Anticipating a December Selloff

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I’ve been following @prfeudo (aka Ashiok Enthusiast) on Twitter for a long time now—they’re probably one of the MTG finance folks I started to follow shortly after I signed up for a Twitter account. Over the years, I’ve learned to trust their judgment and to listen when they make commentary on the MTG market. Ashiok Enthusiast is a mainstay at large Magic events, often buying for vendors. This experience has made them very well-versed in the dynamics of the Magic market.

Back on October 29th, @prfeudo made a very brief but profound statement regarding the market and a prediction for the holiday season:

I’m surprised this tweet didn’t receive more attention. Perhaps it did, but people chose not to “like” it because they didn’t like the prediction. Whatever the reason, this week I’m going to explore this prediction a little further, provide some commentary around it, and share my own thoughts on the matter.

The Catalyst: Las Vegas Weekend

Last month, Channel Fireball announced a “$50,000 MTG Las Vegas Weekend”. As I read the description for this event, it’s clear to me this is akin to what used to be Grand Prixs and, more recently, Magic Fests. Two “main events” are the centerpieces of the event. Then there are the continuous drafts and side events that will inevitably happen throughout the weekend. There’s even a prize wall!

But the part that really stands out to me is this part of the event:

Since COVID-19 shut down major MTG events across the globe, many vendors have not been able to restock on cards in their traditional fashion—only a percentage of the player base is willing to package up buylist orders and ship them off to a vendor. But the temptation to sit down across from a vendor, hand over some cards, and walk away with a stack of cash is always tempting at these large events (and I would know since it’s the primary reason why I would still want to attend them).

You may think this opportunity to restock will be healthy for the market, and in a way, it is. Much of the pent-up demand vendors have will be fulfilled coming out of this event. They’ll likely be staffing their booths well, equipped with stacks of cash eager to buy.

What follows this weekend that will impact the market. After spending all their cash buying up collections from the endless rows of players itching to cash out, these vendors will have to list all their cards and then actually sell through their new inventory. If they are stuck sitting on their newly acquired cards, it will be bad for business. A backlog of players eager to sell cards means a potential overstocking of cards by vendors—especially if some vendors come in a little too hot on buy prices.

This will inevitably lead to a flood of supply on sites like TCGplayer after the event, leading to more competition and lower prices as vendors seek to recoup their investments from the event.

Added Complexity: Holiday Season and Timing

I have to give full credit to Ashiok Enthusiast here. When asked for more details in reply to this tweet, they summarized their rationale quite eloquently:

MoxKitty asked if the reason for this prediction was related to a large influx of players eager to cash out of their collections now that prices are elevated relative to 1-2 years ago. While this was not the primary factor in Ashiok Enthusiast’s opinion, I do suspect there will be more players than average looking to raise cash from their collection.

However, their subsequent explanation should not be ignored: the timing is very awkward. MTG: Las Vegas is scheduled for November 19th through the 21st, less than a week before Black Friday. What normally happens on Black Friday and Cyber Monday? Just as they mentioned, that’s often a time for bonus bucks promos from eBay and TCGplayer, as well as Black Friday specials at vendor sites in the form of discounts and store credit promotions, etc.

How likely is it that the vendors purchasing cards in Las Vegas the weekend before will have time to fly home with their product (likely Monday), organize and grade their purchases, and get that inventory onto eBay or TCGplayer before Thursday? Honestly, I don’t run an online shop so I can’t estimate what this timeline normally looks like, but @prfeudo can estimate the timeline because of their continuous involvement with major MTG sellers.

If they say cards purchased during MTG: Las Vegas won’t be fully listed in time for the Black Friday and Cyber Monday promotions, I would tend to believe them.

Why is this such a big deal? This ladders back to what I mentioned in the previous section: a spike of inventory can be expected coming out of this event. If vendors can’t capitalize on the bonus bucks deals of the holiday sale season, they’ll miss out on a spike in purchases made by players. This means their newly acquired inventory may be a little slower to sell, leading to a drop-off in prices.

Of course, prices sometimes cool off over the holiday season anyway as players shift focus towards family gatherings, holiday celebrations, etc. This could compound an already-weak demand for new cards.

How I’m Approaching The Holidays

With an anticipated cooling of the market and dropping of prices, I feel the need to pause and consider my strategy for the holiday season. Rather than purchasing in an ad hoc manner, I'm thinking in advance about which cards I’m willing to reach for if prices come in, and which ones I should resist the temptation to buy. After all, I’m primarily an Old School collector nowadays, so my buying power is somewhat limited and hinges upon what I can sell.

Speaking of which, that’s precisely what I’ve been doing over the past month or so—gradually letting go of a card here and a card there to build up my PayPal account and prepare for potential deals in November and a potential drop of prices come December and into January. I’ve seen a little bit of softening in the market already, and I couldn’t resist making this purchase from Star City Games recently:

Don’t forget that SCG Premium qualified me for 10% off each of these prices. While I try to stick to more playable cards, I just couldn’t say no to an Alpha rare—even a Purelace—for $225. I just don’t think Alpha rares sell for that cheaply anymore.

The same goes for most Beta rares selling for $54. Drain Power may not be all that powerful, but the artwork is pretty neat, and the price was right. The Blaze of Glory and Righteousness are somewhat playable and have iconic artworks.

These are the kinds of cards I’ll be watching out for during a late fall / early winter cool-down. I’ve grown my appreciation for the collectability and rarity of Alpha and Beta cards recently, and it always seems like one vendor or another is increasing their buy prices to restock these cards. These are also the kinds of cards you can sit on for three years and basically guarantee they’ll maintain or increase in value.

Of course, I’ll also be looking out for any arbitrage opportunities—sometimes one vendor or sale makes a card cheap enough to immediately flip to another vendor for profit. It isn’t a sure thing, but the more sales compound and store credit kickbacks grow, the more likely these opportunities will surface. My bias will be towards Old School cards, but this could also apply to any cards of value.

The bottom line is I am trying to raise cash now before Magic: Las Vegas, where vendors will most likely restock on cards and then have to drop prices in order to reduce their newfound inventory. Then I can try and buy cards as they cool off in December and January.

Wrapping It Up

When a popular, experienced buyer for major vendors speaks up about MTG finance, I listen. In this case, that person was @prfeudo (aka Ashiok Enthusiast). They made a bold prediction regarding prices in December, and I’m inclined to think they’re correct. Between vendors’ pent-up demand to restock inventories at the Channel Fireball Las Vegas event and the awkward timing around the holiday season, there could be an incoming set of price corrections downward.

I believe it’s worth planning for this potential (likely?) outcome. Personally, I’ve begun selling an extra card here and a card I’m less attached to there to raise funds. Then I will have some powder dry and ready to buy when sales and dropping prices begin (first the former, then the latter).

This had been proceeding smoothly until I got tempted by some well-priced Alpha and Beta cards. That’s OK though since those are precisely the kinds of cards I’m interested in picking up at lower prices. Maybe they’ll drop even further come December or January, but in general pricing on Alpha and Beta are stickier. So I’m not too worried. These are some of the cards I’m most confident in holding as Magic continues to evolve with each new set. It’s just hard to beat the rarity and collectability of Magic’s very first and second sets. If these go on sale this winter, you’d best believe I’ll be jumping in and buying hand over fist.

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Sigmund Ausfresser

Sigmund first started playing Magic when Visions was the newest set, back in 1997. Things were simpler back then. After playing casual Magic for about ten years, he tried his hand at competitive play. It took about two years before Sigmund starting taking down drafts. Since then, he moved his focus towards Legacy and MTG finance. Now that he's married and works full-time, Sigmund enjoys the game by reading up on trends and using this knowledge in buying/selling cards.

View More By Sigmund Ausfresser

Posted in Alpha, Analysis, Beta, Business, Cash Flow, Finance, MagicFest, Predictions

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