidate before then) and tally up the results.

The WINNER gets to keep all of their profits PLUS 33% of the LOSER’s profits as well.

The LOSER gets 50% of their profits, and I will take 17% of the LOSER’s profits as an administrative fee.

The person who finishes in last place will die.

If none of you shows any profits for the year, I will be disappoint.

What say you?

–Card Game out

So there you have it. The reason I didn’t make this an open contest is because…well, I’m sure you are all very trustworthy sorts. That said, I don’t usually walk around handing out hundred dollar bills to random dudes on the street. If I’m ponying up $800 of my own money, I want some modest level of security on getting it back. Thus I chose what I thought was an interesting mix from a happy set of volunteers. It’s not you… It’s me. I have trust issues. However, I’m still interested in working with you, gentle readers.

Okay, that sounds great, but what does that have to do with us?

Well here’s the deal—just because I didn’t give you 200 tix to work with doesn’t mean you can’t play along. In fact, this whole project gets a lot better if you do. Therefore, if this is an idea you find intriguing, give yourself a budget on Magic Online and start tracking your buys and sells in a spreadsheet (you can start with anything, but obviously anything north of 50 tickets is preferable). You can hit me with questions at @NextLevelSpec on Twitter—people do this frequently anyway—and you can also talk amongst yourselves with the hashtag #SpecBattle. The guys will be sending me frequent updates of their buys and sells, and we’ll then track their progress here and do a full recap at certain milestones (the first of which will hit after March 31st). You can also track post your own milestones, write about what you are buying and selling in your blog, Facebook notes, whatever, and link to them on Twitter with the hashtag for all to see. (No cheating though—cheaters suck!)

Before you rush out and start buying things, however, you might want to read the answer to the most asked question I got from our new contestants—namely

Where the hell do I start?

Making sure you are at least somewhat familiar with the NextLevelSpec archive is a good start (the Quotes sections should prove especially helpful). Beyond that, let me tell you that the premiere of a new set is usually a pretty sweet time to get involved. The environment will be in flux, and it usually takes at least a month for someone to find and refine the best deck, and that’s just in Standard. The Modern PTQ season is still rolling along, and as anyone who has been paying attention knows, Modern has been a very, very good format for speculators. In short, you have a ton of options.

If you are the type of person who likes to follow all the tournament coverage up to the second, you might be interested in pulling some Speed Specs on the decks that do well. I did this quite a bit when I was first getting started, but the market has gotten a bit more crowded in the last year, so you have to be a bit more careful/timely with what you buy. (Note: I can see a large number of you waiting breathlessly for any information on what LSV, Kibler, Conley, and co. are playing at the Pro Tour and hoovering up available copies for quick flips on the weekend and—provided you do it fast enough—you can probably make some money this weekend.)

If Speed Specs are not your thing, maybe you would be interested in using your crystal ball to try and figure out what is going to become popular. This is part intuition, part magic, and part systemic analysis to say, “You know, I think that card is pretty powerful and going to be played soon; I’m going to buy a bunch of those.” I usually find these types of things to be pretty fun, but unless you are really good at it, you may end up with a high failure rate and cost yourself some tickets.

One of the types of specs I have found most valuable over the last year has been the Cyclical Spec. It’s covered in more detail here, but basically what it says is that there are good and bad times to buy cards, and these cycles are relatively easy to predict. Buying Dark Ascension cards immediately after the Prerelease is comparatively a lot more expensive than buying them right before the next set comes out. The same is true for buying Modern cards en masse before PTQ season starts versus buying Affinity during the middle of the PTQ season the week after it has won back-to-back Grand Prix.

The other thing I would say you should brush up on are the ranges that prices for certain types of cards generate online. Mythic rares from a set like Innistrad rarely go above 25 tickets, so if you are buying near that peak, you better be damned sure they are going to get an extra boost from somewhere if you want to make a profit.

The final thing I do every couple of days is go here and look at the prices. I also save these files regularly with dates in the filename so that I can go back and reference them. Becoming familiar with what the ‘normal’ prices are for the cards currently in heavy rotation means you will be more likely to spot when something seems out of whack and pounce on it. Sadly, there isn’t an archive of prices for Magic Online anywhere that I have found right now (IRL price history can be found at the Black Lotus Project), which is sort of insane, since with how much interest is shown in Magic Financial content, you could generate a TON of hits by making this information readily available. (Hint, hint, *nudge* to Cardbot, MTGOTraders, Supernova, and TheCardNexus.)

Next time, we’ll start finding answers to the questions that you guys are asking to try and help you on your way. In the meantime, do your research, make a few test buys, enjoy the Pro Tour, and have fun with the Battle of the Specs.

Teddy Card Game
@NextLevelSpec for financial stuff
@mixedknuts for everything else

Post Script

Before I go—the four main Battle contestants have been given their tickets and will now start speccing away. You can expect to hear more from them in the coming weeks, but here’s a little bit of background on each, so that you can get to know them better.

Kevin An

My name is Kevin An. Back in the day, I used to be a PTQ grinder, making a couple team PTs with Sean McKeown and Seth Burn. I remember one time when we drove three hours to 1-0 drop an event for rating points (but that’s a different story). I even participated in the Dial-A-Pro-Tour. But moving onto more relevant things, I also used to trade and sell cards. I was one of the ones who would trade big constructed rares and trade them for piles and piles of crap rares. I would get sealed product and trade draft sets for big cards because draft sets were just better than money. I would scour the internet for new sources of cards, finding little stores across the U.S. and buying them up. Remember Flash Hulk? Pretty sure I bought out many stores in the Midwest before Sadin’s GP win, dumping them all for big gains before it was banned. After the banning, I only had one left, which I believe I was able to turn into a Diet Coke and a sandwich.

Anyway, that was years ago. I haven’t done anything with buying or selling or even playing competitively since Morningtide, paper or digital. Magic had strictly become a hobby that sometimes took up large amounts of my time and interest. And half that time, all I was doing was making up decklists that went nowhere (my mom does Sudoku, I make decklists, sue me). To say that I am current with the Magic community would also be a stretch. I didn’t even know Ted wrote Next Level Spec, and as of this moment I am still catching up on the writings. 

My current knowledge of speculating on MTGO is essentially zero. Aside from doing drafts and having those rares fund future drafts, I’ve done very little (aside from hoping to get Snapcaster Mages at 6-7). To prepare for this undertaking, I assume I am going to have to initially do a lot of research, reading old articles and catching up with event results and finally paying strong attention to spoilers and emerging decks with the hopes of being able to stay ahead of (at least) my competitors.

Eric Duerr

My name is Eric Duerr. You may remember me as the nameless Tempered Steel player in Craig Wescoe GP Pittsburgh report. I’m a 21-year-old senior at Brandeis University majoring in economics and math, waiting to hear back from some behavioral and experimental economics grad programs. I’ve been playing Magic regularly since 2003, to no great success. I’ve fallen out of the PTQ scene over the last few years, and I haven’t got much hands-on market experience, but Ted’s still nice enough to let me play around with his money. If nothing else, this will be one hell of a learning experience.

My prior history with the Magic Online market is less than glamorous. I have speculated precisely twice on MODO—and if anyone wants five playsets of Culling Scales, I got you covered. The other time could have been a home run, had I trusted Bing Luke and held onto my Serrated Arrows. That’s my first goal: Learn when to pull the trigger. It’s not as easy as it sounds—Bing sold out at 1.5 and Supernova’s currently buying at 5.4. Are we that desperate to kill Delver of Secrets?

Anyway, it’s comforting to know my competition is a bunch of good guys as unfamiliar with this brave new world as I am. I’m gambling with house money—regardless of the actual outcome, how can I lose?

Tom Reeve

Hi, I’m Tom Reeve! You may remember me from such StarCityGames.com articles as “Finding the Dampen Deck,” “Drafting With Tom! MSS #3,” and “Top Six Knock Out!—The One Where Tom Goes Home.”

First of all, I feel like I should own up to the formal credentials I have that will help me pick up the best-things-in-life trifecta in this competitive speculation shindig. Uh, I don’t have any. My educational background isn’t in economics or finance, but biochemistry (briefly) and media studies and communications (properly).

I have, however, been playing and trading Magic cards for a suddenly terrifying fifteen years or so; I’ve dabbled in paper speculation in the past in both Magic and VS System at a pretty casual level; and for the last few years I’ve been working for Magic Madhouse, a trader here in the UK. While my main focus has been on community management and customer service, those of us in the company who’ve been around a while tend to get stuck in pricing discussions, particularly around new sets and format changes (rotations, bannings, and so on).

More generally, my Magic past has been a pretty consistent streak of not-quite-there. Some PTQ Top 8s, a get-paired-down-and-lose-to-miss-Top-8-on-tiebreaks at Nationals, 43rd out of around 2200 at GP Paris, not quite paying for the train fare.

So I’ve speculated in the past. I’ve picked up my $0.75 Tarmogoyfs, my $3 Bitterblossoms, my super-cheap Null Time Zones. How hard can this be? Unfortunately, there are some critical differences between speculation on paper cards and digital ones. As someone who’s gotten a lot of mileage in the past out of trying to make more accurate initial assessments of cards than ‘the crowd’, particularly eBay presellers, the much longer initial lag on MTGO between ‘card is spoiled’ and ‘card is available for purchase’ will make things harder. I anticipate having to focus far more on anticipating format changes, metagame shifts, rather than being able to move in super-early on cards that are straight-up undervalued. That means, among other things, that I’m going to have to get used to doing a lot more actual research than I have in the past for my relatively small ‘for fun’ investments.

Of course, there are big upsides to MTGO speculation relative to paper. One of the most annoying things with paper speculation is when you get a card ‘right’—but not right enough that you really make out that well after taking into account the greater friction in the process like shipping fees, greater disparity between dealer buy/sell prices, time investment in, gasp, trading, relative to dumping cards to bots. Card valuations aren’t warped as much by casual formats—Death Baron isn’t a $10 card online. There’s greater liquidity in the market, transaction costs are much lower, and there’s more potential to respond quickly to ‘events’ and either minimize losses or make quick profits (where ‘events’ could be anything from a new spoiler, to a breakout performance at an Open or Grand Prix, to a ban announcement). Of course, that also means you need to be paying attention at the right time.

And although this contest does hold the potential for picking up some winnings, that’s not really why I’m doing it. The number one reason I’m doing it? It sounds like fun! I get to make embarrassing mistakes in front of an audience for an entire year, and who doesn’t love that? More seriously, I think it’ll be good for me.

Partly as a writer, in that I’ll get to hone my craft to a razor’s edge by penning dozens of intricately crafted excuses as to why my pool of tickets is shrinking steadily week-by-week, and partly as a general-purpose human being, in that it’s a long-term commitment that requires the investment of time and brainpower. I’ve heard that actually sticking to things like that is good for you, although I have yet to be convinced.

I will hopefully hone some skills that I don’t use enough at the moment and pick up entirely new ones. Paying more attention to formats as they change, and trying to get better at anticipating those changes, could well make me a better Magic player in general. And all I’m really risking is my reputation? I’d be a sucker not to.

(Although, if someone has a sweet card-speculating robot that I can borrow for a year or so, that would also work.)

Valtteri Walldén

Hello world. My name is Valtteri Walldén, and I’m here to add a splash of Nordic color to this illustrious competition. Although I’m no longer an active player, my history with Magic is like a rainbow: long and colorful. You may remember me from such events as Pro Tour: Berlin* in 2008 or any number of FNMs across Finland. Let’s face it though, you probably don’t. As for speculation, well, I’m a complete novice.

My feelings about speculation are mixed. Knut’s speculation series last year was a great read and enlightening, and I’ve been taking part in IRC conversations about speculation for around 18 months now with the GoodGamery crew. Despite everything I’ve learned, I still feel that speculating is a bit of a black art. It’s as if there is a secret that experienced speculators know that I’m not privy to. Markets seem volatile, difficult to predict, and downright scary, even though I have a basic understanding of the mechanisms by which they function. I’m sure there are people out there who feel the same, and it’s a feeling that I want to be rid of.

So, I’m very excited that Ted offered me this chance to try my hand at speculation. I feel like this is the push I needed, that Ted is the road to my rubber. The fact is that I have been thinking and reading about this stuff for a long time, and now it’s time to throw it at the wall and see what sticks.

MTGO is a great sandbox environment for this kind of competition, and I’m eager to get started. I’ve got no illusions that Mr. Knutson will let us off easily, however, and expect him to take issue with our picks remorselessly.

This competition is, at its heart, all about learning, and I expect to learn a whole lot during the next year. Just the jump from thinking about speculation to actually doing it should be very educational.

I hope that the amount of dedication, rigor, and indeed sheer work involved will do a lot to demystify speculation for me. Some of my weak areas will doubtless include portfolio management and a certain lack of patience, and I’m going to try and make headway in both of those areas as soon as possible. My genuine hope is that someone else will also learn something from my successes and failures. If not, I at least plan on being mildly entertaining along the way.

I think my strengths will include my (admittedly somewhat basic) grasp of economics as well as a wide and varied network of people from which to draw information. In addition, the gift of foresight may run in my veins as my great-great-aunt was a Finnish occultist of some renown, as well as a part-time hermit. I’m also getting a Master’s degree in computer science, which means that I’ll be keeping track of my portfolio in a notebook I keep under my bed.

My game plan is as follows. First, look through Ted’s series from last year, confirming what I know about the basics. Since the time frame for the competition is fixed, I’ll then make some kind of calendar for the seasons and releases on MTGO for the next year. I expect speculation on those large, medium-term trends to account for the lion’s share of my profits. There’s no use making very long-term investments, and quick, sure-thing cash-outs tend to be rare. After that bit of preparation, I’m going to start asking around what the MTGO ringers and other pros think about different formats and decks. The rules also allow us competitors to ask questions of Ted directly, and I’m looking forward to drilling him hard.

That’s about it for now. I want to wish luck to my fearsome competition (no slackjawed mouthbreathers here), and I want to offer a big thanks to Ted Knutson for this opportunity. See you in two weeks.

* We didn’t know Elves was a deck, so we thought it was some kind of conspiratorial Japanese prank when Saito came around asking for Gleeful Sabotages. Elves was a deck (six slots in the top eight), and I failed to make day two.


Really Really Post Script—”The last place finisher will die…” someday, but it won’t have anything to do with me. I just threw that in there to see if everyone was still paying attention.