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Some of you may have already noticed, but I’ll come out and declare it here: I’ve lost interest in Twitter. As a Twitter shareholder, this is a horrendous and masochistic thing to say as I watch the value of my shares continue to struggle. But I believe in honesty and transparency, so I felt I should begin this week’s article making this declaration.
Of course, I only mention this because of the irony I am about to present: this week’s column was inspired by buzz I first noticed on Twitter. Namely, the announcement that a “modest reprint” of Eternal Masters will be released for the holidays.
To me, this seems like yet another money grab from Hasbro as they seek to forcefully increase sales of Magic. Don’t get me wrong, this will likely work. But do we really need more copies of these cards? Haven’t the reprints already done enough?
Thus far I’ve been protecting my portfolio from announcements like these by consolidating resources into Old School and Reserved List cards. But I have some lingering doubts causing me to question even this seemingly fool-proof strategy. Allow me to explain.
A Dropping Tide Lowers All Ships?
I have been an avid supporter of the phrase, “a rising tide lifts all ships.” Put simply, as Standard and Modern prices were on the rise, more players could trade their cards up towards Legacy and ultimately Vintage staples, thus increasing the value of all MTG cards.
For example, when a play set of Jace, the Mind Sculptor could be traded to Star City Games for an MP Time Walk during Jace’s heyday in Standard, there was a clear disconnect. A price correction in Time Walk and the rest of the Power 9 quickly ensued as players realized they could cash out their Standard cards for Power. Notice how this is no longer a remote possibility with any Standard card today.
Then you had Modern Masters, where a playset of Tarmogoyfs could be traded up for Power. This also wasn’t a sustainable circumstance, and since then Modern prices have dropped while Power prices have risen. The same rationale can be used to explain the rise in other high-end cards as well, and Old School provided an additional catalyst.
But now a new trend has evolved. Modern prices are down significantly. Star City Games is reducing their Legacy support. Standard is at its cheapest in many years thanks to the introduction of the Masterpiece Series. Now we’re in a situation where it takes a complete playset of Standard to obtain an attractive piece of Power 9.
Enter my concern.
With Standard and Modern getting cheaper, there will be fewer players able to convert their collections into high-end cards such as Power. The sinking tide on most Magic prices will no longer be a driving force for an increase in high-end pricing. As a result, we are starting to see some very minor weakness in duals and Power. After a massive run, cards like Time Walk are actually dropping—a very rare occurrence indeed!
But What About Old School?
I began my journey into Old School MTG over a year ago at Grand Prix Las Vegas. What started as a $70 HP Juzam Djinn rapidly evolved into my favorite format and a sizable investment. Through publicity and open communication of the format’s attractiveness, prices of Old School went on a tear. Cards like Chaos Orb and Juzam Djinn ran up tremendously fast as players sought to play some of their favorite nostalgic cards, myself included.
Surely these cards are primed to rise further right? They aren’t getting easier to find, and the Old School format seems alive and thriving despite weakness in other areas of Magic.
I’m not so sure of this. When I look at the chart of many popular Old School cards, I’m seeing massive spikes followed by an ensuing drift downward in price. It seems the initial “newness” hype has worn off, at least for now.
Don’t get me wrong, prices are still significantly higher than they were just a few months ago. But I confidently believe that most of the popular Old School cards—the ones that have already spiked—are now reaching a new plateau in price. Upward movement may still occur, but it will be at a much slower pace than before.
This naturally means support for crossover cards from Legacy and Vintage will not see much more price support from Old School in the near term. The Tabernacle at Pendrell Vale spiked back in July, but has pulled off its highs since.
I’ve already mentioned Power and duals, and their recent pullbacks. Even looking at something seemingly immune to all outside factors, such as Beta Demonic Tutor, we see the same consistent downward motion.
This is all quite concerning.
What Should We Do About It?
Historically I have been a steadfast supporter of these “safer” investments. But even my confidence is shaken when I view charts like the ones presented above. There is a fundamental shift in Hasbro’s strategy with Magic, and this shift is gradually decaying the price of all cards as a whole. I don’t like it one bit.
I dislike it so much that it’s causing me to rethink my strategy altogether. Don’t get me wrong, I don’t plan on suddenly selling everything and putting my head in the sand—we’re not anywhere near a Magic apocalypse. Not yet anyway.
But for my own personal motivations and goals, I have to wonder if these investments are the right areas to park significant funds at this stage in Magic’s history. I still hope to use MTG finance to fund my son’s (and now daughter’s) college educations as best as I can. But to succeed in this endeavor, I need Magic prices to rise. If I truly believe we’re in for a long period of stagnation, then perhaps I need to find a different investment vehicle. I simply cannot afford to sit on a collection and watch it erode in value.
If I was playing Vintage, Legacy, or Old School on a regular basis, things might be different. In that case, I would be netting “utils” (an economic measurement of happiness) by simply owning and playing with these cards. But this isn’t the reality nor is it my primary motivation for owning these cards. Therefore if I believe these cards are going to continue to shed value, then the rational move for me would be to sell.
That is exactly what I’m considering. I haven’t made any final decisions yet, but I am definitely planning on trimming my collection back significantly over the next two months. My goal will be to reduce my holdings to a very small, core group of cards before my daughter is born in late January.
Grand Prix Louisville is less than two months away, and it will likely be an avenue I pursue for unloading most of what I plan on selling. I may be able to eke out greater value from the High End Facebook group, but the minimal effort of selling at a GP (along with instant cash payment and no issues with shipping/grading) is likely to be the most attractive outlet for me.
I’m not saying this decision is correct for everybody, but if your primary motivation for owning Magic cards is to make money over a long-term investment, then I strongly urge you to reconsider your positions. Perhaps this is a temporary setback and there is simply consolidation going on before the next run higher. Personally, I cannot accept a “technical” analysis of prices when I see such certain fundamental shifts taking place. That’s why I’ve decided to start selling.
Wrapping It Up
“The sky is falling, the sky is falling!” I recognize I have a “Chicken Little” reputation. That’s fine. I don’t really care about how others classify me. Most people who try to put me down with these labels don’t understand my motivations for this hobby. With the infinitesimally small amount of Magic play I enjoy nowadays, I can only justify owning cards if they are primed to make me money over time.
Throughout 2015 and 2016, this meant buying into Old School and Reserved List cards. But recent trends in MTG cause me to question this approach. The downward trends are clear to me—the data doesn’t lie.
Therefore, I think it may be time to put my attachments aside and re-focus on my main goal. This means I must start selling some things to protect my capital.
Does this mean I’m officially calling a Magic “top”? I’m not sure I can claim this stance so confidently. All I know is that Magic finance feels different to me now. All these reprints, Wizards’ clear focus on dropping secondary market prices, and Hasbro’s desperation to increase sales are all reasons to take pause and reconsider MTG as a lifetime investment.
There will certainly be price fluctuations going forward, and there will still be plenty of money to be made in the hobby. I just don’t know if “long-term” holdings make sense if the ultimate goal of Hasbro is to sell more product and to make Magic cheaper. This flies in the face of collectors and their investments.
I’m going to think on this some more before making any final conclusions. I just wanted to be transparent to my readers so they can follow along and assess their own situations for themselves. If you don’t play Magic anymore like me, then you may want to think twice about what you want to hold and for how long. Magic has had quite the run lately, and there’d be no shame in taking some profits off the table. As for me, I’ll start planning some sales and will keep you all up to speed on my decisions as they unfold.
Until then, best of luck to all you Old School and Vintage investors out there. Get ready for some low tides ahead.
…
Sigbits
- One card showing significant strength is Armageddon from Beta and Unlimited. Star City Games is sold out of the Old School staple from both of these sets, with $299.99 and $59.99 price tags respectively. This data point shows that not all cards are peaked and dropping—we just need to look carefully at trends before committing any resources to a long-term investment in a given card.
- Stone Rain is another Old School card seeing strength. The Beta version of this card just hit another all-time high, and Star City Games is sold out except for one MP copy at $4.99. They have no Alpha copies in stock, at $15.99. Many Old School commons and uncommons are seeing real traction as players—not speculators—are acquiring these cards for play in their nostalgic format.
- Doubling Season continues to be casual and Commander gold, it seems. The card just recently hit all-time highs despite its reprint in Modern Masters three years ago. Star City Games does have a decent amount in stock, but I was utterly shocked when I saw that $50 price tag. Clearly this card is seeing steadfast demand, and it screams to me that strategic casual cards are a great place to park some money for investing. Just be careful of those reprints…
Old and rare cards have always been slower to respond to changes in the market as there just aren’t enough on offer to give us reliable prices. We’ve had a time during which the few sellers would push each other to greater and greater heights. This is why I prefer to look at buylist for them.
It would seem to me that what you’re observing is the market finally correcting a price that was unrealistically high in the first place as these sellers discover that nobody actually buys at the prices they set. I also notice that the best buylist and average buylist for these cards doesn’t look too bad, it’s mostly retail average that is dropping.
I don’t really see anything that would have me concerned. Prices for these cards have always shown rises and falls, but over a long enough period they always do great. If they are falling now I am going to be a buyer when they reach a low point. I only get worried when they fall well below what I got in at and I see no indication that that will happen.
Obviously I could be wrong and I know you have other priorities. I would still consider holding on to most old school stuff as you have many years before you want that money available.
pi,
Thank you very much for the comment. I understand your point of view – over the past 23 years, older cards have offered steady and consistent returns. It is easy to state that the same trend will continue over the next 23 years. But can this kind of growth really be sustained? Black Lotus has gone from $300 to $3000…will it be $30,000 in 20 years? $300,000 in 40 years? I’d argue this is extremely unlikely. The more expensive these cards become, the more difficult it will be for them to rise in value over time. With a stagnating player base, perhaps the majority of growth for Old School cards has been realized already?
At some point we have to start looking at the risk/reward equation here. We need to consider what upside remains and compare that against the potential downside of a decaying MTG player base and a market that has an “end”. This may be many years away, but we cannot ignore this possibility when claiming that holding a Juzam Djinn will guarantee profits over the next 10 years. That may not be how things play out.
No one has a crystal ball, but this possibility is what gives me most discomfort about holding these cards here with such stretched valuations. These need to calm down a bit – and in an environment where MTG prices are under pressure, that “calming” period may last longer than some predict.
Anyway, that’s my thought process anyways. I would hate being left with all these high end cards with no buyers in sight, and that fear leads me to reconsider my positions.
We shall see how things unfold…
Thanks again!
Sig
It’s a bit unfair to suggest that I think Lotus will be worth 10x as much in 20 years or 100x as much in 40. I have not quantified how much I see it rising as I simply don’t know.
I expect that Wizards / Hasbro will come up with new ways to accomplish playerbase growth. Quite possibly through a catalyst like the movie. This may still be years out, but we were discussing very long term.
I believe that old cards will gradually end up in long term collections, reducing the number in circulation and thus available to players. Yes, player interest may also go down, but I am not convinced it goes down quick enough to compensate. Tell me, have you ever had the impression that the number of old cards on the market is increasing?
In some instances, I have noticed the number of old cards increase. For example, at its peak there were no more than two or three Juzam Djinns in stock on TCG Player and Star City Games combined. Now there are over a dozen on TCG Player and 3 at SCG. There are also over 80 Underground Seas in stock at SCG – to me this is a surplus. If the open market supply increases, prices will decline as long as demand cannot keep up. For a while demand was keeping up quite nicely, but if player growth stagnates and there are fewer players converting to Vintage and Old School, these older cards will drop in price.
Obviously not on a short time frame, year to year. Of course when a price jumps stragglers at the old price will be bought and later some people will list theirs. You should compare before and after the jump.
Congratulations on your daughter! 2 kids is a whole new world – best of luck with the adjustment!
Blake,
Thank you!!! Yeah, I’m pretty nervous about having a second child in the house. Just gotta take it one day at a time 🙂
Sig