Insider: MTGO Market Report for January 31st, 2018

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Welcome to the MTGO Market Report as compiled by Matthew Lewis. The report will cover a range of topics, including a summary of set prices and price changes for redeemable sets, a look at the major trends in various Constructed formats and a "Trade of the Week" section that highlights a particular speculative strategy with an example and accompanying explanation.

As always, speculators should take into account their own budgets, risk tolerances and current portfolios before buying or selling any digital objects. Please send questions via private message or post below in the article comments.

There are no prices this week, as I am on vacation and don't have access to my usual computing facilities. The set prices table will return next week.

Three-Month Outlook

First up, the Modern Pro Tour in Spain. That’s this weekend, and the top eight Constructed decks will drive the market in the short-term. For speculators, if you are holding any positions that experience a substantial price spike, then you should sell into that strength. Players should be enjoying the coverage and trying out their favourite decks, not looking to round out their collections at this time. On the other hand, if you have a playset of a card that you haven't used in a while and the price skyrockets as a result of being hyped in coverage, then feel free to take the opportunity to sell your playset.

For me, I am looking to sell any Modern position into buying strength this weekend. The reality of Modern speculation in the age of Treasure Chests is that long-term positions inevitably suffer fatigue. The steady drip of supply from Treasure Chests erodes the price support on any card in Modern, given a long enough time frame.

Most of my Modern positions I established in the fall, and they are getting long in the tooth at this point. Some will be sold for a modest profit, some have already been sold for a tidy profit, and some will be sold at a loss. The trick here is to not less small losses extend into larger losses. Speculators lose out doubly in this situation, since you have the potential to take a large loss as prices decline, but you also are being charged the opportunity cost of holding onto your position. It’s much better in the abstract to cut your losses and approach the next speculation target with fresh eyes. In practice, this requires discipline and honesty with what you are doing.

After I have wrapped up my Modern positions, I will still be on the look out for good opportunities to speculate on single cards. Sometimes a card's price will decline to a level where there is a ton of value in that card. I still won't hesitate to pull the trigger on these, though the big, macro shift towards Modern cards will be largely over. There is also the risk of reprint in the Masters 25 set which will be released in March. Although reprint risk is often overblown, it is still a real risk.

In terms of where to deploy resources, the next big opportunity is in full sets of Ixalan (XLN) and Rivals of Ixalan (RIX). I talked about this in last week's article, but I'll reiterate how I am thinking about it here. I’ll be moving tix into these sets prior to the release of Dominaria (DOM) in April. RIX will be an easy purchase towards the end of March, but XLN is a little trickier to time its price bottom. I am still watching the market closely on the fall set, and it’s dip into the 50- to 55-tix range has got me revising my buy price target on this set. I’ll be looking to buy at under 50 tix now, but as long as the price keeps declining, then I'll be cautious about buying.

Another avenue where speculators and players can have some fun looking at XLN block is in pursuing junk rares. By this, I mean considering mythic rares priced at between 0.1 and 0.3 tix and rares priced between 0.01 and 0.05 tix or less. Although these are not absolute price ranges, it’s a good guide for rares priced at the junk level. The trick is to identify cards that are in this price range but that have potential for breaking out into a Standard playable or Standard staple card. If a card does break out, a price of 1 tix or higher is possible for a rare and 2 tix or higher is possible for a mythic rare. One recent example of this is Dark Salvation which peaked at over 1 tix last spring but was widely available for less than 0.01 tix in the winter.

Rowdy Crew is a card with potential that I’ve previously identified as having potential. It still remains completely crowded out by Hazoret, the Fervent and Chandra, Torch of Defiance in the four-casting-cost slot for red decks. This is a card that I’ll be accumulating before April as long as I can get a good price. The trick is to scan the market a few times a week and to buy up the cheapest copies.

If I can’t get a good price, I think waiting until XLN redemption closes. At that point there will be no redemption value in any XLN card and prices will be largely dictated by a card’s play value. If Rowdy Crew continues to see very little play in Standard, then it’s price will drift down over the summer. Once KLD and AKH rotate out of Standard in the fall, then Rowdy Crew will get a chance to shine.

The great thing about a junk rare strategy is that you don’t need each pick to be successful. When you gather  a group of ten or more long shot rares, all bought at junk prices, then it only takes one breakout card to pay for the rest. If you are lucky and catch a couple of breakout cards, then you are moving into profitable territory. It’s also a cheap strategy since using 10 tix or so can often mean you are buying hundreds of rares. The thrill of evaluating a cards true potential, and then seeing that potential realized and validated by the market is a real payoff.

Boosters from Amonkhet (AKH) block have recovered in price since the release of RIX. The price target remains 8 to 9 tix for a draft set. Currently, two HOU boosters and one AKH booster is approaching the lower end of that range, and I anticipate they will move into the upper end of that range by mid March. It’s difficult to sell large quantities of these all at once, since the booster bots will adjust prices quickly in reaction to the flood of supply price, so I intend to slowly but steadily sell down my stock of these boosters over the next eight to ten weeks.

Once Dominaria (DOM) is released in April, XLN and RIX boosters will be the next ones to go on sale. The price of these boosters will drop when DOM limited events begin as players sell their boosters in order to play with the new set. Since demand drops off a cliff at that time too, the price of XLN and RIX boosters will respond accordingly, and that’s when speculators and players can swoop in to get a good deal.

In terms of which boosters to target, in the past, focusing attention on the second set of the block would have been correct based on historical price movements. Gains in HOU and AER were superior to AKH and KLD respectively. But this time, the booster market is going to be in better balance due to the preview event prizes that awarded only RIX boosters. The important thing is the pool of value associated with tix-only entry into drafts, which is 10 tix. That’s the equilibrium price for a tix-only draft. Thus, the strategy remains buying draft sets below this equilibrium price in order to reduce risk and to capture the gains that accrue to these under priced boosters.

Sets of foil mythic rares continue to be a profitable strategy. The plan for XLN and RIX will be to exit the market prior to the end of redemption in June. I’ve already been selling down some of my XLN foil mythic rares, and I see no problem with continuing to do that in the near term. I don’t need to try to wring out the last few percentage points of return when there is risk of prices falling close to the end of redemption.

If a large quantity of players and speculators all seek to exit the foil mythic rare strategy at same time, then buy prices will collapse, and it will be difficult or impossible to exit the position in a timely and profitable manner. The market is liquid enough over the course of weeks, but over the course of days, there is a strong risk of a liquidity crunch. Since this strategy is proving consistently profitable, I am happy to continue making modest gains and rolling over the tix into the next set's foil mythic rares, steadily building up tix over time. Holding on until the end of redemption in an effort to maximize gains sounds foolish to me and is unnecessarily risky.

Trade of the Week

For a complete look at my recent trades, please check out the portfolio. I am on vacation this week and thus do not have any trades. The Pro Tour is rapidly approaching, though, so I am anticipating a good selling window for Modern staples and am preparing for this.

Matthew Lewis

Matt Lewis currently lives in Ottawa, Canada and is a long time player and PTQ grinder who now speculates and plays exclusively on MTGO. He's always ready to discuss ideas and investment strategies, so drop him a line in the comments, the forums or on modo, username mattlewis.

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Posted in Finance, Free Insider, Modern, MTGO, MTGO Market ReportTagged , , ,

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