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Magic Economics — Catching Lightning in a Bottle

By Kelly Reid ⋅ November 19, 2009 ⋅ Post a comment ⋅

Accu­rately pre­dict­ing a price spike is one of the most fun, prof­itable and impor­tant aspects of Magic’s finan­cial side. When done cor­rectly, you can turn a mon­ster profit in a mat­ter of days. These are the kinds of mar­gins that stock traders only dream of — it’s not dif­fi­cult to dou­ble, triple or quadru­ple up on your money with only a few clicks of a mouse. So, why aren’t more peo­ple doing it? They don’t know what to look for.

I’ve pre­vi­ously dis­cussed how to eval­u­ate cards in the absolute, which is a great skill to have when pour­ing over a spoiler or when see­ing cards for the first time at a pre-release. Accu­rately pre­dict­ing a card’s uptick in value because of a tour­na­ment fin­ish is a very dif­fer­ent skill. There are a few case stud­ies that will help demon­strate the skill, but the basic prin­ci­ples are quite simple.

The method varies slightly depend­ing on the tour­na­ment. When ana­lyz­ing a 1-day tour­na­ment like a 5K, States or Region­als, you have far less time and infor­ma­tion to work with as com­pared to a 2– or 3-day event like a Grand Prix or a Pro Tour. Infor­ma­tion is cru­cial to mak­ing an accu­rate pre­dic­tion. The best way to obtain your infor­ma­tion is to have a friend at the event who can call or text mes­sage you, but bar­ring that, Twit­ter is your best resource. I per­son­ally make a point to have one or two of my Quiet Spec­u­la­tion read­ers tweet­ing updates from events so that I can in turn pub­lish that infor­ma­tion on the site. The last resort for infor­ma­tion is the offi­cial event cov­er­age — while this is great for detailed info on the tour­na­ment itself, it is usu­ally not timely enough and it is far too pub­lic. By the time every­one knows that a rogue deck made the Top 8, it may be too late to get a good price on the key cards.

Once you’ve got your sources secured, you need to know what infor­ma­tion to gather. At a large tour­na­ment like a 5K, it is best to start find­ing out what decks are at the top tables after round 6 or so (a lit­tle over halfway through the tour­na­ment). That way, you can start sourc­ing your cards and be ready to buy when you get the green light. For a Pro Tour keep an eye on any unusual decks that have gone unde­feated in the con­structed por­tion after Day 1. Even if the deck is flaw­less, its pilot may not make Top 8 due to the nature of the Lim­ited por­tion. Because of this, some decks may not get the expo­sure nec­es­sary to cause a price spike. At a Grand Prix, just see what unusual or sur­pris­ing decks make Day 2.

Let’s take a look at our first case study — Nissa Eldrazi Green. Going into the Nashville 5K, there were rum­blings on MTGO about decks using Nissa and Eldrazi Mon­u­ment but they were largely dis­missed as kid­die decks. Through­out the day, Twit­ter was buzzing with news about a deck using only green cards and the Zendikar mythic rare. Todd and Kali Ander­son were both post­ing great results with the deck through­out the day, so right around the halfway point of the tour­na­ment, the com­bi­na­tion of the MTGO trend and the suc­cess of the deck up to that point in the day should have tipped off spec­u­la­tors to the poten­tial. At that point, I found a num­ber of sites that were sell­ing Oran-Rief, the Vast­wood, Eldrazi Mon­u­ment and Mas­ter of the Wild Hunt at very rea­son­able prices. I made note of them and con­tin­ued to fol­low the deck’s progress. As soon as not one or two but THREE copies of the deck cracked the top 8, I pulled the trigger.

The most impor­tant thing to remem­ber is that it’s rarely the mar­quee cards of a deck that take the biggest leaps. Nissa Revane saw a 50% increase, as com­pared to Oran-Rief, which saw between 150% and 200% depend­ing on where you look. Eldrazi Mon­u­ment was primed for a big run, and its pos­si­ble that it is still on the way up. It jumped about 300%, show­ing the power of under­priced mythic rares.

The basic prin­ci­ple is sim­ple. First, find a new deck that’s hav­ing suc­cess or an exist­ing deck using a card not pre­vi­ously used. Then, when it looks like the deck has a real shot at Top 8, source the cards. Avoid pay­ing big money for mar­quee cards — there’s just not enough lever­age. For rares, aim for cards priced under $2. For mythics, you can go as high as $4 — Eldrazi Mon­u­ment could be had for around $3.50 2 weeks ago and is now in the dou­ble dig­its. Once you’ve sourced your ven­dors and know what cards on which to focus, pull the trig­ger as soon as you hear the deck’s made Top 8. It pays to be early. Some stores, espe­cially auto­mated MTG Online stores, have auto­matic price adjust­ment imple­mented so that if a big run on a card starts, the price will climb with the vol­ume. The goal here is to get as many copies as pos­si­ble for as lit­tle money as pos­si­ble — that means the cheap­est ship­ping options, order­ing all from the same store if pos­si­ble, etc. How many you order depends on your bankroll, how you plan to move the cards, how soon you need to see a return on invest­ment and if you plan to keep any for your­self or team­mates. I’ll dis­cuss mov­ing inven­tory next week, since that’s pos­si­bly the most-requested topic these days, but 12–20 copies is a good num­ber for an indi­vid­ual player just try­ing to keep him­self play­ing for free. More than 20 becomes hard to move quickly if you’re just trad­ing around your local play group.

I advise keep­ing a spread­sheet on some­thing like Google Doc­u­ments, espe­cially if you have a smart phone. Google Docs is eas­ily acces­si­ble via iPhone, which is why I keep a spread­sheet detail­ing quan­tity, price, source, sta­tus, and any notes if nec­es­sary. Aside from being help­ful to keep track of what you’ve got that hasn’t arrived yet, it gives you a pow­er­ful tool when trad­ing. If you know that a card only cost you $3 and it’s book value is around $10, you can often use this knowl­edge to cut peo­ple deals. They don’t par­tic­u­larly care what you paid for it, but they know that when you offer the card for $7 cash, they’re sav­ing money. You’re still mak­ing a great profit and its often bet­ter to sell cards slightly below mar­ket value in order to make a quick sale. My expe­ri­ence shows me that 20% below the big-name ven­dors is a good price point that keeps you both prof­itable and liquid.

That’s about all you need to know to catch light­ning in a bot­tle! Tim­ing and good sources are key to pulling the deal, and good bankroll man­age­ment is a must. You want to keep abreast of upcom­ing events so you can take advan­tage of mar­ket fluc­tu­a­tions. When this arti­cle is pub­lished, Worlds will have just begun. If you con­sider your­self a spec­u­la­tor, you need to be GLUED to Twit­ter and event cov­er­age until the event ends. Remem­ber, it’s tak­ing place over­seas so be sure to account for the time zone dif­fer­ence. See you next week!

Kelly Reid, editor of financial news site http://www.quietspeculation.com, has been playing Magic the Gathering since 1994. With 15 years experience in the game, his goal is to teach others to fund their gaming through proactive speculation and intelligent trading.

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