Why Not To Invest In Magic: The Gathering

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In last week's article, we looked at why to invest in Magic: The Gathering, and how the reasons you invested shaped the methodology behind what you put your money into. We also explored some of my thoughts on what it means to invest in Magic and the differences between investment and speculation. Regardless of whether you agree or disagree with my perspective, there are some fundamental questions you need to ask yourself before throwing money into Magic cards.

Do You Believe In Magic: The Gathering As A Product?

This is the first question that needs answering. Regardless of what you choose to invest in, be it Magic cards, vintage video games, or the stock market, belief backed by strong evidence is necessary when putting money into any type of investment. No one should be putting money into a stock, product, or endeavor which they do not believe in. If you are going to buy into Magic, for however long a time frame in which you want to operate, you need to do so with the understanding that you believe in Magic as a product, whether you play the game yourself or not.

It bears repeating that I consider Magic to be one of the greatest, if not the greatest, game ever created. If you've read my previous articles, you know that I invest in the game primarily as a player, but that I trade, invest, and speculate heavily on the side as a means to finance my hobby. My outlook on Magic, you can no doubt guess, is almost universally positive.

Though I would encourage you to do so, you do not need to play the game of Magic to believe in the product. Simply looking at Wizards' 2020 and 2021 record profits can be evidence enough to want to invest. If that alone convinces you to want to put money in, take a look and try to answer this next question.

Could You Get A Better Return On This Money Elsewhere?

Magic, and trading card games in general, are only a small segment of the much greater collectibles and antiques market. Collectibles and antiques themselves are part of the larger class of so-called alternative investments – investments different from your traditional ones like stocks, bonds, and cash.

When you are looking to put your money into Magic, it's important to be forthright with yourself on if the money you are planning to put into Magic cards could get you a better return elsewhere, whether it's in another collectible like rare coins, or real estate, or in a traditional investment. If you are actively worried about the kind of return you'll receive, you should think twice before putting your money into Magic, or any other type of investment. You might need to do some serious homework before committing your cash, which takes us to the next question:

Do I Have The Knowledge To Properly Invest In Magic?

If you are reading this website, and others like it, you are already actively working to answer this question. It's a more nebulous question than it may at first seem. This is because the very nature of the Magic market changes on a daily basis, much like the stock market. What was true last year, last week, or even yesterday, may not be true today. Brand new cards are released every few months, and when you factor Secret Lairs into the mix, it feels like old cards are reprinted and introduced to the market almost daily. This not only affects the value of the new versions of cards but the previously printed versions as well.

Let's look at the printing of the recent Modern Horizons 2 as an example. Prior to Modern Horizons 2, the land Cabal Coffers from Torment was an uncommon that was over $150 in March of this year (2021).

There was an error retrieving a chart for Cabal Coffers

An uncommon printing in the Planechase product, and a foil FNM promo had done little to suppress the price of the card over the years. Following the announcement of Cabal Coffers being reprinted in Modern Horizons 2 however, the price of the original Torment printing, and those small reprints went into freefall. The Torment version appears to be stabilizing at just under $50, and the other printings will likely stabilize soon as well, though all significantly off from their former highs prior to Modern Horizons 2.

If you had purchased Cabal Coffers as a long-term investment after April 2020, you likely paid significantly more for the card than they are now going for, assuming you missed the window of opportunity to sell in the last six months when you might have been able to recoup some or all of your investment. This is just one example where having the knowledge to properly invest in Magic is crucial.

Here is another scenario to consider. Perhaps you've read in the news about Reserved List Magic cards selling at auction for six-figure price tags, and you've decided you want to put money into Reserved List cards. A Google search led you to MTGStocks' handy list of everything Reserved, and you decided to buy out all of the two cheapest cards on the list, Mercenaries and Balm of Restoration.

It's a fallacy to think that just because a card is on the Reserved List, it inherently has substantial untapped value, as parodied by this Cardboard Crack comic. The reason cards on the Reserved List command the prices they do is not just tied to rarity, and the fact they will never be reprinted. It is also tied directly to their playability within the game of Magic.

This is another instance where understanding how to play the game itself is important to understand the values of some of the cards. Black Lotus commands the price it does not only because it is on the Reserved List, but because it is arguably the most powerful card printed in the history of the game. Balm of Restoration, on the other hand, is a bad investment however you look at it, summed up succinctly by the words of the character in the comic, "that card sucks."

Black Lotus commands the price it does not only because it is on the Reserved List, but because it is arguably the most powerful card printed in the history of the game.

If you're going to put money into Magic, it is important to understand what you're putting your money into, and this website can help. Quiet Speculation is a great guide for those looking to invest in Magic. Not only do we have news and insights from writers with decades in the game, but we have powerful tools and metrics for Quiet Speculation Insiders, to help them make smart decisions. More on that at the end of the article.

While we'd all rather buy Black Lotuses than Balm of Restorations, not all of us have six figures to spend on Magic cards. This leads us to the next question:

Do I Have The Means To Invest?

This might be the most important question we have to grapple with. While I love Magic: The Gathering, I have to agree with Sig's assessment from his article last week: Magic is expensive. We need to understand that before we can begin dipping into the Magic market. If you are struggling to make ends meet, or lacking in disposable income that could stand to be spent elsewhere, then perhaps investing in Magic at this moment is not the right decision.

If, on the other hand, you have a stable income, a comfortable living, and a little money on the side you'd like to do something with, putting some of that money into Magic doesn't seem like a bad idea. Before you do, though, I'd advise speaking to a financial planner or another licensed professional about your long-term finances. Don't think that putting your money into Magic cards today is going to pay for your kids to go to college, or pad your retirement until you talk to a professional, and also carefully ponder the next question.

What Are The Long-Term Prospects of Magic: The Gathering?

If you've paid attention to the YouTube Channel Reserved Investments, or any of the other sites that focus on the greater collectibles and antiques market, you'd see a much more cautious approach to Magic and similar pop-culture collectibles. In my last article, I discussed a long-term Magic investment being in the range of two to five years or more. I considered speculation to be anything held less than two years. This scale aligned roughly with both cycles of price spikes we have seen occur in Reserved List cards over the years and the frequency at which we see reprints of popular staple cards for Modern, Commander, and other constructed formats.

In the greater collectible and antiques category, however, anything held less than five years is considered speculation, not investment. Investment is seen operating on a timeframe of five, ten, twenty, even fifty years or more.

On that time scale, what do the long-term prospects of Magic: The Gathering look like? The answer to this ties back into much of the answer to our first question. The long-term prospects of Magic seem really good right now. The game is at an all-time high in terms of both popularity and profits, a year and a half into a pandemic where almost no large-scale events have occurred. Extrapolating from there as an indicator points to mostly positive futures. Even in the extremely unlikely scenario where Wizards or Hasbro went out of business, Magic would live on: either in the hands of the players or in the hands of a new owner of the property. This bodes well for us for whatever timeframe we want to have money in Magic.

What Is Your Endgame?

I owe this question to Gavin Verhey and his phenomenal final article for his Flow Of Ideas column on "An endgame is a singular vision of the person you want to be. It is an image of you, sometime in the future, where you have accomplished your goal," Verhey wrote. The essence of the article as I've come to take it is that every action you take, every decision you make, whether in a game of Magic or in life, should always be leading you towards your endgame.

When it comes to Magic finance, being able to articulate the answer to this question should bring our discussion full circle. Whether the answer is to be able to play Modern or to make some money to put towards your retirement, you should be able to answer this question succinctly before buying a single card. It ties closely to our previous discussion on Why To Invest in Magic, and will embody the reason you collect and invest.

As we come to the end of this piece, have you been able to answer all these questions? What are other questions that come to mind when you think about investing in Magic? What other questions do you ask yourself when making financial decisions, Magic or otherwise? What other Magic finance questions are you interested in reading more about? Post your answers in the comments or reach out via Twitter or email.

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Paul Comeau

Paul is Quiet Speculation's Director of Content. He first started playing Magic in 1994 when he cracked open his first Revised packs. He got interested in Magic Finance in 2000 after being swindled on a trade. As a budget-minded competitive player, he's always looking to improve his knowledge of the metagame and the market to stay competitive and to share that knowledge with those around him so we can all make better decisions. An avid Limited player, his favorite Cube card is Shahrazad. A freelance content creator by day, he is currently writing a book on the ‘90s TCG boom. You can find him on Twitter and LinkedIn.

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