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Insider: [MTGO] Exploring Investment on Magic Online

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Hi QS readers,

It has been more than two years now since I made my debut investing and speculating on MTGO. My first year was full of mistakes. My return on investment was positive but relatively low--I didn't really know what I was doing.

About a year and a half ago I became a member of the QS community. I rapidly filled the gap of my ignorance with the help of Insider articles and fruitful discussions on the QS forums.

Since the beginning of 2013, I've been doing pretty well. I became more confident in my trades and I regularly generate significant profits. Now I would like to give back to the community and share my experience with other QS members.

A Little Bit About Me

I began playing Magic in 1998, first with my brother and some friends. I quickly moved to local tournaments and finally across France and Europe for PTQs, GPs and PTs. At that time, MTGO was not really part of my world because I couldn't sell digital cards for cash after drafting, which made it too expensive.

In 2010, when I had the opportunity to move to Atlanta for my job, I was excited to discover another country and perfect my English. With no Magic connections and less free time, I sold my collection and almost stopped playing Magic for good. I only kept one copy of each card, with the hope of playing Commander once I settled in Atlanta. Eventually I sold the rest of my cards on eBay, as I didn't find time--or people--to play with.

Magic Online: Savings Account, Hedge Fund Management or Lottery?

Summer 2011. Two things happen almost simultaneously. I was shocked to discover that my American savings account paid about 0% interest (compared to 2-4% for regular French savings accounts). Second, I remembered that I had a MTGO account with a couple of cards on it.

Getting more interested in MTGO, I realized soon that "older" cards (meaning non-Standard cards) were valuable and had shown a steady increase over the past two years.

Okay, wait--instead of having my money do nothing on my bank account, can I invest it on MTGO and trade cards like you trade stocks?

I bought several hundred Tix in a two-month period and bought a bunch of cards, mostly Legacy staples… and a lots of crap. My challenge was to make a 10% profit in one year. Even though I think I made it, I also made many mistakes: poor investments, bad choices, bad timing, blind bets, etc.

I was trying to follow the fluctuations of the market with the tools I had at that time, but I didn't really know much about the MTGO economy. I thought that what I knew from the paper version would be sufficient to create profit.

To be simple: paper Magic and MTGO are pretty different when it comes to their markets.

The next summer I discovered Quiet Speculation and signed up for three months to give it a shot and see if I could learn something, improve my skills, and at least recoup my membership fee.

After a year and a half of QS membership, I can say that it was fully recovered. Even with the tremendous amount of knowledge and experience I gained here, the QS community is always telling me something I don't know, which keeps my membership paying for itself year to year.

A recent concrete example: I was not aware of the Zur the Enchanter deck in Modern until Matt Lewis posted about it on the MTGO QS forum. The profits I'll make with Zur the Enchanter will probably pay for three months of membership. Without QS I would have missed this one for sure.

One thing is certain after all this time: I don't know everything, I miss opportunities every week and I still make mistakes. But with the help of the QS community members, I'm making smarter and better choices, and I generate more profit than two years ago, no doubt about it.

Now I want to contribute more actively to this community and share the knowledge I have accumulated.

Topics to Cover

The series of articles I want to write could be called “Weekly Market Selection” or "Tips of the Week for Better MTGO Investments." I want to focus on concrete, weekly buys and sells, discuss immediate, previous and future moves, and give helpful hints to maximize your profits on MTGO.

These articles won’t deal with deep strategic analyses or complex theories that drive the MTGO market. Matt Lewis already does a great job covering that every Friday.

I also want to make my own portfolio as transparent as possible and keep track of it all year long with you. Maybe once a month, I want to (re)evaluate the state of my transactions and discuss what I did right, what I did wrong, and what to expect for the coming month.

I will share with you the tools I'm using and discuss their usefulness. I may also share some experiences and reflections about a specific topic or investment.

I hope my articles will benefit particularly the newest Insiders and people not yet familiar with MTGO. The more experienced of us might still benefit from these articles as a complement for what's hot this week, as it can be challenging to keep track of every opportunity in the MTGO world.

I will start with a series of articles addressing:

  • Buying on MTGO: from cash to Tix to cards
  • Selling on MTGO: from cards to Tix to cash
  • How to manage your portfolio and why it's important to keep track of everything

MTGO Investment Types

Today I want to share a little bit of how I see my MTGO investments.

To me, there are three ways to invest on MTGO. Each of your speculation/investments should fit one of these categories. It's also important to know and identify which category a given investment falls into. Profit expectations, timing and risks are different for each.

1. Cyclical Investments

I refer to cyclical investments when the evolution of a given card's price is "cyclical" and therefore extremely predictable.

In this category you'll find Modern cards, cards rotating out of Standard, and mythics from both the core set and the first Standard block (Ravnica, in our current Standard). Actually, anything with the exception of the newest Standard sets could fit this category. Boosters have their place here too.

By looking at past prices and/or past events you can predict when prices will be low and high. Modern cards are probably your best friends here--there are hundreds that fluctuate by a factor of up to four in between low and high season.

Typically, cyclical investments are very low-risk, fairly profitable and require you to hold your position for several months on average. To me, this should form the core of your portfolio.

2. Speculation

This type of investment relates more to "pure" speculation. Here, there's no (or little) history to help you predict the trajectory of a card. You have to rely only on your good judgment and on information you can gather here and there, like the anticipation of a metagame shift or pros who have started talking about a new card or deck.

But in the end it's up to you and nothing is really sure here. This applies particularly for Standard cards. Buying mythics at 0.30 Tix or rares at 0.05 Tix is a typical example. You buy a bunch of these hopping for one or more to break out.

This type of speculation can be very risky, especially if you don't buy at absolute bottoms, but has potential for high returns. The timing here can be variable, from a couple of days to years. Holding too many of these speculative cards can totally undermine your bankroll if you don't buy wisely and carefully.

3. Short-Term Investments (Quick Flips)

This type of investment is a sort of "predictable speculation", the happy ending of the category 2) if you prefer. The trick here is that you're betting only when you already know the card is sure to appreciate. This type of opportunity happens every time a specific card is spotlighted by an event: PT, GP, ban list announcement, SCG tournament, video from Travis Woo, et.al.

You have surely noticed that around the end of a GP or a PT if a new deck or card breaks out, their prices increase substantially within the next hours. The same thing happens during spoiler season or after announcement of ban list changes.

Some examples? The titans' prices increased when Cavern of Souls was spoiled; Scapeshift saw its price multiply by ten when Valakut was unbanned in Modern; or, more recently, Blood Baron of Vizkopa jumped from 14 to 19 Tix after Fort Worth GP.

You can also yield small but totally risk free profits by playing the arbitrage between two bots, one selling lower than the buying price of the second one.

If you're quick enough, this type of investment is virtually risk-free for moderate to high profits in a couple of hours or days.

The downside is that you have to be there when it happens--not two days, or even five hours, later. Also, you can't invest 1000 Tix in one hour in a single card that everybody else is chasing. This is why I always keep some Tix available on my account.

Remembering Your Goal

Always know where and why you are investing Tix in a card, and try your best to stick to your goal.

If you buy a card with a quick flip perspective, don't keep it more than a week, take your profit and move on. If you buy a card because you detected a cycle, prepare yourself to hold on to it until the next predicted peak and don't panic in between.

As of now, my portfolio is composed of about 70-75% of cyclical investments (mostly Modern cards), 10-15% of speculation (on both Standard and Classic cards), and finally 10 to 20% of bankroll is available Tix.

Buying and Selling

Before letting you go, and since it will be the focus of my articles, here is briefly what I'm trading these days:

Buying

  • THS boosters, following the consensus on boosters speculation as discussed in the MTGO forums, I'm buying 12 to 24 packs whenever they hit 3.00 Tix or less. It happens now and then on Goatbots.
  • MM Gush has dropped a lot, to 2 Tix or so. It seems like a good midterm target. I don't expect it to recover to 6 Tix any time soon, but I'll consider selling them whenever they are in the 3-4 Tix range.
  • Vengevine and Emrakul. I have bought a few copies last month around 7 and 7.5 Tix, respectively. Their price is pretty low compare to the benefits they could offer during Modern season.
  • THS complete set. I'll talk more about this in a future article but I'm experimenting with the redemption system as an alternative way to exchange Tix for cash. THS sets are lower than ever and can be acquired at 96 Tix or less if you spend some time scanning bots for the best prices on individual cards.

Selling

  • A lot of Modern cards I bought a month or two ago have reached their ceiling or are very near. That was my target and I think they might drop again approaching Born of the Gods release events, so for these reasons I gladly take my profits and move on. I might buy them back if they effectively drop during the release events in a month and a half. These cards include: Remand, Living End, Torpor Orb, Spellskite, Spectral Procession, Creeping Tar Pit, Through the Breach, Serra Ascendant, and Blackcleave Cliffs. Most of them have doubled in a two-month period.
  • M14 Boosters. I started selling in mid-December and am looking to sell the rest in the coming days, at any price in the 3.35-3.45 range.

Thank you for reading. Next week I'll review the different options to convert your cash into Tix.

Sylvain Lehoux

9 thoughts on “Insider: [MTGO] Exploring Investment on Magic Online

  1. Hi Sylvain,

    I am looking forward to the Set Redemption article! Some years ago I tried to make a profit buying complete MTGO sets, redeeming them for paper, and then selling the paper cards separately. But it took a lot of time/effort and there where a lot of (hidden) costs, so at the end of the day (being based in Europe) I could have better taken the 2% interest on a savings account.

    1. Thanks for reading.

      I’ll talk more for sure about that when I’ll write about how to invert tix to cash.
      As you said, I think being based in Europe almost prohibit redemption as an exit for tix.

      However I came to a middle solution. To be short, I tried to sell the complete set as MTGO set, and not physical cards. It’s a rather slow process, I sold 2 sets in 1 month.
      I was looking to sell tix at a better rate than 0.95$/tix, and that’s clearly what happen, but 2 sets a month is too slow to be a money maker by itself.

      I think the best is being in the US (or at least paying the US shipping fees) and having LGSs that you can sell to.

  2. Great article, I’ve been looking forward to it since I read your intro on the forum topic about botting. When do you think you’ll have a botting article up? I just started one and things are going slow for me, I don’t know if my issues are technical or strategic.

    1. Thanks for reading!

      Sadly I won’t talk about bots, I was not the one mentioning that. I don’t own any, and I don’t have any expertise in this area.

      Sometimes I think that a bot could be useful but I would use it only for targeted cards and not as a “regular” bot that buys everything (or a specific class of cards).

      If I had one I would use it to try to buy target specs and to sell specific cards when the time has come. I have no idea how viable is this. Would people come to sell or buy only 20 difference cards?

      I just know that having a bot around 24/7 would probably help collect and sell, not only more cards, but at better prices.

  3. Going over the 3 types of investments is great and I think everyone should take note of this recommendation, “(cyclical investments) should form the core of your portfolio”. I can’t agree more with that recommendation.

    As for #2, Speculative, it’s a lot trickier, more akin to gambling, but it can be very fun, especially when you get one right.

    And the 3rd type, as you point out, can be hard to leverage with a lot of tix as the market can be very thin on hot cards. Like Zur, I would have bought about 50 copies, but I could only find about 20 before prices started moving.

    I look forward to more of your work Sylvain!

  4. Really great to see another mtgo contributer. Matt’s work has been excellent but QS has been otherwise slow on the mtgo front. Look forward to reading your future articles, Sylvain!

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