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Insider: [MTGO] Nine Months of Portfolio Management – Conclusion

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It's been one year. Already one year since I started my Nine Months of Portfolio Management experiment.

Things went pretty well and it was such a nice opportunity to be able to write about it here at QS. Now is the time wrap it up and conclude this series of articles.

I really hope my articles about this project helped and will help you in your MTGO investments. They certainly will for me this year. As another cycle is beginning, I'm looking forward to implementing my own tips and see how my returns improve from last year.

Today, as a conclusion of this project, I'll review the different categories that composed this portfolio and propose an updated strategy for the coming year. I will also highlight the key points--good or bad--of this adventure.

M14 Mythics

Then...
The M14 mythics were one of the main reasons I started this portfolio initially. After observing the price trends of M12 and M13 mythics, I postulated that it would be possible to generate some Tix by systematically buying all fifteen mythics from M14.

The experiment was simple and straight forward: buy an equal amount of Tix of all fifteen mythics from M14 within the second week after release. Historically, the second week was the lowest average point for core set mythics. The plan was to hold these mythics until the following January, five months later.

The experiment was a great success, after having sold all my M14 mythics, I generated an overall 29.4% profit. The proof was in the pudding: buying all fifteen M14 mythics regardless of their price, card power or metagame trends proved to be a winning strategy.

…Now
With M15 mythics, I intend to apply a similar strategy with only minor modifications. Pro Tour M15 was held right in the middle of M15 release events on MTGO and I was planing on staying away from M15 mythics affected by the PT. In the end, only Nissa, Worldwaker saw a big three-day spike. I haven't bought any Nissa so far and I'll wait to see if she comes back to the 15 Tix range. I may buy this card later in August.

I also plan on waiting for the junk mythics to really hit the mythic floor--0.3 to 0.5 Tix. So far, only The Chain Veil and Soul of Zendikar have reached this price range and I have started accumulating some copies. I'm now watching the four other colored Souls to see if they hit 0.5 Tix or less.

I also won't buy more than 100 copies of any M15 mythic this time around. This is only likely to be an issue with the junk mythics, as my bankroll is not large enough to pretend I can buy 100 copies of Chandra, Pyromaster, for instance, while keeping a sane diversity among my positions. My experience with the M14 mythics showed me that selling 100 copies of a card is not easy without significantly compromising on the sell price.


M14 Rares

Then…
I only bought two M14 rares for my portfolio, Mutavault and Chandra's Phoenix. Obvious picks and huge returns with +194% and +363%. I'm glad these two positions did what I expected, however, I didn't have any global strategy for the other M14 rares.

After reviewing the price fluctuations of this core set rares, it appears that several M14 rares saw huge price fluctuations and some trends could be exploited.

…Now
After more careful study of M14 rares, I came up with a strategy for investing in M15 rares to implement next month. My plan is to wait until mid-September to identify the top M15 rares--the rares that will have a value of 0.2 Tix or more--and buy them. These rares should most likely increase in value once the Standard format rotates. I also plan on buying some outsiders, but only at a bulk price.

Similarly to the mythics strategy, I intend to see if it is possible to generate some Tix by investing on cards independently of metagame trends, card power and prices.


Return to Ravnica Block & Standard

Then…
Back in August 2013, as I acquired the rares and mythics from the Return to Ravnica block, I was full of hope. A lot of rares, including the Shock Lands, Abrupt Decay, Mizzium Mortars and Detention Sphere, were extremely promising. In addition, I also got several mythics such as Blood Baron of Vizkopa and Obzedat, Ghost Council at an attractive price. All was set for substantial profit.

After nine months, I ended up losing more than 100 Tix with these. Why? My first mistake was ignoring the impact of PT Theros in defining the Standard metagame, and thus the prices of Return to Ravnica block cards. My second mistake was not paying enough attention to metagame trends, which made card prices increase and decrease, so I was often off beat when selling.

…Now
Even after this disappointing experience, I am certainly going to invest in Theros block cards. For most, they are already at their cheapest price now and will be for months to come.

The big difference in my strategy is that now Pro Tour Khans of Tarkir is my horizon and I plan on assessing all of my Theros block positions then. On average, Theros block cards should rise as we approach the release of the next fall set and until the Pro Tour defines the metagame. At that point, cards may keep rising or slowly fall depending if they are in or out of the metagame. I'll be especially attentive to the cards that won't make the cut and I will be most likely be selling them.

This time around I'll be also more attentive and more reactive to the rise and fall of prices, and I won't set expectations too high with my Standard positions.


Modern

Then…
Modern positions were the most prolific category of my portfolio--very few losers and an overall profit of more than 60% after nine months. If you buy Modern staples when they are low, it's only a matter of time before you cash in. Benefiting from the February B&R list changes and from Pro Tour Born of the Gods, I was able to maximize many of my positions. Modern promised, Modern delivered.

…Now
Modern PTQs were cancelled online and the announcement of the 2015 PT schedule revealed that no Modern PT will be held this year, although a Modern PT and Grand Prix has just been reintroduced in the 2015 schedule. It may affect the swings of Modern staples on MTGO, but maybe not. After all, fluctuations of Modern staples as we knew it were not really based on Modern PTQs or PTs. Big events and Modern seasons did, for sure, help with bigger spikes and better predictability.

For now, I'm not really worry about that. I'll simply be more careful to buy Modern staples when they are really low, but I'll keep playing with the swings. Scapeshift, Ranger of Eos, Birthing Pod and Serra Ascendant have nicely rebounded recently and confirmed that Modern is still in people's mind.


Innistrad Block & Rotating Out of Standard Sets

Then…
Similarly to my Modern positions, Innistrad block cards were largely positive. Cards rotating out of Standard are a quite predictable way to slowly but surely generate some Tix. I had picked rares that had a future in Eternal formats in addition to several promising mythics. With few exceptions, all of them did pretty well, especially those from Avacyn Restored, the third Innistrad block set.

I would say that I played it safe by selecting cards having a strong potential based on their Standard era. In retrospect, I could have picked more mythics, notably some junk or near junk mythics. Some of them saw a relatively large increase, such as Mikaeus, the Unhallowed and Havengul Lich, for instance, while others had a more chaotic trajectory.

…Now
Return to Ravnica block sets don't have mythics of the same caliber as Liliana of the Veil and Griselbrand, or even, to a lesser degree, Geist of Saint Traft, Craterhoof Behemoth or Past in Flames. Domri Rade, Voice of Resurgence and Sphinx's Revelation are probably the mythics with the best chances outside of Standard, and, with the help of redemption, they should sustain a decent price next year.

I'm still hesitant to pull the trigger on mythics that don't have Eternal format applications such as Blood Baron of Vizkopa, Obzedat, Ghost Council and Jace, Architect of Thought.

I know they may experience a relatively nice increase, but I'm also not so sure about investing in junk mythics. The only mythic that I might be buying is Enter the Infinite, simply because it has Legacy implications. I hope to catch it below 1 Tix.

One thing that Return to Ravnica block sets do have are their rares. Shock Lands, Abrupt Decay, Deathrite Shaman, Loxodon Smiter and others are certainly cards that I will consider buying in the coming months.

Buying into discounted Eternal format staples when rotation comes is a good investment you won't want to miss.


Overall Comments

Completing such an experiment with more than 45% total profit it pretty satisfying. It doesn't, however, mean that everything was perfect. Nonetheless, I'm glad that some of the strategies I implemented during these months worked out as expected--M14 mythics, I'm looking at you.

I also knew that some of my specs would end up negative, so I'm rather happy that about 80% of positions yielded some profit.

After the nine months of investment, and after this series of articles, here are what I consider the main take home messages when looking at the big picture.

Be a Good Dad With Yours Positions

As good parents, you have to keep an eye on your child. Don't let him/her run out of sight into dangerous territory. Do the same with your investments. If buying is always an easy process, it is only the beginning of the journey.

When buying a card, you should already have an idea of the price you are willing to sell and/or when you expect to sell. Even with well defined and delimited criteria, be ready to adjust to anything: PTs, B&R list announcements, new sets... Be ready to sell earlier if the opportunity presents itself.

I lost quite a few Tix by not watching prices evolve with my Return to Ravnica block positions. Keep yourself updated of price movements and you'll be able to sell more cards at better prices.

Keep Your Portfolio Fairly Diversified

Diversification is not a new concept here. Along with other QS writers, we have been talking about it for quite some time. To edge your bankroll against bankruptcy, the best thing do to is to diversify your positions.

5% seems to be an accepted consensus. Any of your positions should not weight more than 5% of your total bankroll size at the time you invest. In other words, no less than 20 different positions in your portfolio.

However, there's no need to spend your Tix simply to reach these 20 positions. If nothing is attractive today, wait for tomorrow when there may be a better opportunity.

This being said, if you look at my portfolio during this experience, I had way more than 20 positions. Actually, even the most important of my investment didn't represent more than 2-3% of the total. I think I may have actually held too many positions. Referring to the "being a good dad" lesson--the more kids you have, the harder it becomes to pay equal, quality attention to each.

With a growing bankroll, I'm kind of forcing myself to avoid positions of few Tix and few copies of a card, thus avoiding having too many positions. I plan on focusing more on expensive positions and limit exposure to anything under 0.5 Tix. This is up to you and your bankroll size, however.

Flow is King

Nothing feels as good as selling a positions you have held for only a month or two and moving on to the next one.

Looking back at my results, all my top Tix makers were positions I held for a period of three months or less. I didn't have any big winner when the position was sold after seven, eight or nine months. That's the reality.

One can say that it's easy when a position tripled in three months, but not so much when a position only increased by 30% in the same period. The truth is the benefit of selling a position is not only the figure you make on that specific position, but also the potential benefit you now allow yourself to make on the next one.

I wrote about opportunity cost and opportunity benefit couple of weeks ago. Jumping from on opportunity to another can be extremely valuable, and selling when a position is losing could be a better move than you think.

 

With that, this is my conclusion of nine great months of investments on MTGO. I hope you enjoyed the series and hope that your investments on MTGO grow as well.

Thank you for reading.

Sylvain Lehoux

7 thoughts on “Insider: [MTGO] Nine Months of Portfolio Management – Conclusion

  1. Hi Sylvain,

    Thank you for your articles, I certainly enjoyed them a lot and will apply your excellent advices.

    I hope you will make the same series of article in the future ! (season 2).

    1. Thanks Mansonian!

      Although I didn’t plan on making a “season 2” per say I’m investing in about the same kind of opportunities this year, M15 mythics, M15 rares (new from last year because of a systematic approach now), Theros, Modern…

      I’ll probably write an article or two and compare if my improved strategies work.

  2. I loved this article series (and as I’ve stated before I play no MTGO at all). I would love to see a portfolio breakdown (i.e. card name, # owned, # sold, price purchased, price sold, etc).

    1. Thanks David,

      For the portfolio breakdown, do you mean about this series? If so, I should have reposted the links, I gave the links to my excel spreadsheet in the beginning of the series?

      1. Ya that would work. It would help me (from my own tracking standpoint) to see what others have come up with when it comes to creating a good system to monitor profits/losses on cards.

        1. Here is the link to the final spread sheet this portfolio https://drive.google.com/file/d/0B9jAUGlNWTh9WWpzWE0xSDRuSkE/edit?usp=sharing

          Beside the colors that I added to make it more clear, that the same kind of spread sheet that I use for my every day transaction.

          Name // Quantity // Unit value // Total
          As I’m buying I add the # and value in qqty and total, and with a simple division the unit value adjusts.

          Same thing when selling, and I also track the % and Tix return.

          I also divide my portfolio in different category to help clarify it: Modern, Standard, Legacy/Vintage.

          Every time I buy a new position I add a new line and from time to time sort everything by alphabetic order.

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