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Insider: Bubbling Muck… Don’t Get Stuck…

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My adventures into MTGO have been a bit delayed with AT&T refusing to set up internet at my new apartment until the end of the month, but in the mean time, some serious business needs to be addressed. It wasn't long ago, that financial minded writers across the community lambasted Sean Morgan for stating the Legacy card price spike was the result of an economic bubble that was bound to burst.  I will note, that he did ultimately realize his misstep and owned his error. My personal disagreements with him were academic ones more than anything else, but now I'm going to be the guy putting my own neck on the line saying something very similar. Modern staples pricing are on a bubble so inflated, that the bursting point could not be far off.

Why is this different than Legacy?

Legacy price increases were gradual at first, and only the most scarce cards showed signs of rapid price increases at first, namely Dual Lands and Force of Will. They fall into the greater number of decks, and are therefore in high demand. When something is scarce, there's a inflection point in the Supply/Demand curve so sharp, that the curve looks almost L-Shaped. When there is a huge increase in quantity demanded by players, it's possible for this inflection point to intersect, and ultimately surpass the fixed supply. This causes prices to skyrocket, as there literally is not enough cards printed for everyone to have what they want, and they just keep exchanging hands until they arrive in the hands of those who are willing to pay the most. More cards followed suit, as the SCG opens gained in popularity, metagames were perfected, and certain staples became even harder to find. Modern does not have this problem. The cards from Modern, are... well... Modern. Meaning, we're not seeing cards from the rarest, and most underprinted sets of all time. We're also not seeing cards that are from a time period where people didn't know how collectible the game would be, while collections were lost or damaged. Scarcity is not an issue in Modern. Modern prices spiked, because people speculated on the existence of the format for months, and further when the format was confirmed, and even further once it was announced as the format for PT Philadelphia. Hopefully, you took advantage of all the winners the QS team slammed on the tracker during this season. Now, however, it is time to cash out, before the bottom falls out. We're not talking about a price depression, just a correction. So cash out any pure investments, and hang on to any playsets you'll need, so we can see where this format will shake out. Keep in mind, that people's valuations of these Modern cards are way out of whack. At my LGS, many people are quoting SCG sell prices as "the going rate" when EBay and buy lists reflect nothing of the sort. Use this information to your advantage.

SCG is using price descrimination, wisely, to get the people who are willing to pay more to do so, and as that volume decreases to slowly lower the price so more people jump in the game and still maximize the people paying at the higher rate.

So if Legacy wasn't on a bubble, why has some of the staples of that format started to come back to Earth? Will Modern follow the same pattern?

Legacy pricing adjusted, because demand adjusted. I'm sure there were very brief moments of over priced cards, as retailers were trying to find the right price to sell at in a quickly changing market, but for the most part, Legacy cards sitting in stock don't do much, its the active buying and selling of them that makes money. Players and investors, excited about modern, are taking gains out of their Legacy cards, and putting them into investments for Modern. Some are probalby also people who started trying to get into Legacy, but jumped on the opportunity for a lowered price variety. This retraction in demand has a clear cause associated, and did not result from speculators taking money out alone. They had to have reason to put their money else where, as did players. Modern will not follow this pattern. Modern prices are going to quickly tumble back down to an appropriate equilibrium price for their demand. What that price is? Too early to tell, but the quality and quantity of Modern events next year is still 'To Be Determined'.  People have hoarded multiple playsets of shocklands and relevant staples (including YT, and hopefully some of you), as soon as the price starts to dip at all, they will start moving their stocks. It will be a race to the post office to send stuff off, before buy lists change, or auctions go ignored. Remember, this format is exactly what Extended would have been, had it not been changed not long ago. No one liked it then. I'm glad people are excited about this format, as I like it myself, but ultimately, it will never be more popular than Standard, and it's nearly guaranteed that if price does continue to prohibit access to cards, we will see reprints.

TL;DR.... Or, why does this matter?

Don't get caught in the trap. If you were one of the lucky (see: smart) ones who was able to get in on some staples early, GET OUT. You've likely scored a sizeable profit, and if you thought the price increases shot up quickly, you'll be surprised to watch them fall again. The actual demand for these cards DOES NOT EXIST yet. There will of course be local events, and likely future major events, but people do not need these cards to play in events, with the exception of those participating in PT Philadelphia.

Sure, you might be saying, "If I cared about the economics behind all of this, I'd study economics!" And that's certainly fair. But to identify the difference between a bubble and a reaction to scarcity, can save you from being burned. I've taken this opportunity to jump on the slight dip in Legacy pricing. I've picked up Tundras from people who wanted my Modern cards at extremely low valuations, and have been sniping on EBay. Take advantage of the knowledge of what everyone else is doing, and be in the right place at the right time ON PURPOSE. Legacy is not going anywhere. People want to play with cards like Brainstorm, Force of Will and Jace the Mindsculptor. There might be some non-blue ones that people care about too.

Hopefully this insight into what drives the card markets in unique situations prepares you for the coming weeks and months, and also gives you insights to make judgements on your own in the future.

I want to make a final note. A few weeks ago I talked about one of my common practices is searching for misspelled listings. I found two key misspelled auctions on EBay this week, that end about 4 days after this article goes live. I really hope the lack of bids on these auctions is due to people waiting to snipe on it, and not the laziness of being unwilling to try a few new search terms once a week. I would just put the link here, but come on, try a little? If I end up as the only bidder, screenshots and such will be posted either next week, or in the forums. But honestly, I hope someone else snakes a good deal by spotting these.
I come up with new search terms by looking at listings I'm already searching for, and finding words mixed in there. I recently added "Deckmaster" to my weekly search list. Inspired by an article by Chas Andres (@chasandres on Twitter) where he discussed buying full collections on EBay, and he found one that refrenced the cards as Deckmaster cards (due to the blue box indicating such on the card backs). I decided to pop it in EBay and see what showed up, and I haven't found any gold mine's yet, but certainly some auctions that are getting less attention than others, which is how you can sneak killer deals.  Be creative, try some things, it's such a minimal time investment, with such upside available.

Chad Havas
@torerotutor on Twitter

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Chad Havas

Chad has been with Quiet Speculation since January of 2011. He uses price speculation to cover all his costs to keep playing. Follow his journey from format to format and be prepared to make moves at the right times.

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4 thoughts on “Insider: Bubbling Muck… Don’t Get Stuck…

  1. I really thought this was a great article, and very good reasoning regarding Modern. I agree with you entirely that the prices cannot hold, as I came to the same conclusion last week independently and shipped a lot of my stuff and advised others to do the same. Good to know I'm not alone.

    Great work, and I'm going to try to figure out what you're looking at on Ebay 😉

  2. Be careful with the "Deckmaster" searches on ebay when looking at collections. In the comments of Chas' article, the guy who won the collection that Chas referenced, posted saying that he basically paid $3000 for the handful of good cards that were specifically shown in the pictures and a large number of longboxes full of crap commons and uncommons.

    1. Yeah, i saw those comments, I’m NOT suggesting buying unknown lots of cards, but it may be a search term worth running. I saw auctions for specific singles under that name, none were valuable enough to warrant a bid, but enough popped up that I’ll be adding it to my list of keywords to seach for.

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