Today my article is mostly inspired by two comments koen_knx and Jason Schwartz made following my article, Small Concessions for Higher Returns. Last October I wrote, "I have only been disappointed with cards I sold too late, never too early." Both koen_knx and Jason Schwartz disagreed with this sentence arguing that there's as much disappointment selling too early than selling too late.
Let me go deeper today and explain to you my point of view and why I think selling too early and missing the peak is nothing compared to selling too late and after potential losses.
I was really disappointed when i sold my 100 pack rats for 2 tix each, and then see them go up over 5 made me a little sick. Ok, I made a nice profit, but the missed huge gain made its mark. Every speculator must have examples like these, and you cannot tell me there is no feeling of disappointment in those moments. There must be people who sold their rabblemasters for 5… I don’t expect them to smile on the tickets made.
Like koen_knx, I’m always more disappointed by my premature movements than holding a card too long. I guess I tend to pull the trigger too soon in a lot of circumstances. I took my profits on Perilous Vault way too early. B/U control was having weak showings all around. I thought it was headed down and that doubling up seemed decent. Of course in retrospect, bad call. In my first really big speculation, I made over 1,000 tix on the back of Mutavault. If I’d timed it better and held much longer, that would have been a 3,500 tix profit.
I'll focus and extend more here on early sales and the reasons why I don't feel disappointed at all after it appears I sold a card too early, potentially leaving some money on the table. I'll also dig deeper into the thought process I go through before actually pressing the trigger.
Selling Too Late
When I say selling too late, I mean waiting several weeks to months to sell a position after a high point was reached. Selling too late often implies a less profit or a loss. Although selling with no loss doesn't taste like defeat in all cases of selling too late you still have lost a precious resource--time.
Varolz, the Scar-Striped is one example from my Nine Months of Portfolio Management series I sold too late, really too late. In my definition of selling too late you are very likely to have wasted two important resources--time and money. Two resources that selling too early rarely wastes.
Selling Too Early
By selling too early, I mean selling a position that has generated a decent profit but significantly before the highest price of that position was reached. The thing is you can only conclude afterwards if you were really selling too early or just right in the perfect timing. You could have been riding two types of upward trends--a sharp spike (doubling or tripling in less than a week) or a more natural upward trend (doubling or tripling over the course of several weeks or months).
In my opinion, selling into the hype, even too early, is never a bad move. With more experience you will be able to estimate more accurately the top of the spike and increase your profit. Selling too early when your position grows organically may also happen but most of the time I wait until the upward trend comes to a stop before taking a decision.
In the case of regular natural growths several factors may and should influence your decision to sell, I'll discuss them below. Again, selling too early is a special notion. Labeling a sale too early depends on what happens in the future, a future you don't know at the time of decision. Unlike selling too late, selling too early is a profitable move and saves you time.
Disappointed or Not?
I'm disappointed when I sell too late but not when I sale too early. From the perspective of the two resources I talk about--time and money--I mostly lose on both when selling too late, and pretty much exclusively win on both when selling too late. More profit faster is going to generate me even more profit even faster.
At the opposite end, spending six months to lose Tix is a complete loss. You can always argue that I could have made more money by selling later rather than earlier, but my decisions are always made with the best of my knowledge, including pondering risks and looking for the next opportunities. And we'll see with some following examples that it's far from being obvious if I left some money on the table with an early sale.
No, I am never disappointed by selling too early. By doing so I feel like I wasted very little of my two resources--time and money. On the contrary, wasting both of them in the case of late sale makes me disappointed about my decision and my strategy, and about the non-profit I generated.
Taking the Decision to Sell With What You Know
As I said, you can only realize you sold a position too early after certain amount of time has passed, from a couple of weeks to several months. Concluding that you sold a position too early should help you better evaluate when to exit with future specs.
However, when you are pondering whether or not to sell a profitable position, what is effectively going to happen next with that spec cannot influence your decision. That's data you have no knowledge about! You have to decide for yourself with the data and knowledge you have right at the time of decision.
When I'm considering selling a profitable position many factors come together to help me take the decision. If by considering all of the criteria bellow I conclude that selling is the best thing to do, then I do it and have no regret.
Especially for Standard and rotated-out Standard specs, looking at the peaks of previous cards is a great guide to what to expect with my current positions in these categories. Played fall-set rares often rise into the 4-6 Tix range, with a max around 8 Tix. Mythics from third sets could go as high as 50 Tix if present as a four-of in popular decks. Rotated-out-of-Standard specs can easily triple from their low in October/November, etc...
Isolated cases can always break the average and set new records but when a spec reaches these limits I'm seriously considering selling.
Prices are usually lower during the week and higher during the weekend. When I'm planing on selling a position I usually try to wait until the weekend to get the most Tix for my spec.
When a given spec has already significantly gained value and is getting close to my expectations, a factor that could seal the deal is the immediate availability of other opportunities. This one is a big decision factor for me. If I can immediately roll over a spec that has doubled into another spec with the potential to double up itself, I'll probably do it.
After all these years of speculating on MTGO, this method is what I consider the best to grow your bankroll. This is the main reason why I'm not looking behind. By the time I realize I sold a position too early I'm already somewhere else. The past few weeks I have been selling Standard positions that have performed well (Theros block and M15) in order to reinvest into rotated cards and Modern positions.
Assessing the current trend of any given spec is also crucial. Is the trend upward, flat or downward? If don't feel confident about a positive evolution of a spec I'm very likely to get ride of it. As I take my benefit sooner now than in the past with my specs I also tend to cut off any losses more rapidly.
I'm however still open to rebuy later if the price has dropped further and if the environment becomes more favorable for this given card. Although setting goals and price/time targets for your specs is important, being able to adapt to unexpected trends and new information is equally important.
As I just said above, setting goals for any given spec you enter in is important. Whether you intend to keep a spec for a certain amount of time or until it reaches a predetermined price is up to your judgment. Sometimes the selling price I was looking for comes sooner than expected and even if I might consider waiting for a little extra raise, I mostly stick to may plan and sell.
Similarly if I thought a spec would be at its best after six months I'm very likely to sell after that period of time even if results are mediocre. Especially with disappointing specs, deciding to wait longer and hoping for a rebound or a spike is the beginning of a slippery slope.
Let's talk about Mutavault since both Jason and I invested in this card. It also seems like both of us sold this land way before it reached 32 Tix. I personally sold my copies of Mutavault at ~17.5 Tix less than a month after PT Theros.
I had bought my Mutavaults in mid-August and sold them in mid-October. Now let's go back to the time I sold my copies and see what motivated my decision.
- My spec had pretty much tripled (+194%) in two months, after what could be considered a spike. Only outstanding specs can expect to have such numbers.
- I started to sell some copies around 15 Tix and sold others around 20 Tix. These prices were among the highest ever seen for a core set rare. Above was uncharted territories; would it has been sustainable?
- Rotated cards and Modern positions were lining up as it was the end of October.
Considering these facts, selling was a very appropriate choice to me. What happened next? Looking at the full picture of Mutavault in Standard, it did reach a record high of 32 Tix in March, five months later. Five months to grow an additional 82%, still a decent number.
However to be here in March with a 32 Tix Mutavault I would have had to keep an uncertain position. How many of us had bet on a core set rare at 30+ Tix? Not me. And it would have been unrealistic to count on that in October. Instead I relied on what I knew in October to take my decision.
Another key point to consider is what I did with the Tix generated with this spec. I reinvested a part of them in other positions, the Secondary Portfolio. This portfolio yielded more than 80% profit, at least almost as much as what I would have make by keeping my Tix in Mutavault.
Here's what I said in my Nine Months of Portfolio Management series on Mutavault. Although I "sold my copies maybe a little bit too early," I also concluded that "I was very happy about that." Considering what the Tix I reinvested from the Mutavault accomplished, I really don't feel disappointed with my decision to sell the manland in October and not later.
- This guy starts off pretty smoothly and is a junk rare for about a year or so. Nothing really tells us in October 2013 that it is going to be a future rock star.
- After only two copies of the pack made Top 8 at PT Theros, Mono-Black Devotion appears to be a thing and the price jumped from 0.1 to 2 Tix in two week. At this point selling your copies of Pack Rat is good move. It's still unclear if Mono-Black Devotion is one deck among many Tier 1 decks or the dominant deck. This is already an enormous gain for what was a junk rare a month earlier.
- One month after the initial peak Pack Rat is losing steam but suddenly rebounds to 3 Tix early December and finally stabilizes around 3.5 Tix later on.
I wasn't on Pack Rat but I would have sold it very likely in October after the initial peak. For a fall set rare with no previous accomplishments, 2 Tix is already a big victory and nothing was guaranteed after this point.
If you waited you might have lost it all if Mono-Black Devotion was just a metagame fluke instead of the Standard deck to beat for one year. Similarly to Mutavault, the Tix you may have collected in October could have been reinvested into speculations that would have held more certainty that Pack Rat at this point in time.
With Goblin Rabblemaster I want to illustrate the point that sometimes you can sell your position (early?) because of rapid gains and rebuy it later at a higher price because conditions have changed and profit appears to be still possible.
After the release of M15, not much glory was given to this goblin. Still in a Standard environment about to rotate, Goblin Rabblemaster's price flew up to 5 Tix! Let's get some perspective here. You have bought the goblin at ~0.5 Tix and sold it at ~5 Tix while Standard is about to rotate and the future of Goblin Rabblemaster is cloudy.
I think selling a card with an uncertain future after it made tenfold profit in one month seems like a pretty good deal to me. I wasn't on it at this point and it would have been my best spec ever with such numbers. At this point in time I cannot feel sorry about that decision, and I don't think you should if you did this.
A couple of weeks later, with more insights about Khans of Tarkir and more certainty that Goblin Rabblemaster is going to play a role in the next Standard metagame, you decide to buy, or even rebuy, some copies of the goblin. That when I bought my copies, at 6.5 Tix on average. Actually, speculative perspectives of Goblin Rabblemaster were so good that QS insiders were talking on the forum about buying additional copies at 10 Tix or under during Khans of Tarkir release events.
And the price jumped to 15 Tix after PT Khans of Tarkir, another great time to sell it especially since the gob was not seen as much as expected. You could still argue that it was again too soon to sell since it reached 18 Tix earlier this month.
All the decisions above, buying or selling, made sense to me in the light of the known information at any given time. I don't think that selling this guy at 5 Tix after you made a 1000% profit was a bad move. It's easy to argue the opposite knowing what happened after, information you had no idea about in last September. You should feel good about that move and you should also assess or re-assess the situation of all of your specs before you make a move. If the decision seems valid at that moment, good enough. It's unfair to judge a decision you took with elements you know only in the future of that decision.
I maintained that selling too early never made me unhappy. At best it helped me gain more experience and accuracy to predict the optimal timing to sell a position. In a vacuum if you have one and only one position to spec on, selling too early makes you leave money on the table. In reality I'm always jumping from one spec to another. Here or there my money is always active and I tend to invest it in positions I have more certainty about their future.
Thanks for reading and thanks for your comments!