This past weekend Warren Buffett issued Berkshire Hathaway’s annual shareholder letter. This is a much-anticipated document indicating Buffett’s outlook on the economy, portfolio updates, and some general musings on the stock market. Even though the addressees of the document are shareholders, the document is publicly available and receives significant scrutiny.
There was an excerpt in this year's newsletter that caught my attention (along with much of Wall Street’s, I’m sure). Buffett states, “Our expectation is that investment gains will continue to be substantial—though totally random as to timing—and that these will supply significant funds for business purchases.” Buffett goes on to explain his optimism for the U.S. economy, stating that babies born today will be the most fortunate generation this country has ever seen.
These are pretty bullishly optimistic comments considering the stock market today stands at all-time highs and the Dow Jones Index has risen eleven days in a row.
Such comments are reassuring for us stock market investors. But the outlook gave me pause as I considered my MTG portfolio. Is there reason to be similarly optimistic about Magic cards? Are significant gains on the horizon? Or should we be more pessimistic in this time of stagnated/muted growth? This week I ponder a few factors before making my conclusions.
Factor 1: Amonkhet
Let’s face it: Standard has gotten a little stale already. Granted, I’m a notorious pessimist when it comes to the format, but even just monitoring price movements (or lack thereof) is enough of an indicator for me to conclude that there’s not much money to be made in Standard right now. But that’s about to change with the release of a brand new block: Amonkhet.
New blocks always incite hype in the Magic community. We tend to bore quickly of things, so it’s generous of Wizards of the Coast to bring us something new and different every couple months to get excited about. And this set sure has potential—a set with an Egyptian flavor is a phenomenal idea.
If done correctly, this set could have flavor reminiscent of Arabian Nights. And while there won’t likely be any references to real-world characters, I hope there’s enough similarity to give me that tangible feel I long for in Magic. It’s difficult to explain, but there is a profound flavor difference between Arabian Nights and, say, Theros, that causes me to love the former and be apathetic to the latter. Let’s hope Wizards gets this right.
Financially speaking, a new set means major metagame changes. This in turn means price fluctuations and, inevitably, profits. I was mildly excited for Pro Tour Aether Revolt, which sadly ended in an underwhelming fashion. Let’s hope the hype for Pro Tour Amonkhet is five times greater and concludes with some real innovative victories. This will set Standard up for a very strong first half of 2017, something MTG finance needs to help keep the economy healthy.
Modern Masters 2017
Let’s face it: Modern is in a slump. I see innovative tweets and deck brews quite frequently—often sporting the likes of Hardened Scales, Brain in a Jar, or Puresteel Paladin shenanigans. But the reality is the format has gotten a bit stale, with Death's Shadow rising to the top as a definitive deck-to-beat.
The upcoming Modern Masters 2017 set is exclusively reprints, so there’s no way the set’s release will impact the metagame. But it could still impact card prices significantly—both negatively, for cards that are reprinted, and positively, for cards that dodge reprint. While the downward spiral of reprint prices is an inevitability, I think we need to focus on the upside potential here.
After all, there will be far more relevant Modern cards that aren’t reprinted than that are reprinted. I believe there may be some pent-up demand for cards, but players are sitting on the sidelines out of fear of reprints. It’s pretty painful to buy a card like Leyline of Sanctity for $30 just to see its price halve a few weeks later upon reprint (this happened to me).
In the same vain, players are reluctant to pick up cards like Snapcaster Mage because they fear that reprint effect. Thus, the card’s price is at a two-year low as players anticipate that reprint.
It’s very akin to how investors treat stocks in the market—stocks price in future potential value of a company rather than current value. A company can have a very difficult quarter, but if they are optimistic with their projections for the future then it’s very possible the company’s stock will jump on the earnings announcement. Looking back to Snapcaster Mage, the market is certainly pricing in a reprint of the blue creature, driving the price lower.
Imagine what would happen if Snappy wasn’t in MM17. All the players who have sat idle waiting for that reprint would suddenly realize they need to buy their copies immediately because there’s no incoming supply. Dozens of copies are acquired at once, draining the market overnight, causing a price spike. Profits are made, and the MTG economy continues to chug along as always.
Granted, I want to make sure I’m on the record stating that I fully expect a Snapcaster reprint in MM17. But this was just meant to be an example everyone can relate to. In reality there are dozens of cards in the precarious “potential reprint” position that may jump in price should that reprint not materialize. Cards like Liliana of the Veil, Damnation, Noble Hierarch, Cavern of Souls, and even Zendikar fetchlands have all drifted lower in price the past couple months as players anticipate the potential reprint.
The larger the card’s price dropped, the higher likelihood of a reprint the market expects. Thus we see large drops in Snapcaster Mage and Noble Hierarch but a much smaller reaction in something like Path to Exile or Fulminator Mage. It’s really fascinating to read the market’s expectations this way.
Despite all the pessimism around the set so far, I remain cautiously optimistic that this reprint set will stand out and catalyze Modern interest. The format is significantly more mature than it was two or four years ago, so we shouldn’t expect rampant expansion of the player base. I only hope that all the upcoming spoilers spur interest anew and help keep the format interesting for players and speculators alike.
Magic Digital Next
I know very little about the MTGO platform. I’ve never used it, but I have heard nonstop gripes about its form and function on the internet pretty much since its inception. Now Wizards of the Coast is working on a brand-new online platform for Magic, and it’s got many players nervous.
The result: a not-insignificant selloff of collections on MTGO. Players justifiably fear a massive system overhaul resulting in de-valuation of their cards, massive exodus from the platform, or some combination of both.
Here is again where a little cautious optimism can go a long way. Paper Magic’s success very much depends on the success of online Magic. If Magic Digital Next inspires players to try out the game and it grows in popularity, then the paper portion of the game should follow suit. Should the release be a total flop, the impact to paper Magic should be more muted but it will still be nonzero.
While there’s very little known about the new platform, all I can say is it would be wise to remain cautiously optimistic. Wizards of the Coast has heard our complaints loud and clear. They know how critical the success of digital Magic is for the health of the game. They can see the dollar signs when players flock to spectate Hearthstone by the hundreds of thousands. Let’s give them a chance to figure it out, because a successful platform could mean amazing things for all the older Magic cards as players flock to the game.
Wrapping It Up
I realize I’ve flip-flopped multiple times in my outlook for MTG finance. I’m human, after all. But today, I see little reason to be bearish on MTG as a whole. There will certainly be pockets of strength; casual formats remain strong as kitchen-table cards continue their slow and steady climb. Additionally, Old School play remains robust and I see a growing player population on Twitter daily.
Meanwhile some formats will remain weak. Legacy is going the way of Vintage and will offer significantly fewer premier play opportunities. Modern is in a tough spot right now and needs some reinvigoration.
But in the end, I believe it is best to remain optimistic about Magic’s future. The game hasn’t endured 24 years out of luck—there are many brilliant minds working on the game’s ongoing development. No one is out to sabotage the game, so out of sanity we really need to hope for the best.
There are definitely enough catalysts on the horizon to merit this optimism, and some of these catalysts should start to unfold as early as next week. Should things go well, we could be looking at a new wave of MTG financial interest in Modern and Standard. Combine this with the phenomenal growth of Old School and you have a recipe for solid financial gains ahead.
So similar to Buffett’s comment, perhaps players who are brand-new entering the game right now may be the best-off players the game has ever seen? Should Magic Digital Next be successful, I see no reason to doubt this statement. A lot is riding on that platform, and if Wizards gets it right, it could mean another surge in our MTG investments. Tread lightly, buy optimistically, and remain on your toes. We’ll know a lot more this time next year, but I suspect we’ll start to see trends far sooner. After all, the market is and always will be forward-looking.
- There has been a quiet buyout of Rite of Passage, the green rare from Fifth Dawn, over the past week or so. People started piecing it together with Hardened Scales and Walking Ballista for an infinite combo in Modern. I don’t think the deck has legs, but the combo may be cool enough for casual players to step in and prop up the price. Star City Games is sold out at the old price, $0.49, but I expect this to be re-listed in the $1.99 range next. Disclaimer: I purchased a bunch of copies from ABU Games in the $0.30-$0.50 range. You can discuss this card further in my forum post.
- Guess how many Emrakul, the Aeons Torn Star City Games has in stock. Answer: three ROE foils ($119.99) and that’s it. No nonfoils, no promos. Their prices range from $45 to $55 depending on the printing, but no matter how you break down the numbers it seems this card is going higher. I guess no one is expecting a reprint in MM17 then.
- The reprint of Cyclonic Rift in Commander 2014 may have seemed like a major setback to those speculating on the blue instant. But demand really helped absorb these new copies quickly. Now we’re looking at all-time highs for the card and a completely sold-out Star City Games. Their price is in the $8-$9 range, but once again I see this ticking higher as long as it’s not reprinted. The card is exceptionally strong in Commander.