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|
|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.
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
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,
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