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Modern - Oh how I love thee. Seeing the hard work, observation, and thought put in bring about astounding results is truly a sight to behold. The thought that a format could be the bastard child of Magic formats should be banished from every man, woman, and child now. The success that GP Richmond provided shows just what a fun, complex, eternal environment can do for the gameplay of Magic. Unfortunately - now it's also showing that darker side too. Affordability will soon no longer be the keyword associated with Modern. "Cheaper Legacy" will be a term lost to the sands of time unless the market corrects. I promise you though, Wizards is already on the case. They either saw this coming, or figured it would happen sooner or later.
The question of if Modern could be a reliable crowd pleasure was initially answered with the release of Modern Masters. With that release though, it brought a buzz that I believe is still really growing. GP Richmond had many things going for it: Location, Timing, Playmat, Reasonable Expectation of affordability to get involved. That's soon going to be a dream of the past. This upcoming season we just might start seeing decks rival their older Legacy counterparts. I would not be surprised to see that in the least. Fortunately, this does not mean it's a time to panic sell everything. Don't push that button!!
Wizards has truly shown an understanding of Supply & Demand. Even more though, they have shown repeatedly that they understand the concept of something that cannot be undone. The measured reaction that Modern Masters gave them has got to be thrilling and exciting to those behind closed doors. It, however, was a "careful step." A step in the direction of correcting the market and making Modern singles more available. Wizards may have already come out and said that it was everything they hoped, but it stands to reason that it's been even more. That step has created even more Demand and now will require even more from Wizards of the Coast. This is what I envision will happen in the future: More. Why more? Because the laws of Supply & Demand require it.
Learning Time
To understand this further - let's take a dive into understanding what Supply & Demand really is:
1) A commodity is a good that is perceived to be worth the same amount regardless of the supplier.
Simply put - regardless of which vendor is supplying the Secondary market singles; there is a perceived value among the buyers and sellers that a card has worth. This concept has been there for a very long time, yet as trend setters there are very few that are willing to take that first step in setting the market. That appears to have changed as even the perceived possibility of a buy out is now starting to move prices before it truly happens.
2) When the price of a good rises, the demand for that good decreases and when the price falls, the demand for that good increases. This is the law of demand.
[cardimage cardname='Tarmogoyf']
This is still based on perception of value. Tarmogoyf is moving. What if the value was suddenly $400? Would people still want it? More than likely not. The price shock alone would decrease the Demand as a result of the price memory. But a slow climb will consistently keep Demand rising with the cost of a good.
3) When the price of a good rises, the supply for that good increases and when the price of a good falls, the supply for that good decreases. This is the law of supply.
It stands to reason that the higher price something gets combined with people wanting it less because of high price; a price will typically fall until it reaches that median place again. More of something available means more competition to be the source for your purchase.
[cardimage cardname='Misty Rainforest']
4) Perfect price information and equivalency of goods are some principles of perfect competition.
If you had multiple Dealers in front of you, but ONLY ONE was selling Misty Rainforest for 10% less, this makes for perfect competition. This doesn't always happen, but as you are a Quietspeculation Insider, you have access to more information than most.
5) Instantaneous price adjustments are another aspect of perfect competition.
This is the results of consistent sales of an item and less about knee jerk reaction, tournament results, or speculation buyouts. But with all the information available, most stores will try to position themselves better.
[cardimage cardname='Scalding Tarn']
6) If there is a surplus, a lower price or perhaps a smaller supply of an item by the supplier are examples of market corrections.
There have been many examples of this as of late, but the buyout of Blue Fetchlands comes immediately to mind. This is an example of forcing a market correction. Another would be Wizards reprinting another large swath of high priced cards in order to make the market more affordable.
7) If there is a shortage, a higher price or perhaps a larger supply of an item by the supplier are again examples of market corrections.
Finally, we come to the heart of the matter. Supply is currently fixed. The Demand has increased for Modern singles to the point that Supply has run short and prices have jumped. Either by Speculators, Stores, or Players hoarding, destroying, or simply just playing - the Market has responded in kind. There is going to start being a shortage and a market correction is going to be needed. Either by Wizards reprinting or a hoard of recently unattainable copies flood back into the market dropping prices left and right. There's a crux though - Modern season will soon be upon us. Understanding this back and forth, wax & wane, is the key to this new Millennia of speculation. The Game is changing and in large part to the dissemination of more information on the ways and hows of best practices - we have this ever fluctuating chaotic market to look forward to. What will you do? As always: Buy low. Sell High. Pick your target point and then choose your exit. At some point....
8) The market will correct itself until a point of equilibrium is reached.
Ladies & Gentleman - welcome to the "When not If" Era.
It's no longer a matter of if a card will rise in value. No, no, no. That would be too easy. Now, it has become simply just a matter of Time. Are you prepared to properly assess when to get out, and when to stay? As we watch the Modern market fluctuate chaotically like it is, this should be a primer for what to expect from the Suppliers. Wizards or other Stores will strike while the market is in hand or reaching a boiling point. More copies will enter into the market and then you will be too late to exit for the most profit. The market will quickly reach equilibrium and your hard earned profit will start to drip away until the item finally sells, or is buylisted. Welcome to the future of constant market corrections.
-Till next time.
It’s becoming more and more difficult to identify the proper exit strategy on Modern investments. From Torpor Orb to foil Liliana of the Veil, I am struggling to decide the best time to sell out of my bets. Almost all of them have paid off, but almost all of them could be vulnerable to reprints.
This is the time to step back and understand our own personal goals in this space. For me, I hope to make money on Magic to support my son’s eventual college education. Therefore if I don’t sell at the peak, I’m not unhappy. As long as I’m making money, I’m approaching my goal – and let’s face it, it’s not like we’re going to run out of profitable opportunities. So what you sold out of Tarmogoyf too soon? Go buy 100 Chokes and then ride that wave for a month or two. You’ll make money somehow regardless.
Couldn’t have said it better – there really is no “wrong time” just a time that you could either make more/less than before. I like where you’re head is at. 🙂
Great article. It’s always important to keep the basic concepts in mind. We often get bogged down focusing on individual cards and ignoring the overarching trends.
Thanks for the kind words, David. Much appreciated. I’m going to try to keep the balance of advanced concepts and basics when I write for my column. It’s much appreciated for the feedback.
Great article. All kinds of useful stuff in it. One minor nitpick though – Modern isn’t eternal, its non-rotating-non-eternal. Legacy and Vintage are the sanctioned eternals and if you count other formats, add pauper and EDH.
No worries on the nitpick. I think Wizards likes to not make that differentiation. I’ve heard Modern referred to as an Eternal format pretty consistently but honestly – it’s all about stability in your investment. That’s all that really matters. So, whatever it’s considered – as long as it’s “forever” that’s all I’m concerned with.
Thank you, as well, for the kind words.
When the price of a good rises, the demand for that good decreases and when the price falls, the demand for that good increases. This is the law of demand.
When the price of a good rises, the supply for that good increases and when the price of a good falls, the supply for that good decreases. This is the law of supply.
Hate to nitpick, but those statements arent exactly accurate.
Based on economic theory, the intersection between Demand and Supply creates the price. Not the other way around.
unless there is a shift in the market, demand remains constant. ie: the demand curve remains constant There will always be X amount of demand in the market place for every price level.
When the price is attractive enough, suppliers might choose to increase the supply, thus shifting the supply curve to the right, which brings a corresponding decrease in prices. vice versa.
Price influences quantity demanded which is the basis of price elasticity of demand. He simply used the word demand in the place of quantity demanded as he is speaking to real world cause / effect. E.g. if Tarmagoyf went to $400 people would still want it as much but would afford to only be able to purchase a smaller number, effectively reducing the global quantity demanded, (i.e. ‘demand’).
Also, price for a good will never be a factor in the movement of a supply curve.
There’s a number of factors that you have to isolate in order to deal with the model you are using. In hypothetical situations – you can use constant in the example in order to predict pricing and supply as long as the elasticity of demand stays constant. If I remember correctly this also assumes a monopolistic or very few supplier frame of reference too – which is very very far from the application we’re dealing with in the realm of the Magic Secondary market.
I’m simply trying to communicate the basic concept to understand price fluctuations as you reach & exceed the public’s “price pain threshold” on a example item. Maybe in that context it makes more sense
And thanks @SicksEyeUrn – that was more the application I had in mind when referencing that. It was more the application of cause and effect when speaking of the price point for Magic cards
There’s a number of factors that you have to isolate in order to deal with the model you are using. In hypothetical situations – you can use constant in the example in order to predict pricing and supply as long as the elasticity of demand stays constant. If I remember correctly this also assumes a monopolistic or very few supplier frame of reference too – which is very very far from the application we’re dealing with in the realm of the Magic Secondary market.
I’m simply trying to communicate the basic concept to understand price fluctuations as you reach & exceed the public’s “price pain threshold” on a example item. Maybe in that context it makes more sense
Good article, reinforces the knowledge that a lot of speculators have but also gives those that don’t fully understanding supply and demand a quick run down.
The increased rise of modern has definitely created an interesting time for us. Here’s hoping wizards can keep the modern demand up without over printing the cards that havent risen yet while printing the cards that have started to spike after we bought in.
Anthony, while I do expect demand to increase and the Modern format to grow I also know retailers are actively manipulating on the supply side. This makes me very cautious
@Mathieu – I agree. Fortunately, Wizards is also very very cautious on the amount of product they release, it feels. Again, it just comes down to “how ahead of the curve are you?” It’s probably going to become a game of chicken amongst speculators and whoever tries to actively manipulate the market. In the end, the only loser really is the player that wants to play a certain deck.
Here’s a theory I have that I would like some opinions on: The time to sell most modern stuff is right now. Let’s do some thought exercises. From right after Modern Masters was released until the Pro Tour, demand came from players (lower) and speculators (higher). These players probably bought a few decks over the months in order to find the one or few they like. Speculators bought in with the knowledge that the season is coming. Supply came from dealers (high) and “amateur” sellers on TCGplayer and ebay (medium).
After the Pro Tour, we entered a different phase. Demand is coming from players (high), dealers gearing up for the season (high), and not so savvy speculators trying to ride the wave(high). Supply is coming from dealers (low) and other sellers (low). The key here is that speculators are holding on to their copies in the hopes that cards that have gone up or spiked will go up more when the season hits.
As we get closer to the season, lets look how things might change. Demand will come from players (high), dealers (low), but not speculators. Supply will come from dealers (medium), and all those speculators looking to out their cards (high). My opinion is that the demand from players will not be as high as the supply from speculators. I think that price memory will keep modern cards where they are, but I don’t see the staples going up much between now and modern season. If they aren’t going up or have a chance to go down, it is time to sell so we can put money into other areas.
Any thoughts or things I am forgetting?
Marc
I don’t think you’re wrong – necessarily. The question is having the right amount of demand. Right now – you’re really seeing the early adapters preparing for the upcoming format. Early adaption is still relevant in the fact that it’s just now “becoming cool” to play Modern. GP Richmond was a HUGE success in that vein to give Modern legitimacy. Something that it has struggled with mightily in the past.
That fact will probably kick demand into 3rd gear by time we’re really preparing for the season to come. Relative to where you are and when your PTQ’s will be, this will be even more chaotic the first weeks leading into and during the season. I feel the appropriate window is probably going to be week 2-5, but it depends on how much info comes down and how quickly. I’ll be keeping a really close eye on price fluctuations during that time period.
I love your explanation of it though. I think you get the key movers and shakers in how you talked about it. Very well put.