Insider: MTG Speculation in Economic Uncertainty

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We are facing trying times right now thanks to the COVID-19 virus. The world economy is in massive turmoil and all that volatility is driving a significant amount of fear. While none of us have a lot of control over what does or doesn't happen to us, we can control our mindsets. Whenever I have to make big decisions I try to look at them from both sides. I'm going to try to put this thought process on paper.

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The Optimist

With MagicFests canceled for the foreseeable future and some stores like ChannelFireball shutting down their warehouses, smaller sellers may see an increase in sales as players switch to retailers operating out of their home or those with a very small staff count. For many of us who own online-only stores, you can reason that we'll see an increase in sales. There are also a lot of Facebook posts of people looking to sell cards, who given the current uncertainty, would rather have currency than cardboard. I won't condone fleecing people, but there is a strong possibility that with more and more sellers in the marketplace, buyers can get more for less.

Warren Buffet once said, "Be fearful when others are greedy and greedy when others are fearful," and we've got plenty of people fearful right now. If you are currently in a financial position to buy cards without needing to liquidate them for 2-4 months, then you could easily stockpile a good inventory given the current ample supply and then sit on it until the virus recedes enough that all the pent up demand is unleashed.

I want to emphasize the idea that now is likely not a good time to try to do quick flips, as prices are likely to continue to trend downward as more and more people sell, thus you don't want to buy on Monday with the intent to sell by Friday. This is actually difficult for me, as I've been doing a lot less overall speculating recently. Instead, I've been buying larger collections and making my profit by eliminating the sellers effort of splitting up cards, giving me a discount for buying the whole thing.

When I go about doing this, my goal is to try to recoup my costs quickly. This means I aggressively price the cards I purchase in order to have more money available for the next buy. I'm often happy with a 15-20% profit margin if it means selling the cards within a week or two rather than hoping for 30-40% profit margins expecting the cards price to grow over time and having to wait months to sell.

In our current environment, speculation targets could be a solid investment. They typically have a longer time frame to reach an expected price, and you're already intending to buy them and park them in a safe place until the price goes up enough to make selling them worthwhile.

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The Pessimist

There is a lot of conflicting information regarding COVID-19 and it's difficult to distinguish accuracy from many sources of said information. While we hope for a quick end to this pandemic, there is so much uncertainty surrounding it, determining a likely "end date" seems impossible. Even when the virus has receded, the economic impact will likely be immense if it isn't already. This could lead to a deeper recession; when people have to choose between food and hobbies, they'll take food. Card prices could easily follow the stock market and tank pretty hard, and Magic cards sadly have little utility outside of the game.

If you're concerned about a long recovery from the virus or the economic fallout than parking money into cards is not a place you want to be right now. One could argue it's better to sell what you don't really need and perhaps buy back in when money isn't as tight or when the price has tanked. To make matters worse, WoTC keeps pushing out more and more supplemental products with lots of reprints, thus any card purchased now, even at a good price, has a risk of plummeting in value should it end up in the next line of supplemental products.

Currently this year, my store's largest sales category is Commander staples which accounts for 62.5% of my overall sales total. WotC has stated that 2020 is the "Year of Commander", we'll see a set of 5 new commander decks with the release of Ikoria: Lair of Behemoths with 71 new cards, meaning 429 reprints. Now some of those 429 will be basic lands and likely a lot of the cheap common or uncommon mana fixing lands, but still that is a lot of potential card prices to tank. Then we will get an additional set of Commander decks with Zendikar Rising taking the place of the Planeswalker Decks, so hopefully that only means another 2 decks, as we typically only get 2 Planeswalker decks per set.

We also have Commander Legends coming out this year which is a draft based Commander product that will also have another two new Commander decks released with it. So while WoTC is pushing this as "Year of Commander", those of us in MTG Finance simply see this year as "Year of the Reprints" or "Year your inventory tanks in value."

Battle Between Opposing Forces

As I write this, I honestly don't know which route I'll take during the next month or two. One day I may be leaning towards optimism, the next pessimism. While my 401K has tanked pretty hard in the last two weeks, my MTG collection hasn't lost nearly as much value. I also know that during trying times people look to comforts and I can happily say that playing Magic with friends, even small groups of friends, is a huge comfort. We are being bombarded with bad news on a daily basis, the only good thing is that we finally have a common enemy that all mankind can stand against.

One Last bit of Joy

While not MTG related, I do have one last bit of news that brings great joy to my life.

James Paul Schumann-Coming August 1st, 2020

3 thoughts on “Insider: MTG Speculation in Economic Uncertainty

  1. Congratulations on your first born. Do your son a favor and stop meeting friends if you value your health and family. If you meant online then disregard. Don’t put you and your sons life in danger by meeting with anyone. You just don’t know where an asymptomatic case can come from.

    “I also know that during trying times people look to comforts and I can happily say that playing Magic with friends, even small groups of friends, is a huge comfort.”

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