Insider: Keeping a Portfolio

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Welcome back, friends. If you didn't catch my discussion of Arena last week, have a look here. Also, be wary about selling your older cards this week. Prices across the board will be about 10 percent lower because everyone is selling their excess cards so they can draft the new set. With prices so volatile, this week, I want to share a little bit about why we should keep an investment portfolio, why I have designed my portfolio the way I have, and how it can help you make smart investment decisions.

Here is a current copy of my portfolio. I also want to stress that there is no singular best way to keep a portfolio.

The overriding reason for keeping an investment portfolio is to help you (i) make smart investment decisions and (ii) keep up with and manage your investment collection. Your portfolio should help you attain those two goals without detracting from those two goals. Above all else, keeping a portfolio should not gobble up tons of your time. It should be easy to add to, should make things clear to you when you look at it, and should not be cluttered with information you don't find useful. Ultimately, you have to adapt your portfolio to suit your investment style, investment strategy, and personal taste.

(1) Keeping a portfolio is essential for managing a large amount of speculations and investments.

I have a friend who keeps track of his speculations on Magic Online by writing them down on a StickyNote and putting that on his computer screen. This method can work... as long as you're speculating only on one or two things and check those two things religiously, as he does. Once those one or two stocks become five or six, and those five or six becomes fifteen or twenty, however, keeping a portfolio becomes essential.  Otherwise, you won't sell your stocks at the right time, and you'll lose value in the process. Sometimes you might even forget about them, only to discover months later that you still had them. If you're going to spend time and money investing on MTGO, even if you're keeping track of just a handful of cards, the best thing you can do is to keep a portfolio. Keeping a portfolio enables you to keep track of the financial data of your past and present investments to an extent that you couldn't otherwise.  It can be as simple as creating a collection on MTGGoldfish.

As I have mentioned before, I keep track of all my transactions in an Excel spreadsheet (on One Note) which I call my portfolio. But I also use MTGGoldfish's collection tool to keep up with the financial value of all the cards in my collection. Formally speaking, I would consider both my excel spreadsheet together with my MTGGoldfish Collection Tool as my portfolio, because together they constitute the outside work I do to help me invest on MTGO and manage my collection. In the MTGGoldfish Collection Tool, I mark all of my contemporary investments as "Favorites," which groups them all together under the same tab. This tab I check roughly once per day. I also keep track of my other valuable cards using this Collection Tool, but I don't mark them as favorites. Thus, when I click the "All Cards" tab, I can see financial information for every valuable card in my collection. This is where I keep track of my playsets of Bitterblossom and Snapcaster Mage, for example. This tab I check once every few weeks, more as a precaution than anything else.

Why did I go above and beyond that to create my spreadsheet a year ago? Mainly because I wanted to become a better speculator and investor, and I perceived that the only way to get better and develop a better acumen for MTGO investing would be to record my investments and chart my results, be they good or bad. It turned out that making and maintaining this page had other benefits I hadn't recognized when I began over a year ago. Some of those will be discussed below, starting with...

(2) Keeping a portfolio helps you organize your MTG year.

Just as we organize our year into different seasons, seasons which have definitive attributes, which follow one another in a predictable way, so too does Magic have its own cycles of activity that follow regular patterns. It took me a while to figure out a way of organizing the Magic year into seasons that helped me break down my larger investment portfolio into pieces that my brain could better digest.

After a while it hit me – I should divide the cards in my investment portfolio into blocks that would be at roughly their same life cycle in Standard, often exhibiting the same trends and needing to be bought and sold at roughly the same time. That is, I should structure my portfolio by "Magic time," which is arranged in blocks! Dividing my portfolio in this manner has been great for organization as my collection has expanded, and now I am beginning to use this season to look at how much capital I am using to invest in every season.

For example, in the Kaladesh season, I invested $1,000 and in the Amonkhet season, I invested $900. Had I been conscious of this earlier, I would have rather invested closer to $750 during the Amonkhet season, because I was less certain about Amonkhet block specs than Kaladesh block ones.

This is a good place to say: don't be intimidated by the voluminous amount of data I have on my portfolio spreadsheet (especially if you "unhide" the columns that I keep hidden so it doesn't become too cluttered). Start simple, and you'll intuit at your own pace various improvements you can make to your portfolio.

(3) Keeping a portfolio helps ground you in the reasonable.

I don't necessarily recommend that you become a full-on Kantian, but one of the pitfalls into which all of us sometimes fall is making buy and sell decisions off of fear, relief, excitement, and emotion. Keeping a portfolio can help you make sound speculation decisions, both with respect to buying and selling. Writing down a target sell price when you make a speculation target helps you not to get too caught up in what can be an emotional experience. Being able to look at your target sell price to give yourself a reminder about how you felt several weeks or months ago when you were making any given speculation is a valuable tool for extricating yourself from making snap decisions and getting too caught up in the moment.

When I set a target sell price in my portfolio, I interpret that as a price at which I should be happy selling it at, a sort of memento to my future self prompting me to sell and not get too greedy. When a card of mine reaches that sell price, I've made it a habit of always selling at least some of my holdings of that card and then reevaluating.

A few months ago, when I asked what QS readers wanted to see a discussion of, one response was a discussion about how to know when to sell a card. How do you know when a card is peaking? How do you know what a reasonable price at which to sell is? Related to the above, how do you know what to write down as a target price when you make a speculation?

The answer may be a bit frustrating, but it is just as true now as it was 2,500 years ago when Plato broached this issue in multiple dialogues: you simply need to have an intuitive sense for it, a sense that you build up the longer you play on MTGO and the longer you pay attention to card prices on MTGO. Just as a blacksmith needs to gain experience using a hammer and an anvil to adequately learn how to make good weaponry, so too do you need to experience the MTGO market to have a good sense for what prices a card might go for in the future. Simply reading a book on blacksmithing does not make one a good blacksmith. There are no sets of theoretical principles that are adequate. There is only past experience and an intuition developed from engaging with that past experience that can guide you. Speculation is an art and a science; it is not a theoretical practice like math or philosophy.

Two articles of mine – the two-part series on Tiny Stocks here and here – can give you a sense for how one ought to think when approaching speculation. When I see Aven Mindcensor or Doomfall, I also see Blessed Alliance and Transgress the Mind in the background behind them. Just as we look to past cards to judge the power level of new cards, we also look to the past performance of cards with similar profiles to anticipate future performance of today's cards.

In my articles going forward, I will begin to include my perception of a card's future price when discussing speculation opportunity. The other place to look will be at my portfolio spreadsheet where I list (for my own benefit) a price at which I'd like to definitely sell some of my holdings. Use my perspective on individual cards, along with the perspectives of the other MTGO writers at QS, to help inform your own perception about the future price of potential speculation targets.

What you should try to avoid doing is feeling bad about selling when the card is going up in price. Aiming for the peak price might seem good in principle, but doing so requires that you live at your computer and spend all of your free time worrying about your speculations. It is virtually impossible to always sell your cards at peak price – what matters in the long run is selling your cards at good prices, roughly around what you believe will be a high, or roughly around a price that you are satisfied with. Writing down a target sell price when you make a speculation will remind you what you had hoped to get for it when making the investment.

Signing Off

How are you all enjoying Ixalan? Let me know in the comments below, and also feel free to ask me any questions regarding designing or maintaining a portfolio. Today, I'd like to share with you the first planeswalker card I ever submitted to a design competition.

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Kyle Rusciano

Kyle started playing Magic with his little brother when they saw some other kids at a baseball camp playing. His grandma bought them some Portal: Second Age decks, and a hobby was born. Kyle played from Weatherlight through Invasion, then took a lengthy break until 2013. Now a PhD student in the humanities, the Greek mythology component of Theros compelled Kyle to return to the game. He enjoys playing Pauper and Limited as well as focusing on MTGO finance and card design. Follow him on Twitter at @KangaMage!

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