Are you a Quiet Speculation member?
If not, now is a perfect time to join up! Our powerful tools, breaking-news analysis, and exclusive Discord channel will make sure you stay up to date and ahead of the curve.
During Return to Ravnica preorder season, my friend made a call on Sigarda, Host of Herons, buying 93 at $5 shipped.
A lot of finance people in articles and tweets, as well as myself in private Skype conversations with him, had been singing the praises of the card. I hadn't even seen a dissenting opinion at the time, credible or otherwise, though I'm sure one existed.
He expected to sell copies for between $8-10 during the RTR Standard season after the zombie hype subsided, netting a tidy profit for himself.
Sigarda seemed poised to dominate the new Standard format. Nothing could kill her! She blanked Liliana of the Veil, crushed Tamiyo the Moon Sage, and even blocked zombies with the best of them. The knowledge that Temple Garden would be in the coming set only made the case stronger that Sigarda was a surefire bomb, an obvious buy.
His play looks pretty good right now. Sigarda has been steadily rising since hitting her floor in September and she is buylisting for $8 on Channel Fireball.
What if I told you most of those 93 copies were already gone?
~
GP San Jose was a pretty insane weekend. I might have slept 7 hours over 3 days and was having trouble adding when I finally got home Sunday night. The most interesting thing that happened that weekend (from a financial perspective) was Entreat the Angels appearing on buylists at $15 when the card was moving at 15-18 in trade.
Overall, a much less relevant thing happened when HotSauce Games gave my friend $7 each on 20 Sigardas.
He was looking to become more liquid by the end of the GP, and throughout the rest of the weekend he flipped another 50 Sigardas for between $6-7 each along with a bunch of other Standard stock, getting his money back on the Sigarda play itself while keeping the 20 that were 'free'.
~
GP San Jose was held from October 12th – 14th, and the Sigardas were purchased during the middle of September. The $465 spent on the initial purchase was between 15-18% of his liquid bankroll at the time.
When my friend left the convention hall that Sunday, he had netted $0 on his initial investment and 20 pieces of capital that were worth between $6-7 each, and in the 3 weeks since then have grown to $8 each (CFB's buylist). Is a potential $160 or 34% return on a $465 investment acceptable?
Of course it is. My problem is the time involved. He took almost 1/5 of his liquid capital and let it sit for a month. The passive growth he gained is very good by most financial market standards, but Magic is not like most financial markets.
Information is the most valuable commodity available. In most markets, the majority of goods bought and sold are done so by people whose job it is to be informed about said goods and the myriad other things that pertain to them. This is not the case for nearly all of the Magic related transactions that take place on a given day, and for good reason - Magic is a hobby.
People have jobs, school, etc, and, as such, most Magic players/collectors are not able to stay on top of Standard prices, much less Commander/casual or even the eternal formats. The popularity of smart phones has changed this somewhat, and your average FNM player can become partially informed in a minute or two, but nearly all of them never go beyond checking retail prices on a single website.
To be fair, why would they need to know more? This is a trade or maybe a free draft, so why does eBay, MOTL or some store's buylist that's across the country matter? The incremental gains you get because you are informed compound over time the more transactions you make. Every time you sit down with someone else's binder, every time you're around other magic players, its an opportunity.
How many Snapcaster Mages could he have bought and resold, or traded away for value during the month those Sigardas sat? How many $1 rares that he could have bought for quarters did that stagnant capital cost him? I want turnover. I want liquidity and the flexibility it brings. It isn't sexy, you don't get to brag to your friends about your sick picks and complain to them about how you have 100 Havoc Festivals. If you can get even a consistent 10% gain on each trade or transaction, the incentive is to make as many of them as you can.
I think my friend's speculation was fine, and while he sold early, his profits look to be pretty good on the investment as a whole. My dissatisfaction with it came from an evolving mindset about the entire idea of speculation. Being a 'cowboy' as Medina called it on Brainstorm Brewery is fun as hell, but I don't think it's the best way for me to spend my money.
Very well put. When you talk opportunity cost outside of Magic even, then things really get fuzzy. Why am I excited to make $50 on Magic cards when I could invest the money in the stock market, for example?
Your article summarizes the core reason why I never go too deep on a spec. I seek to diversify and to flip cards quickly.
It’s fun to have a stack of a card, but it’s also very nerve-wracking. You’re constantly worried that it will fall out of favor. And your money is all tied up.
Good article.
For someone like me who doesnt attend any pro tour, events or opens… I guess the only way to speculate is to buy via different w ebsites, or ebay, and sell back when the card has spiked. I guess I have no other outlets, and no way to trade in person with other players.
In such a case, what would be your advice? to stay out of paper cards and focus on mtgo?
There’s nothing wrong with buying online. The idea of this piece was to show how I came to realize I had a preference in how I used my money. Yours can certainly be different and some of the reason for that is circumstance.
Sebastien I’m in the same boat as you in not attending major events so I sell most of my cards online on places like MOTL , MTGSalvation, Deckbox.org,Reddit and of course Ebay. The problem that I’ve had moving cards through these sites is that it’s harder to move $.10-$6 cards, it can be harder to move legacy staples (for cash) and because of the fees associated with Ebay you need the card to spike hard to see a good profit. When a card moves from $.25 to $2 the online options don’t give you a lot of outs so the best you can do is hope that a buylist is paying $.50 for that card.
I’m not too familiar with the MODO market but from what I understand you need to dedicate a lot of time to it since basically any card mentioned in any article will go up a little for the next day or so, this means immediately reading the new QS content at 7am (or whenever new QS content goes up) TCG player at noon and SCG at midnight.
paper cards are great because they’re easy to package,small and cheap to ship and they’ll usually hold their price for at least a week.
digital objects are even smaller and require no shipping but the market changes almost by the minute so it takes more time and effort.
unless you are trading penny stocks, many mtg specs (thanks to predictable seasonality) will return more over a short period. that said, there are too many good mtg specs to sink everything into one boat. all fastlands, not just B/R. spread your bets out and if you are good you’ll win more than you lose = more predictable profit stream.
cash for sealed m13 event decks selling for less than msrp WITH thragtusk, 2 g/w fastlands and money uncommons is > cash for specs. if only because cash for specs = to large of a position in one card.
thx 4 the article.
Seems like there are two camps developing- the spec camp and the flip camp. It all comes down to your outs. If your best out is retail, flipping seems preferable, especially if you have a way to buy at buylist prices. But if your best out is a buylist, speculating is a good way to go, especially if you\’re offered better than buylist prices due to long-standing personal relationships. Some in the \”flip\” camp may not understand not everyone can out for full retail.
Agreed.
Also, I have 94 Splinterfrights sitting next to me… 🙁
I too have 90 sitting next to me -_- ./slap
All of this is based on personal circumstance, I don’t have a problem with people speculating, I’m just making a concerted effort to do much less of it than I have in the past.
I think there was one crucial piece of information left out of this article…
In your example, your friend had roughly $2500 capital, and your problem with his move was that he tied up $500 of that capital (rounding for ease of head math) for one month. That still leaves him with $2000 to do it your way… but his $2000 will only make him $200/400/600 (at 10/20/30%), spread out over A LOT more deals. Generally, this will actually take MORE time than a simple spec & flip like his Sigarda play. Plus, his Sigarda deal will ONLY have an opportunity cost AFTER he’s spent his remaining $2000 and starts missing out on potential buys… but if he’s churning the cards purchased with that $2k, he essentially should have around $4k to buy cards with. (Since if he buys $500 each week, he should be selling $550 each week too, allowing him to churn more targets for margin). In the end, he’s likely to have done FAR more work with that $2k than he did with Sigarda, to make at best twice as much cash.
Personally, I think unless you are the type that REALLY likes grinding out a profit, you need to find a happy medium. Invest X% of your capital in spec targets, and Y% to churn deals. To determine Y%, you need a good handle on how many transactions you can make per time period, and what your average profit per transaction tends to be. Once you have that number, you can figure out how best to allocate your X and Y percentages to tune everything to your needs.
Does this make sense? (I haven’t had much sleep lately, so…)
It certainly takes more time, and whether that is feasible / reasonable is a personal thing each of us should evaluate. The issue of the other 2k he had to grind with is a fair point, and a happy medium is probably best for most people. However what if he had an opportunity to buy a collection that he had to pass on because of the 500 he had tied up in Sigardas? I don’t think he did, but that’s not the point. The loss of flexibility is one of my primary concerns with speculation.
Right. But one of the points I was (poorly) trying to make is that our time is finite. I’m no PTQ/GP Grinder, but how many trades in a month can one person realistically expect to make?
Further, you can make the exact same “what if” scenario with $500 tied up in grinders. If anything, it is MORE time consuming to get that $500 out if you need it, as its spread over a ton of things you have to move.
At some point, your capital could (should?) exceed what is POSSIBLE, let alone feasible or reasonable. At that point, you’re left with little else left to do EXCEPT speculate. I think exploring and quantifying this idea is where an truly amazing article awaits.
Grinders are much more liquid than specs from my experience which makes that what if scenario much less of an issue if your money isn’t tied in holds. Time is certainly finite, and one of the decisions we have to make on a personal level is what is and what is not worth doing, some of that is based on circumstance such as ‘how many trades can I actually make in a month’.
The end point you describe seems unrealistic for most people, and exploring it while interesting doesn’t seem like it would teach us much. Its very possible I’m wrong here as I haven’t investigated it, but that’s my initial impression.
Very good article, by the way. I would be happy with that Sigarda play, myself, since I’m not at enough big events to reliably churn through mass amounts of stock, but the principle behind what you’re saying is very accurate. There’s always an opportunity cost.
My question is, is $8 the buy cap we are going to see for her ?
If your friend had held on for another month, and the card hits $15 instead, would that not have been a sound investment even for that length of time netting 300% ?
It certainly would have been better if Sigarda hit $15, but there is no guarantee that happens at all, in which case his money is stagnant even longer with the same of possibly less growth.
I am the one who went in on Sigarda’s that Paul is referring to in his article. I loved this writing, and I think Paul’s purpose in this article is well meant as well as well received. There are people in this business who do gun-sling and flip for profit, me being one of them. The thing is, I always have card inventory available for trade, as well as X amount of liquid cash. At the time, I looked the data for Sigarda and saw potential for growth. High price ceiling + low buyin point (~5$, shipped, each)= potential profit. Of course, I saw this profit as immediately giving me 30-40% return for 2 reasons:
1. Mythic Angel from a set that will be highly revered for years to come
2. Potential playability in Standard
Also, my 2,500$ didn’t just appear overnight. It comes from months of flipping, specing, and trading all for profit. If i want to make a high risk, high return play like this one (high risk because of amount of capital tied up), I can afford to. The end result I was very pleased with. At GP: San Jose, I ended up shipping 80 or so copies for 6.75$ on avg for profit of (1.75$ x 80), all while holding on to 30 copies to see what happens.
If anybody has any questions, feel free to ask me here or on twitter, @UCDLaCrosse1989