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Insider: Another Person’s Portfolio

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If you haven’t read Sigmund’s excellent article from Monday, please take a few minutes to go do so now.

I’ll wait.

I loved this article. Its simplicity is its beauty. I’m also sure it comes to no one’s surprise that Sig and I share some investing idols, notably Warren Buffett. That man’s lessons have informed my moves in Magic finance for years. His advice hasn’t steered me wrong despite obviously being meant for a slightly different audience, as I wrote last week.

I’ve written thousands upon thousands of words every month about what cards I think are primed to increase, which ones are tailing downward, and which ones are just going to be stagnant. But as Sig pointed out on Monday, nothing speaks more clearly than disclosing my own positions to you guys.

Power in Parallels

The reason I enjoyed watching Sig walk through his portfolio so much was that I wanted to compare it to mine! I think that’s the biggest value, and exactly why following it up with my own is a good idea. Of course it’s a good idea to know what one stock market expert is investing in, but at the end of the day it’s one person’s opinion.

And you know what’s better than one person’s opinion? Two, of course. For instance, if we’re both on the same page in terms of a spec, I’m going to be more confident in myself. This is just one of the reasons why our forums are so useful. Of course, at the end of the day it’s your money and you shouldn’t trust anyone but yourself with it, but comparing notes can only help.

So let’s get started.

Sealed Product

I don’t own nearly as much Sealed product as Sigmund does, and I think that highlights the biggest difference in our respective approaches-–cash outlays.

Whereas Sig trolls eBay for good deals and puts out the cash to acquire and hold, I’m much more cautious with my money. For instance, I rarely buy into a card I think will rise in cash unless I’m extremely confident in a huge spike, which doesn’t happen all that often.

I prefer trading into specs, and the reason is simple: there’s less risk. If I pay $4-5 for a card and it doubles overnight to $10, I’m realistically looking at getting $7 or so on a buylist or through other outlets. While this profit is nice, compare it to this: I trade a $5 retail card that sells for $2.50 for the card I think is going to spike (cough cough, Aetherling). Then, when the card I’m speccing on does hit $10, that $7 cash I’m pulling looks a lot better when my “in” price was $2.50 cash instead of $4-5.

While this particular example is more related to speculation than Sealed product in particular, the principle of the “cash outlay” remains the same. I don’t like to tie up cash in cards for the long-term. Even my biggest and most public spec, blue Zendikar fetches (I was the largest single holder in Oklahoma for a time with more than 100), was done entirely through trading.

Part of this is simply psychological. It’s a lot easier for me to justify spending “Magic money,” aka other cards, than it is for me to spend actual, pay-the-bills cash. Even though Sealed product is usually a safe investment, I tend to stay away from too much because I don’t like to tie up cash.

But that doesn’t mean I don’t have similar positions, even if they aren't strictly Sealed product, which I’ll get to shortly.

But first, with that said, I do own some Sealed product. At the moment I have two Modern Masters boxes, purchased at roughly MSRP, that I intend to hold on to for a long time. With Modern cards still appreciating, I have no reason to doubt these will pass $300 in the next year. They could easily be $500 three or four years down the road when not only Modern staples have continued to appreciate, but casual cards like Stonehewer Giant that are currently suppressed begin to rebound.

I also have two From the Vault: Legends that someone sold to me a few weeks ago, and while I am looking to sell these, I’m not in any rush.

The final piece of my Sealed portfolio consists of a pair of Dragon’s Maze boxes that I won at GP: Houston a few months back. I never cracked them, and I haven’t decided exactly what to do with them. I don’t have any cash tied up in these, so it’s possible I could just keep them in the closet and hope that Voice of Resurgence continues to get more expensive, but with so little else in the set I’m not sure if that’s better than just flipping them now. Thoughts?

Printed Money

This is what I alluded to above. While I don’t have boxes of Innistrad or Zendikar, I have the next best thing: A longbox of full-art Zendikar lands.

I have maybe 500 of these socked away with about 75 Unhinged lands. Every time I can, I trade for one, bring it home and drop it in the box where I hope not to see it again for a decade or so. I also have a decent stack of foil Zendikar lands, which have gone crazy in the past two years and now are all at least $15, with some reaching $25.

This is how I compensate for not having boxes. These lands, I believe, will continue to appreciate at near the same rate as a box of Zendikar, and are much easier on the wallet to acquire. An Unhinged Island, for instance, has gone up nearly 20 percent in the past year.

TCGPlayer makes it difficult to track Zendikar lands, but on Star City Games all of them are now at least a dollar retail and some are sold out at $2.50. To me, these types of deals take the place of Sealed product in terms of the safe, long-term, low-risk bet that Sig uses boxes for.

Standard

Again, we see some differences between Sigmund and I. While he and I like many of the same bets in Standard right now--shocks and Oozes come to mind—-I don’t mind playing the market a little more. I’m certainly not up-to-the-minute with all of the latest one-week wonders, but I don’t mind taking a position in some Standard cards I have a lot of faith in.

Right now, that means a lot of Jace, Architect of Thought, Deathrite Shaman, Scavenging Ooze, Blood Baron of Vizkopa, Domri Rade and shocklands. I think these are all great places to put money, and I have a fair amount of these to show for it.

Of course, I’m also in a different position than Sigmund here because I sell singles at a brick and mortar store. While not all of my customers are into Standard (most are casual players), enough are that I also try to stock popular Standard items to keep moving.

Overall, I would say that maybe 25 percent of my Standard stock is devoted to “spec” calls like the ones mentioned above (and don’t forget Exava), while the rest is just stuff I know I’ll move through, so it’s not quite as relevant in terms of what I’m confident about.

The Buylist Box

This is one of my favorites, and it’s something you may not be familiar with. While this represents a pretty small portion of my Magic holdings at any one time, maybe five percent, it’s an important tool for grinding out value over the long term.

The concept of the buylist box is simple. All those Seaside Citadels, Liliana's Caresses and such that can be sold for anywhere from a quarter to two or three dollars, I put in the box. Most of these have no rush to sell, so I just let the box build up over time. It typically has between 100 and 500 cards in it, and I’ll usually empty it out when I make it to a Grand Prix. Of course, if it fills up before then, I’ll buylist them out online.

Some people pick everything down to nickels, but I’ll usually stick to stuff that is a quarter or more. Sometimes what is a quarter to one dealer is a dime to others, so basically I’m ending up with at least cards worth a dime to a dealer in the box.

Anyway, here’s what it looks like right now.

My decks

It’s easy to overlook this, but I actually have quite a bit of value tied up in my decks, even though most of them are only casual decks. I have Merfolk and Living End built for Modern, but I have no Standard or Legacy decks put together.

I do have plenty of fetchlands, shocklands and other cool and semi-expensive cards in decks, from my EDH deck to my Allies deck (lands) and other fun decks.

Overall, I would say that in terms of singles, I have maybe 10 percent tied up in my decks.

Other

I hold a dozen duals, all white-bordered, as well as a playset of Wastelands and Forces. I do agree in the abstract that Legacy’s ceiling is what it used to be, due to the advent of Modern, but I also don’t think the bottom is falling out. Because of that, I’ve held onto these cards. I also own six Jaces (and at the moment have three from a collection I’m trying to sell).

That’s pretty much all my exposure to Legacy (outside of also-Modern cards).

Modern, though, I am pretty exposed to. Though I own no Bobs or Goyfs or Thoughtseizes, and sold my extra Fetchlands six months ago, I’m invested in a lot of the smaller items. I own about 60 shocklands of varying flavors, both because I expect them to go up after rotation and because they sell well in the store.

I’m also heavily invested in things like Inkmoth Nexus, Scars fastlands, Birthing Pods and some of the Modern Masters uncommons I expect to rebound, like Spell Snare and Kitchen Finks.

Rounding out, I also traffic a lot in casual cards. We’re talking the Parallel Lives and Asceticisms of the bunch here. These solidly grow over time, and I love having them in my binders and the store case.

Overall, I would say that in Modern nearly 50 percent of my stock right now are “staple-ish” cards that I believe are overpriced, and 0 percent are ones I think are too expensive to really “spec” on, like Bob, Goyf and Clique. The other 50 percent is tied to widely-played cards that sell/trade well, even if I think the price on these or more or less correct.

Closing the Book

I think that pretty much covers it. As you can see, one of the biggest things I advocate is diversification, which is reflected in my own collection. Sure, Scars lands may never take off, but I only have some of my eggs in that basket. Legacy may crash, but as a whole it won’t destroy my collection.

I think that’s the trick to steadily accumulating value. Going really deep on a card you think is underpriced is good, but you shouldn’t ever invest too heavily in it at the expense of the rest of your collection, because these things don’t always pan out. But if you spread around that opportunity, you’ll open yourself to enough of it paying off to outweigh any losses (or simply lack of growth) you might incur.

I hope this was a valuable exercise. I enjoyed writing it and taking stock of my own stuff, something that can be hard to do from time to time. For all of you, I think it would be helpful to compare your own collection to mine and Sigmund’s and see if you can draw any conclusions of your own. Remember, what is right for me may not be right for you, and that’s okay. But comparing notes never hurts.

Thanks for reading,

Corbin Hosler

@Chosler88 on Twitter

10 thoughts on “Insider: Another Person’s Portfolio

  1. Corbin, thanks for all the positive words and your shout-out! 🙂

    There is plenty of overlap here and that is reassuring indeed. I came up with my new MTG investing strategy only about 6 months ago or so, when I decided to go deep on INN boxes. If I had developed this strategy earlier, I would be right there with you on Zendikar lands. I kept every single one I opened and traded for a couple more, but I didn’t acquire greedily like I should have.

    I’ve likened my investing strategy to Kelly Betting. The more confident I am in a spec the deepr I go. I don’t care too much if my return will only be 10% on an investment. If I’m exceptionally confident in the buy, I’ll still go deep. That’s why I went deep on INN boxes. Even if I make $10 a box, I know my risk of losing is virtually 0 if I wait patiently. It’s free money.

    I continue to buy Scavenging Oozes at $12 or less, though I may taper soon as I’m at around 32 copies and counting. I just got 5 more Shock lands in the mail, bringing my total to 83 (not counting those in my Melira Pod deck). I don’t have a buy list box like you do mainly because I can’t trade for buylist cards. But any time I shop online and I’m paying for shipping ANYWAY, I’ll do a quick browse of inventory to see if there are any cards available under buy list. Those sit in my binder until the next time I decide to ship a buy list.

  2. The two big thoughts for me in terms of my investment holdings are % gain, and the length of the hold. I don’t mind sitting on a box of Darksteel for the next year. I’m confidant that the growth will be at least 10%. However, product like a box of M12 probably isn’t going to increase in price for maybe 4 years. When it does, I’d have to consider if the increase beats inflation (low currently ~2%, but still unpredictable).

    This idea of Sig’s has been great. Corbin, I like to see your approach as well. Can’t believe I overlooked the Zen basics in the article I wrote this week.
    http://oasisgamesslc.com/financial-fix-plastic-wr

  3. Full art lands. So good – one of the biggest adrenaline buzzes I had returning to Magic this year was going through my basic lands and pulling out foil and non-foil Zendikar lands. I was literally pulling dollar bills out of my land boxes.

    I very rarely trade, but when I do, it’s almost always for lands. Zendikar non-foils are great dollar fillers.

  4. Isn’t relying on trades to acquire assets actually more risky, in that you’re both betting that what you’re trading away won’t appreciate AND that what you’re acquiring will appreciate, whereas a dollar is always a dollar (ignoring currency fluctuations, but that’s a different category of investment)?

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