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Insider: The Year of the Speculator

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Here we are at the end of the year, and it’s been quite a ride, hasn’t it? We’ve seen, among many other financially relevant things, the successful launch of Quiet Speculation’s Insider service, the rise and (soft) fall of Legacy staples, the rise (and very hard) fall of Modern prices, not to mention the format itself, and names like Jonathan Medina, Chas Andres and Kelly Reid have become household names even for those who aren’t interested in the financial side of the game.

Most importantly, 2011 definitively announced that the rules have changed. The line between huge profit and massive loss is a razor’s edge more than ever before. No longer can you find the hot financial tech a day late, or you’ll already be completely out of luck. This year cards soared in value and fell off even faster before they were ever even played in a tournament. This can be contributed to the prominence of the “value trader” and the rising costs of cards in general making people more aware.

While there have been some head-scratching moments in 2011 (the absurd Modern prices, this article denouncing Legacy as a bubble, etc), it was, by and large, the best year to date for those interested in the financial side of the game. Yes, it became more difficult to make your money off of trading due this rise, but it also marked the first time ever you could read (multiple) financial articles a day, and that is a good thing. It will be exciting to see what 2012 has in store for us (and if QS has anything to say about it, it will be a lot).

With that said, I think it’s important to look back at my own 2011 and see what I did well, what I did wrong, and why it’s important.

The last part is easy. If you read my work, you know that accountability, integrity and honesty are hugely important to me when it comes to Magic finances, even if you wouldn’t necessarily group those things together. But being honest with both others and yourself is of the utmost importance in trading, and it goes deeper than being honest about card prices on the trading floor.

It’s especially important if you strive to have any kind of influence. Whether that means writing weekly articles, becoming a respected floor trader or even just the “trading guy” at your local FNM, the way you carry yourself matters. I’ve talked at length about doing the right thing in your interactions with people, but there’s also a responsibility to be honest with yourself and others about the money you make. Think about it. You may not shark people, but if there are others who look up to you (and there likely are), if you brag about how much you made off trading, other people will feel the pressure to match you and are more likely to shark someone to do it because they think "that's the way it's done", not to mention those who hear you talking about it and become terrified of losing value themselves. In an indirect way you have the ability to affect the perception of the “value trader” in your area. Keep that in mind.

The other thing is that it’s vital that you’re honest with yourself about your profits. People constantly talk about the times they’ve “won” speculating on a card or making a trade, but in the end all that matters is the bottom line. Your cash. Are those cards you made “infinite value” trading for still sitting in your binder? That’s not making money, it’s building inventory. And while there’s nothing wrong with this, you cannot count that as a profit if you’re trying to treat this as a business.

Another mistake I see people make is not counting their true expenses. Making $150 in value on the trade floor is nice, but recognize that if you paid $200 in food, gas and hotel costs to get to the event, you’re not “making money,” you’re just losing slightly less. This is why I keep a detailed log of my expenses on Magic-related trips; I want to know where I stand after I’m done, and that’s only done by selling cards, not holding them in your binder and attaching a nebulous value to them.

To be true to my word, here’s what I consider my best and worst MTG-financial moves of 2011.

Doing it right

I had some solid scores this year, and I made some major callshots. I didn’t make as much as I should have (more on this later), but I still did well for myself. Let’s take a look.

­Good calls

In no order, some of the best cards I’ve been ahead of

-       Spellskite

-       Stoneforge Mystic

-       Consecrated Sphinx

-       Mutavault

-       Dark Confidant

-       Modern

I’m especially proud of my calls on Confidant and Modern cards, of which I singled out Ravnica shocks when they were closing at under $11 a pop on Ebay. The Confidant I deduced by using good, old-fashioned mathematical analysis here when it was going for just $14 on Ebay (it's now $30). It’s satisfying to know that I can recognize undervalued and playable cards, and if I do half as well on callshots in 2012 as I did last year, I’ll be happy.

Maximizing dealers

If you’re serious about selling cards for cash, you know how difficult dealing with dealers can sometimes be. This was an area I focused on last year, and I’ve become much more connected among potential buyers for cards. This allows me to both move cards easily at good prices to a dealer or work out arrangements with them beforehand to maximize my profits. This was especially valuable when I was able to buy a bunch of beta dual lands this year and flip them at maximum profit because I had the right contacts.

The Prediction Tracker

This thing was my baby, and I’m glad that it’s become as popular as it has. I’ll be the first to admit it’s gone through some growing pains, but I know it’s made people who’ve used it a lot of money.

Kelly’s been working on an updated database for the Tracker, and hopefully that will be up and running soon. In the meantime, one of my goals for the Christmas holiday is to update the version we currently have running and mold it into a more easily updated form. We’ve gotten some new writers since we started it, and I’m excited to bring them onboard.

The Prediction Tracker is the first of its kind, and I couldn’t be more proud of it, and especially of what I know it will become.

Doing it wrong

While there have been some good times this year, I’ve also made my share of mistakes, many of which I’ve shared with you. Here’s a few that have been especially good learning experiences.

Not buying in

The biggest trouble I had this year was the inability to pull the trigger. While I expertly called the rise of Ravnica lands, Bobs and Filter lands, I didn’t buy in hard to any of them. Instead I targeted them in trade, a tactic that made me decent money but nowhere near as much as it would have if I had actually bought in hard. Obviously hindsight is 20/20 and all that, but I missed out on literally thousands of dollars in shocklands alone. I also remember almost clicking “buy” on Grove of the Burnwillows at $5 and deciding to hold off only to watch them rocket to $20 literally the next day.

Part of my problem is that I was a broke college student and was scared to tie up so much capital. Now, being an employed (but still mostly broke) college graduate I have a little more wiggle room, and will try to put (more of) my money where my mouth is next year.

There were a few small things I bought into with cash that paid off, including Hive Mind and Reflecting Pools. But there was also Primeval Titan, which worked out but not quite well enough. I detailed the entire experience here, and it’s worth looking at if you want to see When Speculation Goes Bad.

Card calls

There were a couple calls I made that didn’t pan out at all, such as predicting the return to prominence of Baneslayer Angel when it was going for $8-10. I also missed the boat on Hero of Bladehold as well as a few other cards. While I don’t mind missing a few sleepers like Hero (I didn’t lose anyone money there), I feel worse about things like Baneslayer, though thankfully there were very few examples of that.

Being hesitant to go big

This is something that appears to be a recurring thing for me, and it certainly fits with my risk-adverse nature. I traffic mainly in small casual cards like Adaptive Automaton rather than trying to go bigger. I love working in the $1-15 range when trading, but I’m significantly more unwieldy when we start going bigger. Part of that is an unfamiliarity with many older card prices because I’ve only played for the last three years and only traded for two of them, but part of it is also my tendency to hold onto big-ticket items. Either way, I need to work on being more flexible next year.

There it is. An honest look at some things I feel like I did well last year and some things I certainly didn’t do well. I highly suggest doing this for yourself. It will both help you to recognize some weaknesses and set yourself some tangible goals for next year. I’m off next week, so I’ll see you in the new year, when we will surely have a ton of Modern information to wade through.

Enjoy the holidays, and thanks for reading,

Corbin Hosler

@Chosler88

4 thoughts on “Insider: The Year of the Speculator

  1. Terrific article. I am in the same boat as you in terms of being risk averse. I have multiple regrets where I hovered my mouse over the "commit to buy" button and chickened out, only to see the cards' prices jump up. I bought 3 Elspeth Tirel at around 13$ when I could have bought many more. I bought Blazing Shoal & Disrupting Shoal at $0.25, but only bought a couple of each.

    The problem for me is that I am so afraid of missing. If I buy 20x of a particular card at 5$ each and then watch it drop a couple bucks I will lose significant value and I want to avoid that where possible. Any advice on how to be less risk averse and how to cut losses sooner rather than later?

  2. I think coming to grips with 'the fear' is important. Seeing the correct play is fine, but having the guts to follow through with it is what matters. I've found that the more I pull the trigger on well thought out trades, the easier it gets despite 'the fear'. The things that help me make a move include historical patterns and prices, my own experience, and not talking to too many people. I find that when discussing trades with people, their opinion will be influenced by their own fear. I don't need someone else's fear to talk me out of a good trade!

    Sigmund, your question around knowing when to cut losses is a good one. When I make a trade, I often have a few reasons why I have made that trade. If things haven't worked out in a certain time frame, or my reasons have changed, it's often a bad trade that I should pull out of. This is a huge red flag for me. Once I start altering my original analysis, it's usually an attempt to rationalize a loss, and rarely if ever does a bad trade get better before it gets much much worse.

  3. Great article. So important to look at actual profits and revisit the buys you have made over the past year. This is the first year I have really put my money out there for speculation. I think those of us who are cautious with our money will do much better over the long run so don’t get down on yourself for your caution. Right now I’m waiting on braid of fire and gifts ungiven to develop in modern. If they work out, my losses will be considerably less for the year. Keep up the good work. You are definitely making a name for yourself and should be in the conversation with the big 3 financial guru’s you mentioned in your article.

  4. This is one of the reasons I pay for content on Quiet Speculation. Honest looks back at how everyone did, and emphasis on doing it the right way. I am similar to you guys as far as hesitation goes. I tend to purchase 5-20 copies of a card and if I pulled the trigger harder or a few things I would be much better off. Look forward to the new tracker I keep hearing about and a whole new year of what should be some AWESOME modern calls going forward.

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