My New Home

Welcome, speculators and speculatorettes! My name is Chas Andres, and I am proud to announce myself as the new Friday writer here on Quiet Speculation. Before the content, I want to tell you a little about myself. If you want, please comment and tell me about yourself, too. If you’re reading this article, I would love to know who you are and what you want to read. Let me know!

At any rate, I’m 25 years old and I live in Studio City, California. I currently work for a major broadcast television network, which is a pretty sweet deal. I am an aspiring TV writer, and I play Magic every Friday night and most weekends. I have a deep love for the financial side of the game mostly because it reminds me of a youth I spent searching for antiques and collectables at flea markets and yard sales in Massachusetts and New Hampshire.

While I have never made the top 8 of a GP or PTQ, I did manage use Magic: The Gathering to pay for nearly all of my living expenses for 8 months when I first moved to California. While I no longer buy and sell cards full time, I still manage to use trading to put together any constructed decks I want as well as to fuel the continued pimping of my cube. My goal as a trader is to go infinite in constructed and EDH as well as to own a foil copy of every interesting and relevant card in the history of Magic.

Late One Wednesday Night in February, 2009…

After sitting in a Glendale Starbucks from 9 PM until close, I finally drove home.

I was miffed. The guy must’ve gotten cold feet or found another buyer. I understood his reluctance, but he could have at least called me and given me a heads-up. I had left him over a dozen phone messages with no response. I guess I shouldn’t have been too shocked. The listing had been up on Craigslist for several hours at this point, and while I knew that I was the first person to inquire, I doubt I was the last.

It had been months since my last major score, and frustration was mounting. I could only paw through piles of three dollar Thorn Thallids so many times before despair set in.

My phone rang as I turned onto my street. I pulled over and answered it.

“Hey,” said the voice on the other end. “Sorry about that. A cop pulled me over on my way to meet you, and I didn’t have my license. Jerk took his time writing me a ticket, and then I had to drive all the way home. I know it’s late, but do you still want to meet?"

“Sure!” I replied. “Starbucks is closed now, though. Got somewhere else in mind?”

An hour later I found myself driving through the deserted town of Eagle Rock looking for an Asian market called “99 Ranch.” Why he settled on meeting me there, I had no idea. The market was closed – everything in town was. Perhaps the parking lot had especially bright lights?

After waiting in the parking lot for about fifteen minutes, a battered SUV drove up with three guys stuffed in the cab. It pulled up next to my car, and the driver swung out of the door and walked over to where I was standing.

“You must be Chas,” he said. “Let me get the cards for you. They’re in the back.”

My heart was pounding as I heaved the 5,000 count flat row onto my hood and picked up the first stack. The box was about ¾ full and organized by set. I started with the tab marked “The Dark.”

Giant Shark, Giant Shark, Giant Shark, Elves of Deep Shadow, Maze of Ith, Maze of Ith…

I pulled the Mazes out and looked at them in the yellow glow of the parking lot’s dim illumination. They were flawless. I put them aside and kept going.

Half an hour later, I had a stack of about a hundred and fifty cards pulled aside. There were five Mazes of Ith, a couple Sol Rings, three or four revised dual lands, some weird old gold Legends rares, some Antiquities Strip Mines and Mishra’s Factories, and a whole stack of Antiquities Urza-tron lands. After a couple of twenty dollar bills changed hands, I was back on the road heading home.

The cards I got that night would end up covering half my rent that month, no small matter for a guy who had been unemployed for six months and counting.

The Undiscovered Country

If you want to provide a positive benefit for the Magic community while making an absolute killing, you may want to consider spending some time buying old collections.

One of the major concerns about the health of Legacy is that there are a finite number of certain staple cards. Thanks to the reserved list, Wizards can not and will not ever print another original dual land. The number of Tundras that exist now is the maximum number of Tundras that will ever exist, and anyone who knows about coin circulation will tell you that this number is likely to shrink as cards get damaged or destroyed.

However, until the day that a group of highly motivated eternal players swarm the WOTC printing press and put an end to the reserved list themselves, there is another way to increase the number of duals that can be used: mining the collections of long-inactive players.

When Revised was first printed, tournament magic was in its infancy. For every pack opened by a kid that is still playing the game, a thousand were opened by people who haven’t thought about their cards in years. Every dual land plucked from a dusty closet shoebox or basement drawer is one more card with the potential to be in an active player’s deck

And the best part? If you want a true treasure hunt – if you want to really feel the rush that you get while trading – searching out these collections is the best way to do it!

There’s only so much value that can be gained on a trade before it starts to weigh on your soul or threaten to harm your reputation, but there’s no limit to the score you might find once you start searching for Magic cards in the Muggle world.

Ever dream about picking up a Black Lotus with a 50 cent price tag?

The Craigslist Equation

In the search for collections, the first place to turn is Craigslist.

Of course, I guarantee that you are not the only one looking for Magic cards on the web’s largest catalogue of classified ads. Often, only minutes will pass between a collection being posted and the first offer from a hungry buyer.

Once, I responded to a post about the sale of a complete, mint set of Revised only ten minutes after it had been listed. The seller had already been offered $20 each by someone for the dual lands. (Just slightly under fair market value at the time.). I was able to buy the set by offering slightly more for the rest of the cards, as well as agreeing to make the drive down to his house in Santa Monica immediately, but if I hadn’t been as on top of things as I was, I would have missed that deal entirely.

There are hundreds of other collections that I was just moments too late on, as well as thousands I never saw at all.

Constant Vigilance

If you are going to play the Craigslist game, timing is everything.

RSS feeds are particularly helpful if you don’t want to constantly refresh browser windows. If you don’t currently have these set up, I recommend them. I use netvibes.com, where I have a page set up that shows my latest emails, eBay auctions, weather, YouTube channels, new articles on my favorite sites, and whatever Craigslist search parameters I want to use. RSS or not, you’ll want to manually search Craigslist as often as you can. I use the terms “Magic Cards” and “Magic Gathering”, as some listings will contain one of the two words but not both.

Be prepared for lots and lots of people selling Magic Johnson basketball cards, as well as YuGiOh collections full of cards with ridiculous sounding names.

Patience is also crucial. When I was searching for collections on Craigslist full time, I would still only make a reasonable score about once a month. And for each collection I bought, I drove to and passed on three or four.

If you are truly serious about tracking down cards via Craigslist, I would keep half a tank of gas in your car and $500 cash in a drawer at all times. Many times, the seller will send you an email saying something like, “whoever gets here first can have the cards.” If you are the one who is prepared, then a winner will be you.

Safety First (or at Least Second)

I have no doubt that some of you who read my story were waiting for it to turn into a mugging. I know I sort of was.

The best place to meet for deals like this are in public places with lots of other people nearby. Starbucks is probably the best, followed by fast food restaurants. I have gone to people’s houses, and I have met in darkened parking lots, but never when I was dealing with amounts of cash over $50.

Never invite people you don’t know into your house.

For transactions that involve more than $100, I lock all of my money in my glove compartment and only pull it out once the cards are physically in my possession and a deal has been reached. A strong or smart thief could still find a way to get it, though, so I don’t recommend buying collections at all unless you generally trust humans to behave like reasonable people. If you are perpetually afraid of being robbed, it isn’t worth the risk.

How to Know When to Go

Before embarking on your new quest toward purchasing collections, you need to figure out what sort of profit margin

you need to be making for it to be worth it to you to start driving all over town.Are you only interested in turning forty bucks into several hundred? Are you willing to put in the time to turn $20 into $35? Or $300 into $400? Do you just want to re-stock your trade binders at below-eBay prices?

The big scores are usually going to be obvious, and you’re going to have to jump on them fast. The cards I got in the above story came from a listing that advertised a box of 4,000 Magic cards from Legends, Revised, the Dark, and Antiquities for $80. It also said that the lot contained “a lot of the rare (gold) ones.” Since I knew that cards from that era lacked a gold expansion symbol, I asked the seller about that over the phone. After a few seconds, I quickly realized that he believed that his multicolored cards were his rares! This told me that he had not played in a very long time and probably did not have a full grasp on values.

I knew from that moment that this collection had a chance to be special.

If you want to start increasing your intake with lower-profit acquisitions, then I would inquire into most collections offered on Craigslist that don’t look immediately terrible. Keep in mind, though, that -

Craigslist Sucks

A good 95-99% of Craigslist collections are pure garbage. For example, most lots will look something like this:

Magic: The Grathering Lot - $300 (Culver City) - This a huge collection on cards! It whopping 850 card big. Kamiwaga through Scrag! Cash only – no other than cash.

Included with the listing will be a few tiny pictures showing different angles of a stack of cards. On top will be a fourth edition Island completely covering everything else.

Where to begin? While 850 cards may seem like a ton of cards to someone unfamiliar with the game, it is a miniscule number of cards to anyone who knows about Magic. Assuming this collection contains no basic lands and all of the cards were purchased in sealed packs, we’re looking at a total of 56 rares.

Of course, the assumptions I just made were horrible. Without even talking to this person, I would guess at least 100 of the cards are basic land and another 200 are crappy commons that came from a store’s bulk bin or a friends’ forgotten collection. How do I know this? I’ve looked through a thousand collections. It’s always true.

You also have to hope that among the rares, there is a reasonable distribution of awesome eternal staples. While some players knew the value of their cards or kept their fetchlands tucked away, for the most part you’re looking at the collections of casual players who have long since cashed in their high-value cards for playsets of Elvish Hoedown.

And this is just one of the exciting hurdles you’ll run in to when purchasing collections from ex-players!

Standard Shall Rise Again

Many players only invested in a real standard deck once. As such, they believe that all of their cards still hold the same value they did when Anurid Brushhopper was a chase rare. Did you know that other than Stifle, there’s not a single card Star City Games will buy from Scourge for over $1.00? Or that Akroma’s $2.00 buy list price tag makes her the only card in all of Time Spiral worth more than $1.00? Try telling this to the guy who thinks his Flagstones of Trokair are worth their weight in gold.

A sad corollary to this is the fact that most staples aren’t what they used to be. Birds of Paradise and Wrath of God used to be the peanut butter & jelly of collection purchasing; you could always count on them to be easy to find and easy to trade. Unfortunately, due to years of reprints and power creep, there’s just no desire for these cards anymore.

Fifteen Cents Adds Up

There is a site out there that calculates the value of your Magic card collection via the aggregate listing prices of eBay auctions.

No – not sale prices like Magic Traders – the listing price.

While this might help you determine that your Force of Will is worth somewhere between $30 and $50, it really does a number on commons and uncommons.

Entering a pile of 500 bulk cards into this program will give you a VERY false sense of what your collection is worth. Some cards, like Lightning Bolt, may include values from Beta or foil listings. Some weird commons and uncommons might show up as being worth $15 because some nut listed a copy for $15 once and no one else has ever bothered listing a card that no one will buy. Even without these outliers, this site will determine the value of each common between $0.08 and $0.20.

This adds up – fast.

The guy looking to unload his cards enters them into this site and checks what they're worth. In the end, our jubilant collection owner is left with a spreadsheet detailing 1,200 cards with a total “value” of $540, even though there are maybe 5 playable rares in the whole collection.

But don’t worry, they don’t want book value – they’ll take $350 for the lot. That way you can still make money too!

The Uncanny Valley

If you buy a collection of cards from Revised, you will probably end up with some useful staples. Dual lands, Sol Rings, Demonic Tutors, Swords to Plowshares, Fork, and Wheel of Fortune are all in Revised, and the uncommons have the chance to be present in plentiful numbers. I once bought a collection that came with 10 free Sol Rings. 10! Of course, Revised was old news when Magic was at peak popularity. Ice Age was the new kid in town, and everyone wanted to open that sweet new Jester’s Cap.

Between the duals in Revised and the printing of Force of Will in Alliances, there were three Magic sets – Homelands, Ice Age, and Fallen Empires – that don’t have a single good card between them. You could literally buy a collection of 5,000 Magic cards from this era and not end up with a single money rare.

I have answered many promising ads for large collections, only to get to the seller’s house and learn that 95% of their collection was from this era. Since so many cards from this time period were sold, most old collections span these unfortunate sets.

So watch what you purchase from the valley between Duals and Force. While having an extra playset of Ice Age Brainstorms is cool, paying $150 for seventeen extra playsets of Ice Age Brainstorms along with 8,000 useless cards is not a smart decision.

Have I dissuaded you enough from buying collections yet? No? Then let’s examine some actual ads from Craigslist and see if anything looks promising.

Let’s Hit The Streets

Magic the gathering box - $50 (Huntington beach/fountain valley)

box full of magic the gathering cards good condition if interested contact me

Underneath is a picture of a box of cards with no indication of quality or age. About half of them are in sleeves.

I would say this is actually a fairly promising lot. While there are very few details here, and a reasonable chance that nothing in this box is worth even close to $50, all it takes is one Underground Sea for this to be a great score. Who knows? The sleeved-up decks could have Sinkholes, Forces, Natural Orders, and City of Traitors.

Sleeved cards are a good thing. People rarely trade out of decks they build, and a box full of decks might mean playsets of staples as opposed to bulk commons. Were I to pursue this collection, I would first respond by asking for a little more detail. Could they provide you any information about who bought the cards and when they were purchased? Do they know if there are any rares? Are there any more pictures available, or at the very least could they send you a list of 9-10 cards so you can gauge which era they’re from?

I would only go to see these cards if the responses were positive. Unless they’re from the pre-Masques era, the chance of that box containing $50 worth of cards is very small.

Magic the gathering cards - $1 (Irvine)

I have a huge collection of magic the gathering cards ( couple thousand). I am selling them for various prices about $20 for 500 but will negotaite depending on what u want (mana, sets, decks, common, rare etc email me with questions. I DO NOT SELL SINGLE CARDS SO DO NOT ASK ME FOR A LIST OF MY GOOD CARDS AND PRICES

This is another semi-promising lead, despite the vitriol at the end of the listing.

$20 for 500 cards is an amazing deal if you’re getting his good stuff, and since we SHOULD NOT ASK HIM FOR A LIST OF HIS GOOD CARDS AND PRICES, that means that we can meet him, paw through his cards, and find his good cards without having to discuss prices! I would note that this person is probably crazy, though, so I would call him up and try to find out as much information as I could before heading over.

Magic the gathering cards - $350 (Bakersfield)

misc 4th edition and up urzas saga 5th edtion worth alot more than $350.00 its a entire pop corn tin full of cards

I would probably not pay this collection a visit, even though “its a entire pop corn tin full of cards.” 4^th edition and up precludes any truly valuable singles – no duals or forces here. 4^th and 5^th edition cards are usually just as bad as Fallen Empires, honestly. With Wrath and Birds no longer being worth anything, these sets are gigantic dead zones in the history of Magic. Even a couple hits from Saga, like Exploration, won’t be enough to get even 10% of the way to the $350.00 asking price.

Also, the presence of the popcorn tin tells me that this collection is owned by the most casual of players. They probably didn’t seek out expensive tournament rares, and I would wager that many of these cards are in awful shape.

This lot is a pass for me.

Negotiation Tactics

So let’s say you find a collection seems interesting. You set up a rendezvous, meet the seller, and find some cards you want. What now? Unlike active Magic players, former players often have very unique opinions of what comprises the value of their cards.

To many players, the “good” cards are only worth slightly more than the “bad” ones – it’s the volume that makes up the value. If they’re asking $200 for their 1,000 card collection, there’s a shot you can snag the ten best cards for $20 or less. Other players will assign a flat value to all of their rares. This also allows you to cherry pick their collections a bit, passing over Mudholes in favor of Sinkholes.

Still others might want Star City (or higher) prices for each of their rares, but will sell you any uncommon for twenty-five or fifty cents. This is where you can dig for a few minutes and come up with Aether Vials, Sensei’s Divining Tops, Standstills, and maybe even a Wasteland.

If buying the whole collection is cost prohibitive, I will ask the seller if I can just buy the cards I want for a reduced amount. If I offer them, say, half of their total asking price for a small handful of cards, they can still sell the bulk of their collection to a casual player and make a reasonable amount of money. If you do this, though, please make sure to leave a couple of good rares so that their collection isn’t totally unsalable. And be honest with the buyer that you are going to be purchasing most of their valuable cards. They’ll still make the deal with you 9 times out of 10.

The Ethics of Winning

I imagine that there might be a few complaints in the forums from people who think that this is an even bigger rip off than making lopsided trades. After all, I am suggesting that you go out and buy a pile of Aether Vials for 50 cents each! Unlike trading, where you are both sitting in a safe, warm card shop with stocked binders, you must make a profit when you are buying collections. If not, then you are losing time and money.

In order to make even minimum wage buying collections, you need to be making even more of a profit than stores do when they buy up people’s unwanted cards. After all, those collections walk in their door, and then they can sell all the cards at retail.

You? First you have to spend a ton of time tracking down collections, writing emails to sellers, and identifying the promising lots. Then you have to spend gas and time driving to those collections, and not all of them are going to be winners. Then you have to find a good way to sell them in order to make a profit. (This will be a subject of a future article of mine.)

So remember: the ethics of buying collections are more similar to looking for bargains at a yard sale than pulling out a binder at a game shop.

Conclusions

In between the hundreds of posts advertising MANNY RARES! Ajan Goldman! Elspiathe! I have had some real successes on Craigslist.

My best purchase ever saw me hand over $1,100 cash in the parking lot of a Van Nuys Costco in order to get a collection that came with the full Power 9 and eventually netted me over $3,500 in profit.

And really, it’s about the adventure as much as it is about the cash.

My favorite story is from when I purchased a collection that came with a burnt, blackened piece of the card Chain Lightning. When I asked the seller what happened to the card, he told me (as though I should know) that it had been used in a game of “real Magic.”

I asked him what that was, and he told me it was a variation of the game where you had to pretend that the spells were real. Apparently this involves lighting your burn spells on fire and dumping water on your hydroblasts or something.

At any rate, if you are looking for an easy, painless way to increase the value of your collection, look elsewhere.

If, however, you are looking to go on an awesome treasure hunt with the possibility of a major score, searching for collections online may be your new weekend activity.

Until next week,

-Chas Andres

Hey Everyone, I'm going to steal a bit of Kelly's thunder here to give you a bit of information. My name is David Conrad, current Editor here at Quiet Speculation. I'm the guy behind the scenes making sure all of the articles get out. When I started to realize the theme of Peter Jahn's article showing up in all of our writer's articles this week, I asked Kelly if we could syndicate his article from Mana Nation, and they graciously allowed us to so long as I made sure to let you know it came from there first. So here is the article, redone in all its glory to further this discussion in regards to an article that sparked a fire within the trading communities.

You can find the original article here.

You can also find Kelly's follow-up article on Mana Nation here.

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This is being written in response to Peter Jahn’s article regarding the ethics of trading. This is a loaded topic, and one that hits close to home for me. In addition, Jon Medina is a friend of mine and his Pack to Power project was published right here on ManaNation, which is why I’m choosing this as my forum through which to reply to his article. I’ve read Peter’s articles for years and I respect the guy as a writer, but I just don’t agree with most of what he’s saying. I will do my best to address it respectfully, and would encourage anyone who disagrees to do the same.

Magic: The Gathering is a Collectible Card Game. A game is a contest, with rules, to determine a winner. Most people view Magic as a card game whose pieces are collectible. I view Magic as a game of financials wherein I can then use the pieces I acquire to play a fun card game with my friends. I need to make it clear to everyone that I don’t play Magic because I like the game. I play Magic because I love to deal. I was trading baseball cards on the playground in 4th grade, I was altering server-wide economies in World of Warcraft, I’ve sat for and passed the Series 7 exam and I’ve successfully traded stock for a net gain. It’s clear to me that the game of Magic is ancillary to the art of the deal. That’s not likely to change any time soon.

The best part about Magic is that people can play the game on any level they choose to. There is no “value judgment” between someone who plays on the Pro Tour and someone who plays kitchen table casual. It’s your game. Play it the way you want to play it. And don’t let anyone else tell you not to. For me, my concept of “fun” is simple. I enjoy learning the rules of a game, finding out what the basic assumptions are, and then I figure out which of those basic assumptions are poorly-founded.

I hate rules. I really hate them. Most of them are written by morons who don’t know the goals they’re trying to achieve. Magic’s rulebook, however, is one of the better sets of rules I’ve seen. I like their rules, and I enjoy playing by them. When it comes to competition, I am a stickler about rules, be it in Magic, athletics, or any other area of competition. The rules exist to define the set of legal actions one can take to achieve victory. If there were no rules, people would just kill each other in every game. Thankfully, laws (which are rules) prevent this.

You know what I hate more than rules? Unwritten or unspoken rules. Earmuffs, children – unspoken rules are bullshit. When it comes to competition, you play by the rules or you don’t. If you don’t play by the rules, you are cheating and you get disqualified. I cannot stand it when someone follows the rules and then an onlooker or another participant references an unwritten rule and cries foul. My favorite example – watching college kids play Street Fighter. There’s always some character or another that’s considered “cheap”, and everyone gets upset when a player wins with said character. What a load of crap. There’s no honor in 2nd place, just a consolation prize. You know why it’s called a consolation prize? To make you feel better about the fact that you’re Loser Prime. No, it’s not a value judgment of you, as a human being, but if the object of the game is to win, and you didn’t win, then guess what? You lost! You weren’t smart enough, fast enough, strong enough or whatever enough, and you lost.

I am a firm believer that a player (that is, a participant in a game) can, and should, do everything in his power to win the game he is playing without violating any rules. We have officials in Magic just like we have officials in Baseball, but when it comes to the secondary market, no such rules really exist. The DCI floor rules are quite intentionally mum on the subject, and considering that WotC specifically does not acknowledge the secondary market beyond recognizing its existence with the Reserved List, I am not surprised.

Furthermore, there is no regulatory body that governs Magic trading, buying and selling. You are often constrained by the rules of your marketplace. I cannot buy or sell cards to persons not registered as dealers at events, just as my customers are not permitted to buy or sell cards in my store unless I am involved in the transaction*. Those are written rules. The former is a policy I see at every major event, and the latter is a policy I maintain in my store at all times. If you sell on eBay, you follow their rules. Same goes for MOTL, or when selling to a dealer.

I want to reiterate that concept. The only rules to trading are the ones that are set by your marketplace. I want to highlight that I have not used the word “ethics” yet. I hate that word too. It’s a loaded term with all sorts of value judgments included. I’m going to avoid using the term “ethics” because it ignores the crux of my argument, which I posit to be correct. I argue that, in a game where profit is possible, it can always be considered to be in a player’s best interests to make a profit. For systems whose goal is solely the creation of capital (the stock market, for example), it is assumed that everyone is playing the game towards that end.

In a game like Magic’s secondary market, most people are not playing towards the endgame of maxing out profit. People trade to finish decks, finish sets, make a cube, or any number of other reasons. I trade because I want to make money. If you read my works and like what I say, you are probably in the same boat. When it comes to turning a profit, your thinking must become bottom-line-centric. If ripping off little kids is profitable, why don’t I do it? Well, I’m going to put aside the concept of ethics for a minute, because there are all kinds of problems with calling a trade unethical. I don’t work with ethics. You’d better ask a philosopher if you want to talk ethics. I don’t rip off little kids in trades or in my store because it’s awful business. I defy you to find someone who legitimately thinks of me as a rip-off artist. I often double up on trades, yet I’ve never been called a rip-off artist. Perhaps this game’s economy is not as zero-sum as Peter Jahn would have you believe.

Zero-Sum means that the ‘size’ of the game does not change. Zero-Sum means that, if I have 10 apples and you have 10 apples, and we are not allowed to eat them, discard them, or give them to anyone but eachother and only in an apples-for-apples like kind exchange, then the game is zero sum. No matter how many apples we each have, we’ll have 20 between the two of us. It’ll be hard for me to convince you to part with your apples at better than a 1::1 ratio, right? Let’s step into that situation for a second to illustrate the ways that a zero-sum game can still be profitable.

On what axis can I leverage my apples? I clearly cannot leverage market scarcity because you have as many as I do. I must leverage a quality instead. Perhaps my apples are fresher, or from a better source. Perhaps mine have been kept free from pesticides. Maybe I have knowledge, or a hunch, about a change in the apple market coming in the future and I’ll write you an options contract to sell your apples or buy mine. Now we have apple derivatives! What a mess. How about if I decide to make apple sauce and then barter my sauce by measuring it in a manner that does not indicate the quantity of apples actually used? See how a zero sum game is still perfectly fine to play? You’ve just got to think a little orthogonally, but you can usually figure out a way to make a profit.

Magic’s secondary market is not such a game. First of all, the concept of a card having one specific price is absolute garbage. If that was true, why are there different prices on different websites for the same damned card? Until we have computer software that performs a weighted average of all online prices, please don’t talk to me about a card’s “price”. It’s garbage.

The Tragedy of the Commons

This is a thought experiment I learned about in college. Here’s the gist. When you give a group of people a shared resource and leave them to act in their own best interests, what is good for the individual is rarely good for the group as a whole. That’s what the Magic secondary market is – a shared resource (cards) with many players acting on their own best interests. In a system where profit is possible, I do not ever expect a person to act altruistically unless their goal is not to profit.

We can all agree that ripping off little kids in trades is bad for the game. That kid could have gone on to become an avid player and refer many friends, which in turn keeps the game popular and keeps WotC paid, so they can keep making great cards. That’s not up for debate. The problem comes when you expect people to act in the best interests of anyone besides themselves. When I choose to execute my trades in a fair and transparent manner, I do so because it is the best business decision. I do not argue that being ethical is usually the best business choice, but it is unreasonable to expect everyone to act ethically, especially when it is contrary to their own benefit. Thus, any discussion that predicates its conclusions on people acting ethically is bunk.

The Value of Information

Since there is no rule against insider trading in Magic, then I see no reason not to leverage every piece of information one has access to. It may be unethical to trade on information that others do not have, but since there is no rule against doing so, I must assume that other traders are doing it. Since there is no penalty, and thus, no risk, involved, I believe that to be a safe assumption. This is business; this is not the care bare school of financial management.

This is an especially big dillemma for people who run major sites and get preview cards. That’s about as “insider” as it gets. I can safely say I have never traded on information I have gleaned from getting a preview card, but the situation has not come up. What if I got a preview card that suddenly made an existing trash rare into a format staple? What about if I had gotten the Vampire Hexmage exclusive preview? Would I be scum for buying every $1 Dark Depths on the internet? I’m clearly at an advantage here – no one else capable of executing this trade. Literally, no one. Just me. What would my competitors do? How about if the transactions were made by other parties on my behalf to mitigate my risk?

There are all kinds of sticky problems there. I can easily operate within the rules of the non-disclosure agreement that states that I’m not to disseminate any information about my preview card until the agreed-upon date. But anyone who’s seen Wall Street and it’s surprisingly good sequel** understands what I mean. It’s really easy for me to call 20 of my closes friends to tell them “Blue Horseshoe loves Dark Depths“. They know that I have info, but I can’t give them that info. If they make this trade, and they make money, they’ll return the favor somehow. Everyone is operating within the rules of the game.

Have I ever done this? No. I’m a writer and a businessman, which means that my reputation is worth more than a one time profit. However, were I just some unknown guy in a room in the middle of nowhere with a laptop and a healthy dose of greed, why not? There’s no penalty for doing so, and if my reputation is protected or irrelevant, then there is no legitimate reason not to conduct the trade. It sucks to say it, but the tragedy of the commons is in full swing in our secondary market. There’s no reason for dealers to charge less than $85 for Jace, The Mind Sculptor, because people are willing to pay it. Are they colluding by doing so? No! They’re simply using the market’s reactions to price their assets, and people are complicit in paying $85 for that card. They bitch and whine and piss and moan, but then they pay the $85. Incidentally, its cards like Jace, The Mind Sculptor that necessitate players having to trade like sharks. When a Standard deck costs more than your monthly rent, you have got to be tight with your trades.

Why Carpentry Sucks

OK, carpentry doesn’t really suck. I like having stuff made of wood, and I admire people who perform it because it is a difficult and admirable task. When it comes to a choice of trade, I think I’ll look elsewhere. I don’t like businesses that have scalar costs. After you buy your tools and stuff, you still have a fixed cost, more or less, per unit sold. You can get discounts buying in bulk, but your costs will still scale on a more-or-less linear scale. Want to make another table? Buy more wood and screws and put in the time to do so. Yuck. It’s a great hobby, but a poor example of a good business. I like finance because the costs don’t scale with the profits. If I have a model that has proven to return $X with a predictable rate of variance, all I have to do is invest more money into the model to get a larger rate of return. It’s not quite that simple, but it’s close enough. Here’s a quote that demonstrates Jahn’s basic lack of understanding of the value of information:

Cards involved in trades do not gain this sort of added value. I recently traded for an Obstinate Baloth. Despite having been traded around a bit, that Baloth does not cost any less, does not beat any harder, and does not have any additional features it did not have when it first came out of the pack, or when it was first spoiled. It’s retail and wholesale prices may have changed, but the card itself is not improved in any way. It still plays exactly the same way it did at the prerelease. No value was added.

Obstinate Baloth‘s printed text has not changed, nor will it likely ever. It’s context, however, has shifted dramatically since it was printed. Try telling me Obstinate Baloth does the same thing today as compared to what it did over the Summer. Why? Context. Blightning is not in Standard anymore. The crux of value trading without ripping people off is making good guesses as to what changes will occur in either reality or the “hive mind” perception thereof. Often times, reality is dictated by what the “hive mind” thinks, so in many cases, the groupthink becomes reality. Either way, we can all understand that a card’s value can change without the underlying card changing. That’s not a hard sell. Want to disagree? Look at this chart, which is based solely on people buying and selling the card on eBay. A P2P trader can easily leverage this knowledge and make smart predictions to generate value. No value changes hands in the moment, but by trading the card at $6 when he predicts that it will fall below $3 is just as good as making $3 as far as I am concerned.

Here’s another assertion I think is incorrect:

Simply put, they make sure their trading partners lose a little bit of money on every trade – and by making those small loses add up

Here’s another subsequent and relevant excerpt that I fundamentally disagree with:

Here’s another set of gray lines. Suppose we make a trade that involves some cards that are of nearly identical value. For example, assume I trade you a (Vampire Nocturnis) and a Defiler of Souls for a Frost Titan. At the moment, that’s pretty close to even. However, I strongly expect – I could almost say know – that the value of Frost Titan is going to go up after the results from the2010s (a/k/a States), while the value of the others is going down. If I think you don’t understand that, and I don’t tell you, am I trading ethically? If I were in this particular trade, I’d explain, and I’d probably throw in some additional cards. Again, YMMV.

So? Isn’t this exactly what good traders do? First of all, small losses are rarely even noticible to the party taking the loss. If I give someone 9.50 on a 10.00 card, it’s not like I’m taking them to the cleaners! I’m making a modest 5% profit on paper. Do that enough, however, and you get a big profit. In most cases, the difference in each trade is negligible, and often times it is not even clear. Who’s to say that either party’s price was accurate? Maybe he’s going off Star City retail prices and I’m focusing on cards that SCG sells below the average market value. It’s not my job to ensure the accuracy of his information. When you play a CCG, trading is optional. You can either do a lot of work to get information, or you can pay a bit of a premium to someone else who does that.

I make a point to memorize or have easy access to dealer buy lists, since those represent a good baseline of what I could do to cash-out after a day of trading. These are public documents – you can see that CoolStuffInc has their buy list posted online for all to see. I spend hours every week looking at those sheets and making sure that I have the info in my head. This is a lot of work, and not pleasant. I have no problem leveraging my access to superior information to make a profit on a trade. If I have better access to the same public information than you do, why should you benefit from my hard work? I spend hours building spreadsheets, models and formulae, verifying sources, charting trends, and generally slaving away in front of a computer in order to make my living. The better access to information I have, the more money I make. Why, then, should I disclose to you all that I know? Do your own damned homework.

I will never lie to you when I am trading. That is outside the scope of the rules that I play under. If you want to lie to me, fine, but expect word to get around that you’re a liar. Lying is bad business. However, when you tell me that Dealer X is selling a card for $Y, I might or might not care. When you ask me what Dealer X is selling Card Z for, I won’t lie and say “I don’t know”, nor will I knowingly quote you an incorrect price. If I am genuinely misinformed one way or the other, too bad. I once bought an obscure yet expensive card from someone for like $3, when I should have at least given him $8 for it. I was genuinely unaware that the card had risen in price recently. Too bad for him. My information was bad, and his was even worse. This happens the other way around. I will sometimes buy a card for too much because my information is inaccurate or outdated. It’s just a risk of doing business. The point is, if you ask me what a given dealer is selling a card for, I will probably just not answer because the answer doesn’t matter to me and I’m not in the business of giving away information. You want to know what a card sells for? Go look it up or memorize it like I do. Am I a jerk for offering someone X for a card when I know I can sell it to someone else for $2x? No way.

I recently wrote a piece on why Magic cards act much like stocks on a stock exchange, and the crux of the piece was that the knowledge of a transaction’s possibility or existence is often as valuable as the transaction’s execution. Let’s go back to apples for a moment to draw an example. Let’s say you, the reader, own an orchard which produces apples. Your time and skillset revolves around producing apples. Let’s then say that the Chicago Apple Sauce Company (which is not publicly traded) just lost their #1 apple distributor and are now buying apples at $X each, which represents a much higher-than-normal price for apples. I am a businessperson with some spare capital lying around, and both you (the reader) and the Chicago Apple Sauce Company are my contacts but you two do not know each other. Here’s the situation.

You sell apples at $0.25X. They buy apples at $X.00. Why has this transaction not ocurred? Because the two parties have not been introduced. There is almost no chance of a negotiation falling through at this point since the prices are so agreeable. Thus, all the value is contained in the knowledge of the transaction. My knowledge of this transaction’s potential is worth approximately $0.75X per apple, since I can then take all the capital I can spare, buy your apples, and flip them for more. In this case, would you just tell one of the two parties, “Hey, you know they’re selling apples for way less than $X each!” or would you just go buy some damned apples and pad the coffers for a few months? I know what I would do. The same is true with speculation – it’s just a question of who’s got the best information. He with the best information and the best predictions makes the best profit.

The last piece of the puzzle is the issue of hoarding. MTGO is the only viable way to do this, and it can be a problem. The problem with calling hoarding a “problem” is that it’s totally legal and within the scope of the game to do so. While I find that hoarding is a brute force method of making money as compared to setting up a profitable retail model or being a quick speculator, I’m not one to pass judgment. I don’t do it, but I can’t fault any of my competitors for doing so. After all, my basic premise is that, in a system where the potential for profit exists, one must assume that all reasonable parties can and will be acting in their own best interests. If I have the finances to successfully hoard/flood and I know it will make me money, why wouldn’t I do it (beyond the risk of my reputation, which can be ameliorated by using many anonymous accounts or any number of other techniques to “launder” the cards).

I want to once again reiterate that I still respect Peter Jahn’s position he took, and would like to applaud him for writing a thoughtful, if perhaps partially inaccurate article. It is a great discussion topic and, though I do not agree with all that he has said, he represents a valid point of view that many other people undoubtedly share. I always strive to be honest in my writings, so while this piece may have come off more vitriolic than some of my usual work, I hope it has at least given perspective on how I think about business. I have my own code of ethics that I do not care to introduce into the discussion (though it would likely make me look much less Machiavellian).

The reason I do not discuss ethics is because there are no really good assumptions. What is ethical to me may not be ethical to you, and vice versa. There are cultures in which murder is considered ethical in some cases. I do not subscribe to that point of view because I believe every life is sacred and important, but it is not my place to judge their ethics, as it is not their place to judge mine. I want to close by reminding everyone that there is a huge difference between being ethical and playing by the rules. One does not predicate the other. It is my belief that a business’s most valuable asset is its reputation for integrity, which is why I conduct my store in an ethical and honest manner. I encourage everyone in business to do the same. A wise man named Seth Godin once explained that a business that flourishes with its customers will always beat out a business that flourishes when its customers flounder. I am in firm accord, and would like to ask everyone to mind their bottom line conscientiously.

——-

* – On customers transacting cash between themselves in my store: I’ve been toying with the idea of permitting this as long as I can somehow get a cut of the transaction. If I can serve my customer’s best interests, while still making a few bucks, I see no reason not to do so. If I am selling a card at $X and a customer is willing to sell it at $.75x, why should another customer pay my higher price? It is unreasonable to ask him to do this, and he is well within his right to “step outside” to complete the transaction. I have long been a fan of the idea of building a business model that enforces “good behavior” by making bad behavior unprofitable. If we define a given action, P, as an action considered “bad” for the business or the game, we will often spend many resources diverting people away from doing P. We will also spend money to get them to take the action ~P (the opposite of P). Why force someone to do ~P (when their nature, best interests, or otherwise tells them to do P) when you can figure out ways to benefit from their doing P instead? If my customer can make a better deal even after I get a small cut, isn’t everyone winning? Sure I make “less” money, but I conduct a transaction that literally costs me nothing.

** – On Wall Street 2 – Hedge Fund Boogaloo: The love interest was tepid, forced, and detracted from what could have been one hell of a corporate thriller. Oliver Stone should be ashamed of himself for ruining a good movie. The female character was one-dimensional and frankly an insult to most women, as well as a horrible characterization of what a startup looks like. Nice Manhattan office space with brand new Apple computers. Most start-ups don’t have that kind of money, especially not leftie news blogs.

As many of you may know my contributions to Quiet Speculation are a work in progress. I can’t tell you the hours I spend each week crunching down this data, mostly because I don’t keep track. I had originally intended a different topic for this week, but due to the complexity involved there wasn't enough time to fully complete it so it will be saved for another week.

So far it seems that the most popular topics have been the Buy Lists and prerelease pricing for Scars and so my back office development has tended to go in that direction a bit more than into the theoretical. This week I’ll give you some more data that is Demand Matrix focused as I prepare the spreadsheets to kick out some more gold.

My source data (www.magictraders.com fed by eBay) has still yet to add in the Scars of Mirrodin cards so I’ve have to do that manually and it’s a massive pain. I’m working on an alternate source of data but it’s going to take some time. Adding to this, the latest data from them is just plain wrong and I can’t reliably use it to feed into my spread sheets. So as I work on fixing these issues and creating more lists and tools for you, the listener, I’m faced with the task of posting something interesting and inviting. The interesting part will hopefully sort itself out and I invite you to read on and help me shape the nature of my soap box.

Over these last months I have presented The Demand Matrix, Set EV analysis, Buy Lists, prerelease data and a guide to GP Portland. I’ve read the comments and suggestions and so will be adding more sources for the buy lists, and working on some more interactive tools for you to use. The plans for these and other additions are pretty vast and I think you’re all going to like them quite a bit. By now there should be enough regular followers who know the kinds of things I’m capable of, some dreamers who overestimate me and some trolls who are out to prove me wrong. Whatever category you place yourself in, I need your help.

I have few very interesting bits of data to present this week that I can trust, so I’ve created the following poll. In addition to this fishing expedition which will shape what I present in the future I would ask you to make comments with suggestions and ideas that might not be covered. We’re a financially focused web site, but making sense of lots of numbers isn’t all I can do for you. Please let me know anything that you’d like me to work on. The fact is that if you are a long time reader of mine (3 months on Quiet Speculation and a few more months on The Starkington Post) then you are actually a life time reader. I’m pretty new on the presenting side of this one-way communication medium.

In case you’d like to reference it for the purposes of these few questions, here is The Nutt Draw Primer.
The Nutt Draw: Primers and Glossary

All the questions are optional, but please answer those you feel you can.

[iframe https://spreadsheets0.google.com/embeddedform?formkey=dHNKX2dOdFpBd1ZQeVBkQjctXzROX0E6MQ 100% 2300]

And just in case anyone wants to see how the poll in progressing, I've worked up a live results page. (Refresh this page to see the results with your contributions).

[iframe https://spreadsheets.google.com/pub?key=0AukC5EWiTvOpdHNKX2dOdFpBd1ZQeVBkQjctXzROX0E&hl=en&single=true&gid=1&output=html&widget=false 100% 3300]

Chris McNutt
Magic Analyst
Level 1 Judge
@fatecreatr on twitter