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Insider: Is Now the Time to Sell Your Shock Lands?

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I’m going to assume you did the right thing and bought into Shocklands in May when I suggested it. The question is, then, is it time to sell?

Ever since Director of R&D Aaron Forsythe uttered the memorable words “We’re moving forward with the Modern format,” Shocklands (Watery Grave, Hallowed Fountain etc…) have been on a tear. We’ve been working hard to keep you up-to-date, and the time has come to move into other, less-obvious cards to speculate on (Hint: it’s Filter Lands).

But what about those Shocklands?

I first called to pick them up on May 26, so I think using a June 1 price point is fair for this exercise. If you’re not familiar with what I’ll be doing here, check out this article from Doug Linn asking the same question regarding Survival of the Fittest, which was tearing up every Legacy tournament and was a popular choice to be banned.

Let’s start by setting some prices. I’m going to use Hallowed Fountain as my example, since it’s currently the most expensive one on the market (as usual, we’ll use BlackLotusProject prices).

Hallowed Fountain Price:

June 1, 2011 - $10.47

Aug. 4, 2011 - $15.60

I’m going to use one caveat here. If you’re not aware, BlackLotusProject.com, while an incredible resource, is a bit of a lagging indicator due to the nature of the sales it compiles. When demand for a card really surges, it takes a few days for that to reflect in Ebay, since ongoing auctions take a few days to close on the price more correctly associated with current demand levels.

Taking this into account, we see that Hallowed Fountain is still rising steadily, so I’m inclined to believe the current BLP isn’t necessarily what we want to use verbatim. This pushes the price on Fountain higher, but it is offset by another factor – Ebay and Paypal fees, which total about 12%. Considering these numbers, I think a reasonable adjusted price is $15 of pure profit.

Hallowed Fountain Price (adjusted):

Aug. 4, 2011 - $15

With that out the way, we’re going to look at the possible scenarios presented right now by the Fountain, as well as the factors that will affect its price, and I’m going to handicap each according to what I think is most likely.

Market Result Probability End Price
Nothing happens 5% $12
Modern is announced as PTQ/GP Format and Shocks aren’t reprinted in the next year 40 $28
Modern is announced as PTQ/GP Format and Shocks are reprinted in the next year 55 $9

A basic chart, yes, but I believe it covers the most relevant outcomes. While there are some other scenarios I’ve seen discussed such as making Modern a Magic Online only format, I don’t see this as being credible enough to merit discussion.

Nothing Happens

I find this very unlikely, but it is worth looking at. It’s possible that either Wizards decides they don’t want to do Modern after all, intent to turn it into just an FNM format, or maybe we just misunderstood what Aaron Forsythe meant.

If this occurs, I see the price dropping heavily, but ultimately settling up a few dollars from where they were before the hype. This is for a few reasons. First, people won’t want to sell their Shocklands for less than they bought them for, so there will be fewer in circulation than before the buying spree. Secondly, the release of the Commander product has increased the amount of people building Commander decks, which is a factor many people forget about when looking at the price increase on Shocks. A non-trivial number of these are floating around in 100-card decks right now. Thirdly, we’ll be further away from their original printing, so prices will understandably trend higher.

Modern is real and Shocks aren’t reprinted

It seems highly likely Modern is going to receive some support, possibly replacing the unpopular current Extended season. With Wizards hosting a record number of Grand Prix next year, I think we can be confident Modern will be the format on display at a few of these.

The question, then, comes down to the question of reprints. I think it’s more likely than not we’ll see reprints, which I’ll get to in the next section. For now, let’s assume no reprints.

If we’re stuck with just the current supply of Hallowed Fountains and all of a sudden people need them for that PTQ next weekend? The price is going to keep going up. SCG is out of stock at $25, and we already have anecdotal evidence that people are buying these at $30. Remember, Wizards hasn’t even made any official announcements about Modern yet, so the prices still have a ways to go. I think dealer prices would even out between $35 and $40, so $28 seems like a reasonable Ebay rate, based on the current growth.

Modern is real and Shocks are reprinted

I consider this the most likely scenario for a few reasons which I’ll list, and aren’t all lists better with bullet points?

-       The current Core Set dual land cycle of Sunpetal Grove and friends has been reprinted three times in a row. I understand that Wizards doesn’t want players taking damage from their own lands, but it’s clearly time for a new cycle. In a perfect world, the Shocks would have been in M12, since there wasn’t a flashy cycle of new Mythics to sell the set, but putting Fetches and Shocks together was out of the question.

-       With players in need of Shocks and the Core Set in need of a new cycle of lands, cracking Hallowed Fountain in M13 seems highly plausible (or Innistrad).

-       Wizards doesn’t ignore the secondary market. While they don’t participate in it and claim no decisions are based off of it, they are certainly aware of it, and it is discussed in the halls of R&D, as illustrated a recent article regarding Jace. If they’re looking to create an Eternal format that’s more affordable than Legacy, I don’t think $40 lands are something they want to see.

-       Shocklands have proven to be highly popular. As the $9-10 pricetag before Modern hype took over indicated, these are a popular choice among players even when they don’t have a format of their own.

As for the price of $9, I looked at the current cycle of fetchlands, namely Scalding Tarn and Misty Rainforest. Both of these cards see heavy Standard and Legacy play, but hover around $10. Shocklands would be in the same position if they were reprinted.

Is it time to sell?

Let’s crunch some numbers.

For the math, I’m going to quote Doug’s article, since he explains the process masterfully (insert “Hallowed Fountain” for “Survival”)

With this kind of prediction, we rate out what the end price is by discounting each price by the likelihood that it will happen. So, a weak reaction to banning is worth $2.50 ($25 x 10%), since it is unlikely to happen – if Survival goes, I think its value will eventually end up at about that of Recurring Nightmare, which also currently only has casual appeal. This chart reflects a 40% chance that Survival will get banned; you can adjust it up or down, based on what you believe is correct.

The math works out that my predicted, current, realistic value of Survival is (12+20+2.5+3) or $37.50. This is well below what the card retails for these days, even below what you could sell them for on buylists. Since the price of Survival of the Fittest is a little over what we think it’s worth, it is what the market called an “overpriced asset.” If we could effectively “short” the market, this would be an excellent opportunity.

So, for Hallowed Fountain, we’re working with a current price of $15. Now let’s apply the formula.

Nothing happens – 12 x 5% = $.60

No reprints – 28 x 40% = $11.20

Reprints – 9 x 55% = $4.95

Total: $16.75

What this means to you

Using this kind of analysis, if our projected price ($16.75) is higher than what the current price is ($15), then you want to hold on to the card. What our statistical analysis tells us is that the Shocks are nearing the point where it is current to sell. This passes the “facts check” test, since the price of some of the other Shocks (Stomping Ground, etc), have begun to plateau on BLP.

With this, we can reasonably conclude that the optimal time to sell your Shocklands is coming but not quite here. If you bought in early, I would wait for more signs that the Shocks as a whole are coming to a peak on Ebay and sell at that point. Alternatively, you could sell some now to cover your costs and use the profits to reinvest in Shocks if you want to lock in your profits but think the prices are going higher.

If you bought in later in the process and can’t sell now for a reasonable profit, I suggest holding onto them until an official announcement comes from Wizards, because that represents the next spike in the prices. Just be aware of the possibility of an announcement of reprints, which will hurt you.

I know this was a very wordy “process” article, but I hope some of you enjoy seeing the work that goes on behind the decisions we make at QS. If you just wanted to know whether or not to sell now and skipped to the end, you’ve got that, and my reasoning behind it.

I’ll be at GenCon this weekend thanks to the original Quiet Speculator Kelly Reid getting me a last-minute pass, and some kind souls from Oklahoma willing to let me tag along for the 13-hour drive in a full car (where I’m told I’ll be learning to play Ascension). If you’re there, feel free to say hi to the QS crew (we’ll be the ones with the awesome “Got Trades?” shirts). See you there!

Thanks for reading,

Corbin Hosler

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4 thoughts on “Insider: Is Now the Time to Sell Your Shock Lands?

  1. Corbin,

    The one thing I think you are ignoring in this analysis is the effect of having the shocklands legal in Standard again. While we don't know yet how big the Modern player base is going to be, we do know that Standard is going to be many times the size. The moment shocklands become legal in Standard, the price should rise, because there won't have been enough packs opened to meet demand.

    Another key variable is which set they are reprinted in. If it's M13, then prices will not rise as much, because all the lands will be available in a "large set". If it is in a block, then we may see the lands distributed throughout the sets, as was done in Ravnica. In this case, we would see a repeat of the "small set" effect, where some of the lands are scarcer than others. Thus, depending on how the lands are distributed, some of the lands could see higher price increases. Following this logic, we should also consider the likelihood that not all of the shocklands would be reprinted. Wizards' typical pattern is that they only release dual lands in allied color pairs, or (less frequently) enemy color pairs. If the shocklands are reprinted in M13, it will probably only be the allied color ones, leaving the enemy-colored ones to continue to rise in price.

    I'm interested to get your (and others) reactions to these scenarios but taken together, they increase the upside potential substantially. For this reason, I would recommend keeping a "buy" recommendation on the shocklands, and taking advantage of any dips in price to add to your inventory, with particular weighting toward the enemy-colored duals.

  2. This is possibly my favorite of your articles yet. I was musing about selling my shocklands this morning, and your analysis was very well reasoned.

    Two things you should think about:

    1) The fetchlands are rotating out this September, which increases the likelihood that a new set of really hot lands are printed/reprinted in Innistrad. Shocks? Maybe.

    2) Polluted Delta, the most expensive Fetch, is $26 or so on BLP. I can't see Fountain sustaining a price higher than that at any point. Sure, it could spike higher, but I don't think $28 eBay/actual value is possible for long.

    With both of those on the table, I would re-tweak the formula slightly and say that selling now is fine. But keeping is fine too – there will most likely be at least one more point when you'll be able to get even more.

  3. I agree with both your guys' points, and I think what the right decision is will vary from person to person, depending on when you bought in.

    @Aaron – I agree they will spike early before falling off. The spike will come when Wizards announces Modern and then again when they announce the reprinting. The question is whether the spike will be much higher than the current one, since I think it's pretty clear there is going to be a short-term leveling off of prices. Modern hype has dominated the last two weeks, but hype out of US Nats will dominate the next, and Shocks are going to cool off. It all depends when you bought in. If you got in early, then selling now and not taking chances is pretty much what you want to do. If you bought in later, you need to wait for these expected (but not guaranteed) spikes. Thanks for the feedback, you raised some good points.

    @Chas – Thanks! Fetchlands rotating is one of the major factors for me in this decision, but there are plenty of options for cycles outside of Shocks, so it could go either way. We also know the rumor that the set after Innistrad is a return to Ravnica (which I'm not sold on), and people assume Shocks would be back then.
    I think you're right about the long-term price on the lands, and if we did tweak the formula then it basically tells us to sell now. Sell now, sell next week, sell in a few months – the money is going to be there and not be substantially different if you bought in early enough.

  4. Since this column was in the newsletter this morning, I got curious about what's happened to the shocks since then. I'm primarily an MTGO trader, so I checked out MTGOTraders, and found 12 Hallowed Fountains in stock @$23. Understandably, MTGOTraders no longer lists any shocks on their buylist. Worse, Hallowed Fountains are allied-colored (albeit in a very popular combination), so their likelihood of being reprinted is higher, for reasons I gave in my previous post. So I would now switch to sell mode, at least on MTGO

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