Welcome to my Introduction
Well hey folks. I hope everyone had a good time with Christmas and the other trappings of the holiday season, but a new year has come, and it’s time to delve into some of the most important months of trading and moneymaking in the MTG finance business.
Consider, if you will, the reason why you go deep on a card- usually it’s because you expect the card to go up. At least, I’d hope so. If the card is worth 30 dollars, however, you need it to go up quite a bit before it’s worth the investment.
If a 30 dollar card goes up to 40, that’s a 1/3 increase in price. This is a big deal, and would usually get a lot of hype in financial circles. Consider a card jumping from 10 dollars to 15, a greater ratio of increase, allowing for a greater profit margin on the same input, and a much lower actual price increase.
I have problems with 30 dollar cards. When the average price of a playable rare is relatively low, a card that’s significantly above that is inherently less likely to increase in value- pointing to examples like Bonfire doesn’t make me incorrect, by the way, since the vast majority of cards in that price range inevitably plummet. Most planeswalkers come to mind.
I Do Love an Underdog
A ten dollar card, however, gives me a warm fuzzy feeling. At ten dollars we know the card is a rare, and played. Ten dollars usually doesn’t mean it’s played in everything, however, and the jump to 15 retail is often a matter of as little as being bumped to 4 copies in a deck rather than 2. Ah, I feel better about that- if the card is good, I’ve played it and I like it, and it’s not being played as often as it should, it’s easy. For a card to go from 30 to 45 it has to go from being massively played to almost universally played. A good card going from unplayed to played in one deck is more likely than a great card becoming ubiquitous.
Sure, Bonfire was a good bet, but in a vacuum I never bet on the good bets if they’re as expensive as Bonfire was. I like certainty to an almost unreasonable extent, and a card like Arid Mesa gives me certainty in a way that Bonfire never did, let alone Thundermaw Hellkite. Mesa’s now worth twice what it was a few months ago, something we take for granted, but Thundermaw doing the same thing is almost mind boggling- we all knew Mesa was going up, but Hellkite gained 20 whole dollars on its price sticker. Twenty dollars! That’s a lot of money! Nevermind that if you’d bought two Mesas on m13 release day when Hellkite looked awfully similar to an Andrew Jackson, you’d be no worse off now.
This brings us to another danger of investing in the flashy, explosively powerful cards- what happens when we’re wrong? Let’s assume for a minute that you are not the perfect oracle of card prices. We can include that neither am I, or Doug or Sig or anyone else you might consider a trader. Everyone gets it wrong. If you put money into Bonfire and it crashed, you lose massive quantities of cash, especially if you have a playset, two, three. By the same token that we aren’t perfect, however, we’re also not stupid- you least of all. If you read this site and bought into something as big as Bonfire, it’s because you believe in it, and probably because many of us believed in it too. It didn’t drop, and anything that generically powerful wasn’t likely to. What if it just didn’t gain as much as you wanted? What if Hellkite went to 30 and stopped?
This isn’t out of the question. In fact, most savvy guesses regarding the future of a given card don’t involve explosions in price, but rather a noticeable increase with room for profit but not necessarily a doubling of money.
Biggest Isn't Always Best
If, instead of buying into Bonfires when you saw them angling towards a million dollars right before states you put that money into other stock, what would happen? Having 50 per card invested in a playset might make sense if you can guarantee the upswing, but I find it better to put my money into a variety of things I have a lot of faith in. Perhaps I miss out on the more mind-boggling price swings of cards, but only because I’m covering my bases- I even had Bonfires at one point. But I sure as hell didn’t have 8, and I didn’t feel the need to go so deep on a card that wasn’t a guaranteed win, for all the hype it was getting.
When I started becoming interested in investing in general, I wanted to be that guy who picked out a stock and Blammo! Made it rich. Turns out that’s not how the stock market works, and it’s incredibly dangerous to overexpose yourself to one particular asset. I was taught to put specifically controlled amounts of my account into several different stocks I felt comfortable with- if they went up, great, but what I was dealing in was consistency. These stocks weren’t the splashy ones that could make me for life or shatter my hopes of graduate school forever, these were the ones that wouldn’t lose. They were the fetchlands of the stock market, and I got a nice spread.
You can invest in your Hellkites, your Bonfires, your Jaces, and you could have some good stories- but you’ll also be setting yourself up for crippling failure. Why not move into a diverse collection of lower priced cards with more places to go, and know that regardless of how the market turns you’ll be ready. By buying into cards that would be good in a control meta, an aggressive meta, a board lock meta, you set yourself up for success regardless of what WoTC prints next.
Unplayed Cards Can't be Played Less
Another thing to keep in mind- while Bonfire did go up from the 20 it was at originally (a LONG time ago), where is it now? The more flashy a card is, the more room it has to fall. If you pick cards you like that are seeing very little play but still have solid prices, what’s the worst that could happen? Obviously the market for them is being supported in some way or the price wouldn’t be up, so if you anticipate the card being played and you fail, you’re no worse off than you were before. Bonfire, on the other hand, was a speculation target when it was already seeing a lot of play. In the face of meta changes it was just as likely the card would be played less as it would be played more, so there was danger in the pickup. Lucky for investors this didn’t turn out so bad for them, but just because it went your way once doesn’t mean it will again. Diversify, gentlemen, and be careful about it.
Thanks to Sigmund, I had torturous writer’s block until I read his article, and without it I would not have a coherent thought for this piece or the next. As always, if you have any questions comments or snide remarks, I look forward to your comments!