Previously published on SCG Premium on 7/20/2011.
The point of today’s discussion will be to open your eyes to potential you probably don’t know exists. Most of today’s financial writers discuss what has already happened and maybe give you their insights for what to expect in the future. Nearly every single one of them focuses on what is happening/has already happened with real world Magical cards. This series will be different.
In it, I’m going to focus primarily on the Magic Online markets. Additionally, instead of just telling you what I think in each article, I’m going to teach you how to read what the future might hold. In future weeks, I’ll start discussing how to spot trends, pricing metrics, and how news from the real world translates and impacts the Magic Online market, which just happens to be the fastest, most reactive Magic card market on the planet. For now, however, we’ll start with a story.
Welcome to Next Level Spec.
Mythics and Money
It’s all Baneslayer Angel’s fault. While not the first mythic rare I ever played with or against (credit for that go to Sarkhan Vol and Gideon Jura respectively), Baneslayer is the first mythic whose price I started following. Back before M11 came out, BSA was hovering around $50 per card, but no one knew what would happen if she either a) rotated out or b) got reprinted. Everyone had guesses, but no one could really say for sure because it was the first time a card this popular had faced this kind of window. My guess was that either answer meant the price would drop, but I couldn’t say how much. Obviously we now know that the combination of reprinting and utter lack of play in the new environment caused Angel to crash from such lofty heights all the way down to $7 in the real world and 3.75 tix on Magic Online, but at the time the future was cloudy.
I didn’t own any Angels then, but the whole process of speculation and gaming the potential outcomes got my economic juices flowing, which in turn saw me start to pay attention to the MODO card markets. This is something I do professionally for sports betting, but in Magic it’s just a casual thingâ€”one of those cases where you test your wits and your knowledge of market forces against everyone else out there for fun and profit. To me, it’s very much like choosing which stocks you want to put some retirement money into, except the turnaround for buying and selling is dramatically compressed, the money involved is a lot smaller, and instead of following the news of the entire business world, you just have to follow what’s happening in Magic.
Additionally (and this is the important bit), if you are good at it, it’s also a solid way to make a chunk of change from very little seed capital.
A Potential Scenario
It’s the end of the Jund summer Standard season, and you are looking to buy staple rares you know are likely to be good when Scars of Mirrodin releases in the autumn. You have also been bitten by the speculation bug, which means you sometimes look for value cards that might get more expensive down the road, partly to play with now, but partly with an eye to selling these cards at a profit. At this point, Jace, the Mind Sculptor is down to 75 tix each on Magic Online, and you are sure that a) this guy isn’t being reprinted, and b) it’s probably the best card in Standard, so you buy a set of 4 for $300. Also something Ben Bleiweiss (one of Magic’s most reliable financial experts) said in one of his articles tweaked you, and you grab some Stoneforge Mystics for $4 each as well, partly because you think you’d like to play Boros at some point and partly because Ben said Scars would likely have some pretty spicy Equipment in it, so mise well, eh?
You’re also mucking about with all the M11 Titans at this time. They all look good, but no one really knows which ones will be the best ones in the coming seasons. So you decide to buy them all at their cheapest point and figure you will either play them or potentially sell them when they get popular in various archetypes.
I won’t go through all the Titan trades here, but between August and Christmas, you net 50 tix in trades.
Titans = +50tix
Fast forward a bit. It’s now April, and some dashingly handsome writer discovers that this Jace guy may be a problem. Not just a little problem, but a problem big enough to get him banned. Can that happen? Standard cards don’t get banned, do they? Normally you wouldn’t pay attention to the braying of such donkeys, but this guy has a pretty good track record in predicting things, and he might just be right. You’ve been doing pretty well playing Caw-Blade since Ben Stark won Pro Tour Paris, but it’s getting kind of boring playing against the same decks all the time. May rolls around, and Jace is still crushing, and Stoneforge Mystic looks like a troublesome card as well, especially with a new Sword and Batterskull in New Phyrexia. You decide it’s time to sell.
At this point you are up 146 tickets from your initial â€˜investment,’ and you’ve gotten pretty good use out of your cards. #BanJace and #BanSFM are officially a big deal, but both cards are so popular/necessary among the tournament crowd that there hasn’t been very much movement on their prices.
The week before the potential banning announcement arrives, and you get to thinking. There’s no way to short (or make a bet that the prices will decrease) Jace or Stoneforge like you could in financial markets, but you honestly think there will be bannings. How do you capitalize on this if you are right? Well, everyone says if Jace gets the big +B, Valakut will be huge… maybe you should buy Valakut cards? If Jace doesn’t get banned, you can sell them back at a small loss (worst case, 2 tix per card purchased), but if it does get banned, you could be in for a large payday. Hrm…
You don’t want to go too deep here, since you still have a small bankroll and could certainly be wrong. However, the potential wins are big enough to make you feel it is worth the gamble.
Spoiler: Jace and Stoneforge Mystic Get Banned
Now, you could hang on to these cards if you want to. However, you know for a fact that Primeval Titan is in the soon-to-be-released M12 set (which means it will be devalued as a reprint), so a short turnaround is the thing to do. Plus, the day after the bannings are announced, Primeval Titan hits 28, and Avenger goes to 10+, which forces your hand. Sell! Sell! Sell!
Well that was a nice two days’ work. Primeval Titans would be at a more normal 18tix within a week because Valakut is not quite all that and the proverbial bag of chips, so selling at that time turns out to be brilliant. Hang on though, you’re not done yet.
While people (especially the young grinders surfing the waves of the online metagame) are busy buying Valakut cards, they are also panic-selling Jace and Stoneforge. Maybe there’s another buck or two to be made off this crazy yo-yo.
You would have bought more (especially of Jace) because he’s a staple in older formats like Legacy and Vintage, and you felt this price was absolutely silly. Unfortunately, you had to see a guy about a thing and ran out of time.
Five days pass, and the market looks a bit more normal.
June 26, 2011
SELL 5 Jace (36ea) -> 180tix
SELL 10 Stoneforge (3.5ea) -> 35tix
Net Jace = +50
Net Stoneforge = +20
Total = 703 + 70 = 773
Selling the Stoneforges here was particularly good because they are in the new event deck that came out and almost certainly won’t go up that much more. The Jaces could wait because he’s just that good, but quick profit-taking in these cases has been good so far, so why stop now?
To recap, you started with 316 tix to buy Jace and Stoneforge Mystic, which were bought thinking you would play with them. By taking advantage of generally available knowledge and having a pretty good sense of timing, you have more than doubled your investment to 773 tickets in less than a year, and you have been doing it on a very small, casual scale.
What Does It Mean?
That, boys and girls, was me, casually mucking about with Magic Online’s card market. It doesn’t include everything I did (I lost small change speculating on the wrong Elf cards for Standard, while I won a good chunk on Candelabra of Tawnos purchases), but it includes the big stuff (which in reality were still quite small). Some of you might view it as an extraordinary case of the run-goods, but I do this sort of thing for a living and have been for yearsâ€”this was a helluva lot easier to figure out than sports betting. That said, no one seems to have done it yet (or if they have, they aren’t writing about it), so it seems like a topic that deserves coverage from someone with a clue.
Over the past year, I have discovered the MODO market is now deep enough to allow for reasonably large card buys without significantly impacting the stock of the biggest bot networks (Cardbot, Marlon, Supernova, MTGOTraders), or the overall price of what you are buying. This makes speculating on cards relatively cheap and easy (translation: aside from the actual card costs, you aren’t paying much in fees to buy or sell the cards, and you can buy in bulk without triggering price increases. This is good). Additionally, you can flip cards immediately, without having to go through the huge hassle of shipping and handling tens of thousands of cards on a daily basis. Additionally, the margins for getting into and out of cards are relatively thin, so if you make mistakes, you can usually cut your losses without getting completely stuck.
To put it another way, Magic Online’s online card market can now function like a very small, niche online stock market. If you wanted to invest a couple hundred bucks and start speculating, you could do that within 20 minutes, making it even simpler than opening an account with e*trade. As you can see from above, with a few educated guesses and a good sense of timing, you can make a hefty profit just by following the news and a couple different metagames. As someone who really enjoys economics and markets, I find this to be yet another fascinating game within the game of Magic, except unlike most tournament elements of Magic, this one can actually be +EV. I’d never speculate on cards in the real world because it takes too much time and effort to deal with the actual cardboard, but online doesn’t have any of that. Yes, the trading interface sucks, but most of you won’t be moving thousands of digital objects, so you’ll barely even notice.
Where Do We Go From Here?
That, my friends, is up to you. I have a bunch of practical theory and research that I’ve done over the last year to deliver, but you guys will end up choosing the majority of the topics. If you have something you are curious about, let me know, and there’s a chance we’ll take a look at it in the future. I will spend some time discussing current events, but that isn’t the primary purpose of this column, so it won’t take up most of the space either. What I can tell you is that most people don’t have the slightest clue what they are doing regarding MODO finance. That’s good news for us, since it means there is a lot of money to be made from applying sound theory and superior knowledge. I’m excited, and I hope you are too.
Live long and profit.
@mixedknuts on Twitter