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Insider: The Lies We Tell Ourselves

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Welcome back readers/speculators/critics/etc.! This weeks article will cover some of the lies we tell ourselves with regards to many subjects (Magic included of course).

Primer

The concept for this article actually occurred to me as I was leaving the bar last night. My friends and I were sitting at a table and I was watching this other table. At it were a guy in a polo shirt, a girl in a blue dress, and a girl in a yellow dress. The guy was focused solely on the girl in the blue dress; so much so that he was only looking at her and really only talking to her. The girl in the blue dress reciprocated and her poor friend in yellow was left to occasionally jump into the conversation or stare intently at her phone.

Where am I going with this, you may wonder. Don't worry, I'll feed you baby birds (who gets this reference?)

I was sadly cradling my water (I was the DD) and trying to talk myself into going over and introducing myself for about 30 minutes. Eventually my brain convinced me that the person she kept texting was probably her boyfriend and I would simply look stupid if I walked over there. They all got up and left and shortly thereafter so did my group.

The whole time I was driving back all I could think was how much of a wuss I was and that the worst possible outcome was that she said she wasn't interested (well worst would be that her boyfriend was an Marine Scout Sniper with a huge rage/jealousy problem).

All this got me thinking about the lies we tell ourselves in the MTG world.

Meat and Potatoes

Lie #1: We missed the peak time to sell so we should just hold onto it until it peaks again.

It's arrogant to think you'll predict the next peak, or that it will match the previous peak and guarantee the same amount of money you'd have made if you'd sold at the perfect time. It's a terrible idea to hold onto a card that saw a massive spike and then suddenly plummeted, as those trends tend to indicate a buyout or attempt at market manipulation (Alluren says hello). All in all, your potential for gains is rather limited in this situation. While you won't have made "optimal profit", profit is still profit.

Lie #2: If the card jumps in price suddenly, it will keep going up.

So many of my compatriots on this site repeat the adage "Sell into the Hype" because it's virtually impossible to know when a card will actually hit its peak. On the other hand, it's easy to unload a card when it keeps going up, as people are much more willing to pay top dollar if they expect it to continue to rise.

As a speculator it's critical to focus on the actual profit versus risk. If you buy ten copies of a card at $1 and there's a run on it, you'll want to determine what price point is acceptable to sell; but it's critical to have this point pre-determined. You could sell all ten copies at $3 relatively easily (assuming the run is pretty quick) or you could hold out and hope for $5. You have to determine whether you're willing to risk $20 guaranteed profit vs. $40 potential profit.

This risk varies from person to person. I myself am rather risk averse when it comes to most investments. I'd sell them all at $3 (assuming they were at that price) rather than risk them maybe going to $5, with one major caveat. If I believe a card really should be worth a certain price, I'm much more willing to run the risk of it not meeting that price then sell out too early.

A prime example was Deathrite Shaman, which I warned all my friends was going to be a $10+ card when it came up and I tried to trade for every copy I could. My only regret was NOT going deep and pre-ordering tons online.

Lie #3: Legacy cards are the gold standard (i.e. safe bets)

This one pains me to admit, but looking over quite a few cards that I assumed would maintain their value, not even Legacy cards are a guarantee. While some are safer than others (dual lands), some can spike for a little while as a deck heats up, and then drop back down as the deck cools or the metagame changes. This particular concept is universal across all formats.

This became most apparent as I was looking over some Legacy cards I thought were still $25+ (Time Spiral) only to see they had dropped right back down to their pre-unbanning price of around $15. High Tide just hasn't put up any numbers recently.

Luckily, Legacy cards can spike drastically with one good showing; so in these instances it's perfectly fine to hold onto them, but it's important to sell the next time High Tide does well. There is also concern in the Legacy community about SCG cutting back its support of the format, which unfortunately, will serve as a death sentence to competitive Legacy.

Fortunately, Modern has yet to replace Legacy on the SCG circuit and WoTC's willingness to drop the banhammer when any deck becomes too prevalent will continue to be a hinderance to it's growth.

Lie #4: SCG Manipulates Prices

While this one is partially true, the basic laws of supply/demand would prove them wrong most of the time if it were always true.

The reason I say partially, is because while the prices of many cards have suddenly gone up as SCG aggressively bought them (Zendikar fetchlands, Force of Will, Wasteland, and most recently Dark Confidant/Tarmogoyf), if demand did not exist for the cards at the new SCG prices, then SCG would just have a stockpile of cards they paid a lot of money for and no income on said cards.

You can see when their buying has been too aggressive when the cards drop back down after the initial spike. More often than not you'll see them go on sale a few months later for their pre-spike price or you'll see the number in stock not change for awhile.

Lie #5: I should always get maximum value out of my cards.

This one's more of a half-truth. While you don't want to discount your trades and lose money when you don't have to, it's critical to compare what you're trading for. If you think what you're trading might go up $5 in the next month, but what you're trading for should go up by $15, losing $2 in value to secure the new stock is a worthwhile "loss".

For example, my very last trade of GP Vegas:

My ($58):

2x Chord of Calling (LP)
1x Helm of Obedience (LP)
1x Rugged Prairie (Chinese) (NM)

Their ($55):

1x Dark Confidant (German) (NM)

Right now, this looks like an amazing trade for me, but at the exact time of the trade I had to let my Rugged Prairie go for about $3 less than I would have liked. I did so because I'd seen dealers selling Dark Confidants at $80 and the guy's binder had nothing in it that was under $20.

This is part of the fun and challenge of trading. Comparing Current Price to Current Price is one level, but as a speculator we often want to also look at Future Price vs. Future Price as well. After all, if I can trade three $10 cards for three other $10 cards, except I think the cards I'm picking up will be $15 in the future and the ones I'm trading away will still be $10 each, then that's a solid trade.

It's important to note that the price of Chord has risen drastically in the last day or two, so this trade may ultimately end up a wash.

Lie #6: Foils are worth double the regular price.

This is the multiplier everyone uses when people trade for foils. Many times it's pretty accurate, however, for some of the older foils or chase foils it's quite wrong.

If you have some rarer foils and someone shows interest, it's perfectly fine to say "I honestly don't know foils that well, let me look it up" rather than jump to "well the regular is $5 so...$10?" You could be cheating yourself out of quite a lot of value and I personally believe a lot of sharks target foils specifically because so many people jump to the 2x multiplier without thinking about it.

Here are some examples to show you the kinds of multipliers that exist (@ TCG Mid):

Daze (non-foil): $2.99
Daze (foil): $66.35
Multiplier: x 22.19

Thalia, Guardian of Thraben (non-foil): $2.49
Thalia, Guardian of Thraben (foil): $17.50
Multiplier: x 7.02

Geist of Saint Traft (non-foil): $22.31
Geist of Saint Traft (foil): $54.66
Multiplier: x 2.45

13 thoughts on “Insider: The Lies We Tell Ourselves

  1. Lie #1 is my favorite. Profit is profit – I overuse this statement but it’s so true. I’ll often sell way too early at the earliest signs I can profit from an MTG investment. Let’s face it, making money with Magic Cards is pretty sweet, and so even if I don’t maximize profit I still get that giddy feeling from making a right call. Didgeridoos, anyone? 😉

    1. Yep..I know I myself have fallen into this trap before…all you can do is get yourself out of that mindset as fast as possible.

  2. Lie #1

    This depends entirely on what you got in at, what you envision the cards doing and what you aim to get out of the financial side of Magic. I got my Alurens at $5, I don’t see the card go lower than that, being reserved and all. I can get out at $5 at pretty much any point and just maybe at some point Aluren will catch on in Legacy. Keeping some copies set aside in a box somewhere is not going to be a hinderance. I trade, buy and sell to pay for collection maintenance and in general take a very long term perspective. I could use more money, but I am not short on it. I don’t need to get that money out ASAP.

    Lie 3a SCG stopping Legacy support will be a death sentence to competitive Legacy.

    You are forgetting all about the rest of the world. You are also assuming no other party would step up. Also your argument covers all Legacy cards, yet it’s hard to look at them without also considering EDH and casual in general. If you want to look at Legacy exclusively Spiral is probably a fair choice, but Duals aren’t as a significant part of their value is likely caused by casual demand.

    I would agree that SCG stopping Legacy support would cause some riples among Legacy card prices, maybe even some minor waves, but I am quite convinced that nothing for which casual forms a significant part of the price will face more than that.

    1. While I can understand your desire to hold onto something because you believe it’s at it’s floor, my argument was more aimed at those who didn’t get in on the ground floor but instead at say level 2…..nobody knows how high the elevator the elevator will go, but when it starts going back down again you don’t want to be holding onto the cards when they pass your buy in price…unless you think they really are worth your buy in price. I really hope you’re right on lie #3, but I honestly can’t see it. I think a big part of that is you’re based in Europe (I believe) which doesn’t have SCG propping up it’s legacy scene (like it does here in the US). I don’t know the European market as well…but I do know that before SCG started hosting legacy tournaments legacy prices were MUCH lower (I remember getting a Tropical Island @ $40 for EDH). There will be a much lower drop for the casual/edh playable cards, but ones that are almost exclusively legacy only will take quite a hit.

      1. I am indeed based in Europe, The Netherlands specifically.

        I can tell you that back when SCG started hosting Legacy opens (I could find them as far back as ’09 in their archives, perhaps they started before that?) EDH had a much, much smaller following. I really think the impact on casual usable cards will be fairly minimal, there are many, many more of us than there are tournament players.

        What would be interesting to chart over time if the data was available was Casual only cards versus Legacy only cards versus cards played in both. We might be able to filter out the relative impact each has.

        Another interesting thing to look at would be to go back equally far from 2009 (or whenever the first legacy open was) and look at how prices were then. I’m pretty sure back in 2005 or so a Trop would have also been a lot cheaper than it was in 2009. (Though Vintage was still going fairly strong back then and it would be hard to account for that influence).

        I agree that if there are no tournaments to play them in Legacy only cards would drop, however, that is still assuming no other tournament organizers will step up. There could also be new formats using those same cards (like going from Vintage to Legacy), heck, there might be a huge wave of new collector’s for all we know (though I’m not counting on it). There are many outside factors, SCG hosting these tournaments is only one of them. It’s good to consider them, but, assuming they have this power is just as bad as assuming they have no power over this at all. In reality it should fall somewhere in between those extremes.

        1. “What would be interesting to chart over time if the data was available was Casual only cards versus Legacy only cards versus cards played in both. We might be able to filter out the relative impact each has.”

          I’ve actually written an article on each but I haven’t done a comparison between the two…which is a pretty good idea (so special thanks for that one)

  3. I think it’s important to note on Lie #2 that the reason a card continues going up is because it’s in such high demand, but the reason it peaks and then falls is because the demand is gone. It’s easy to look at a graph and say, “man, I could’ve sold these for $20 instead of $15!” When in reality, it’s possible no one (or just very few) actually sold it at $20. Sellers could have priced it at $20, saw there were no more buyers, and started dropping the price. Suddenly it’s a buyer’s market and a race to the bottom just to unload your cards.

    In other words, you should view a card’s peak as not where the most profit lies, but only where its demand runs out.

    1. That’s an excellent point. It is important to remember that in economics..Price IS the indicator of demand. If there is no demand then a high price can not be sustained, and if the price is low enough demand will often go up (at least in a free market).

    1. Also if the foil just looks fuckin’ sweet. sometimes you can just tell. the instant I saw the art for All is Dust I knew it would be a goddamn gorgeous foil, and when the set released I was right.

      Um, foil angels get hella love, way outside any other factor.

  4. makes sense, I guess sometimes it’s more than twice as pretty. I’d trade for a foil gift of orzhova, and that’s just uncommon

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