Insider: Not Every Failure Is Created Equal

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Two events in particular over the past week got me thinking about a concept we don’t like to talk much about in MTG finance.

After all, who wants dwell on their failures?

If we’re doing our jobs (or hobby, however you view it), then failure isn’t something we should concern ourselves too much over. While that’s a great concept in theory, it doesn’t always hold up in the real world. We all fall down, make mistakes and screw up, and sometimes we even do it when it comes to Magic.

I want to make it clear up front that there’s nothing wrong with this. The important thing is that we learn from it and apply those lessons learned in the future.

Anyway, back to the story I was telling before I so rudely interrupted myself.

The First Failure

The first incident stems from the aftermath of a large collection I bought. If you haven’t seen my tweets about it, I’m currently into several collections I bought on the same day for about $2,000, which marks the largest amount of money I’ve ever tied up in collections at the same time before. I’ve been piecing it out over the Internet before flipping the rest at GP: Oklahoma City (my hometown) next month.

This is already a stressful situation even though I was confident going in, and the amount of work I’ve incurred in the past month as a result is not insignificant. Not that I mind that part exactly, but I don't exactly have all the free time in the world.

Now we come to the part where I admit failure. A lot of the cards from one of the collections I bought are from Innistrad block, and we all know that means: dropping prices across the board.

Of course, I did know this going in and tried to prepare. I lowered my prices from the outset and thought I’d get rid of them all in a week or two tops so I could get out of them before buy prices completely disappeared.

That was three weeks ago.

Now I have a big stack of things like Hinterland Harbors and Falkenrath Aristocrats that no one wants, and I’m looking at a real possibility of actually losing money on some of these cards because I drug my feet too much. I’m certainly not going into the red on the collections as a whole (I’m positioned to do well but it’s not one of my better flips in terms of percentages), but looking back over my spreadsheet I see where I overpaid pretty badly on some of these cards.

There are a few reasons. I thought I’d be able to move a few more than I did, I missed some nicks on several cards that damage value, and the seller was a pretty skilled negotiator who walked out of the store with a better deal than someone who doesn’t know what they’re doing.

Maybe he reads these articles.

I’m not sure exactly why I screwed up here, but the bottom line is I did, and that’s very dangerous to a store as small as mine. Just because I’m not losing money on the deal doesn’t make it a success. Costs have to be paid, and that includes my time--to be honest when I’m dealing with the store I see losing money on any buy as an unacceptable failure.

Of course, I’m somewhat new to running a full business, so is this just something I should be prepared for?

At the end of the day, I’m going to make money on these cards, and some would consider it good money. But I can’t shake the feeling that I failed by paying what I should have known was too much on a bunch of rotating cards.

Another Failure

Moving these collections from the back of my car into my office at home, I also came upon a small box full of a certain Rare from Magic 2013:

I was very public about speculating on this card, and my love of Merfolk is well-known. I paid just under two dollars per copy on these back when I thought Gatecrash would be filled to the brim with fishies.

As we all know, the card did nothing, and Wizards trolled me with Merfolk of the Depths (I also feel trolled by the new mythic merfolk in Theros, but that’s a topic for another day). Anyway, my spec on Masters has been publicly deemed a failure, and I’ve endured a certain amount of ridicule over it, which I understand.

Today, four stores on my usual list buy Master of the Pearl Trident for nearly what I paid for them.

The Difference?

Two decisions, two outcomes. In one I lose money on several cards I bought but it’s considered successful because I’m able to cover it up with other profitable moves. In another, I make a speculation that is widely considered a failure, even though I can cash out for basically what I put in.

So what do I take from this? I’d love to hear your opinions on the matter. Am I stressing out too much over some bad buys, or is this as serious a mistake as I think it is? How should I feel about my Merfolk speculation? After all, that money was tied up and basically did nothing. Are these two situations even comparable? Which one is actually a “failure?”

Here’s my take.

Every Mistake Is Different

A mistake is not always a failure.

When it comes to Master, I went in knowing the fundamentals behind the card were strong. It had Eternal playability, was a lord of a popular tribe and only printed once, in a core set at that. Sure, it didn’t take off like I thought it would, but I knew those other factors would help to provide a safe haven if things didn’t pan out like I hoped.

It’s the same reason I’m so keen on speculating on bulk rares, like Scion of Vitu-Ghazi right now. It may hit, it may not, but at current prices it’s extremely difficult to lose. I knew this with Master, so I didn’t feel bad about sinking my money into the venture; I knew what I was getting into and planned accordingly.

Thinking the card would spike was a mistake, but I can’t categorize this as a failure.

Now, on to the collection. Yes, I made a mistake by overpaying on several cards. It bothers me because I knew what I was getting into with rotating cards, and yet I still allowed myself to make the mistake.

But at the end of the day, I am going to make money. Much like I knew the background appeal of Master of the Pearl Trident would hedge my bets, I think that paying what I did on the other cards in that collection hedges against the risk of overpaying on rotating cards. Yes, it sucks to have overpaid, but I think that looking at every buy as a singular monolithic event is wrong. What matters is the whole.

The Takeaway

I believe this lesson can be applied to every part of MTG finance. I sold all of my blue Zendikar fetchlands (~80) when they hit $35 retail thinking I made the right move. It’s easy to look at them now pushing $60 and say that I screwed up. But I quintupled up on those lands, and profit is profit. I also traded a pair of Tarns for a Force of Will a few months ago, which also looks pretty bad in retrospect.

But you can’t get hung up on these mistakes, or they’ll negatively impact everything you do from here on out.

If you dwell on a card that goes up more after you sold it, you’ll end up holding on to the next card too long when you should be selling into the hype instead. Still stressing about trading away an Emrakul two years ago? All of a sudden you’re worried to trade any card with long-term potential for fear of screwing up.

We’ve got to move on. You may feel bad about getting rid of Desecration Demon a month ago after the first jump in price, but remember that profit is profit, and at the end of the day if you still made money (or at least didn’t completely sink yourself), consider yourself lucky.

Look back at your mistakes. Dissect them. Figure out what went wrong. Hell, write an article about it. But learn the lesson and move on to what’s next.

Failure is not a period, it's a comma. A mistake is not always a failure, and don’t let anyone tell you differently. Even if all you have to show for it is a lonely pile of islandwalking fish.

Thanks for reading,

Corbin Hosler

@Chosler88 on Twitter

16 thoughts on “Insider: Not Every Failure Is Created Equal

  1. “How can you judge advice?” he said. “You should ask the people who got advice to tell you how they feel.” – Legendary US investment banker Felix Rohatyn when asked how to measure the value of an adviser’s counsel.

    If I get ‘bad’ advice from you or certain QS staff/forum members, if the logic and reasoning behind the advice is sound then there’s nothing to do except move on. No one is 100% correct, not even Buffett or Icahn.

    That’s why even though I may not always agree with QS advice and/or positions at least I feel confident that QS is not feeding me useless information.

  2. Great article Corbin. While you’re collection purchase is unfortunate, I actually still feel you’re correct on Master of the Pearl Trident. I will be trying to pick up a few playsets via trades in the next couple of months for the simple reason that, I believe the reason he has failed to materialize is not due to lack of power or not having a home…it’s simply that the legacy metagame has not been good for the merfolk archetype since his release…but I feel it will swing back around…the more “combo” decks become rampant the better merfolk looks.

  3. I like the article.

    I think that cashing fetches was ok. Whocan predict everything. You get cash, you made money, and i think that is what matter. I always have feeling, to hold them, when i have some cards that are going up (wait a litle bit more). And most of the time i wait to long. I try to set mind to some number 10 %, 15 % and when the cards gets there i sold them and try not to have any regrets.

  4. Nice to see a humble article, I don’t like to dwell on losses or mistakes myself.

    I don’t actually put a huge figure on my own time for this, as I enjoy dabbling in the Magic market casually. I’d happily do it for below minimum wage some evenings.

    It’s a fun rollercoaster watching my stocks fluctuate, but they usually trend upwards. I find it strangely therapeutic and addictive trying to beat the financial game.

  5. Arg, I wrote a nice long comment and it didn’t get posted!

    This time around the short version: Great article! It’s important we look back and learn from our mistakes. But in my opinion if you’re making money on Magic Cards, you’re doing something right. Even if your exchange wasn’t necessarily “optimal”. Therefore, don’t beat yourself up over suboptimal plays. If you create a thesis, make a bit, and profit because of your thesis you should rejoice. Learn from the mistakes, sure, but make sure you celebrate success too.

  6. I think truthfully evaluating your specs is the only way you can learn how to not repeat mistakes. People don’t like to talk about their failures because everyone likes a winner and people don’t like to admit they are wrong. However, if you’re not honest with yourself on your fails, you’ll be worse off in the long run because of it.

    I’ve had plenty of mtg finance blunders within the past year but I use every purchase or sale as an opportunity to learn. Different outcomes of speculation are relative based on how you choose to look at them. If you neither made or lost money on a spec, some can choose to look at this as a fail and others can choose to look at this as a non-fail because you made a smart purchase by still having outs to get you back to a break even point. The important thing is to understand why it did or did not work and make a mental note for the next time a similar situation comes along.

    One thing that this article has made me want to do is to dig up my old “box of fail” post in the forums where everyone can discuss their failures openly. it’s like group therapy…lol.

  7. I think you should judge success based on your goals when you picked up a buy – if you met those, then it means you are ready for more ambitious targets.

  8. My solution to some blunders was to keep a finance journal and evaluate all finance purchases at the end of the year. I may write it up so other traders can get inside my head.

  9. I think a lot of the miscalls we\’ve made on the podcast have come as a result of things that are without precedent. It\’s hard to know what to do when you don\’t have a ton of historical data to look at or there are factors you completely miss. All you can do is try to be safe on investments that feel risky. Remember, in MTG Finance there are no \”failed\”

    specs, only \”cards that haven\’t gone up yet\”

  10. Good point, I agree, it’s essential to focus on failures, otherwise we don’t really learn anything. I don’t mind getting market direction wrong and losing thousands if I feel I made the “right” bet with my information, but avoidable errors for even $10 drive me crazy. For example, when I went to Oakland, my plane didn’t have wifi so I was shut out of the market for 6 hours and lost a couple hundred because of this. That was an avoidable error because I just assumed the plane would have wifi but didn’t check. In contrast, selling cards that were spoiled in MM only to see them not go down was mostly just a bad beat.

    I also find it a lot easier to create trading systems when my systems aren’t doing well. When they are kicking ass and things are mostly working as expected, there is less room for inspiration.

  11. Failure is a matter of perspective. First, consider economic gain. The opportunity cost of money tied up in a dead card coupled with the opportunity cost of your time sorting the collection to pick out $.10 cards for hours on end both have negative impact relative to their respective quantities on your bottom line. However, the decision to mitigate losses by selling the merfolk for what you bought in at can be perceived as neutral.

    The economic loss of a failure to recognize that a card is a lost cause is a greater failure than taking a hit and putting your money in a place such that it can make you money again. Sitting on a card for 4 years waiting for it to go up makes less sense than losing $50 on a bad buy if you can dump the cards and make back the loss with money that would otherwise be tied up.

    Net profit is extremely important in the context of selling zendikar fetches for $35.00. Assessing the success/failure of the move is simple: Did you make money? Holding out on fetches for another 6 months to make an additional $25 each is not sound logic. Take the profit and simply use it to make more money. Making just over $4/month per fetch sold over the next 6 months would bring you to the same level of money as you would have had holding onto the fetches, assuming they hit a higher price (which in this case they did). From a standpoint of risk analysis, yes zendikar fetches are a safer bet than Thundermaw Hellkite at this point, but 6 months from now I have no idea what the price of a zendikar fetch or Thundermaw Hellkite will be, but I have a much better idea what the prices will be 2 weeks from now.

    In summary, take the sure profit 90% of the time. The other 10% is reserved for cards like duals (assuming we are a year back in time) and other cards that you know for a fact are protected in some way from losing value, or cards you have special knowledge of their future price with such surety that it warrants investing in.

    1. Excellent post, and I agree 100%. Of course, the fetch money isn’t making me more money since I used it to buy a fridge as a housewarming gift for my wife 🙂

      But you’re right in that these are all very important facets to consider when evaluating an investment. Good work.

  12. Good article. I am also the boat of “i think i can sell this higher if I wait a bit longer” Turns out sometimes it bites me in the butt, other time it pays off. Depends on how much you are willing to risk.

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