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Traderous Instinct – The Year in Speculation

This weeks article is all about Skyrim and how battling dragons is just like Magic trading.

..
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Yeah, okay, I’ve got nothing. Man, I guess that means I have to stop thinking about Skyrim for a couple hours and focus on…not Skyrim.

Onto option B, then.

About a year ago, I wrote a primer covering the basics of Magic speculation: the art of buying massive quantities of a single card in the hopes that they’ll go up in the future. While the article is still pretty useful, it only begun to crack the surface at what goes in to a successful spec.

In the year since I wrote that piece, I’ve done more speculation than ever. And even though I whiffed more than I’d hoped, I still made a reasonable amount of money correctly identifying which cards to buy and when.

Today, I’d like to go over some of the more interesting speculations I made this year and see if I can figure out why some paid off big and others crashed and burned. Hopefully by looking at concrete examples from my own speculation adventures, I can improve my success rate (and by extension, yours) when the 2012 season for Magic organized play begins.

Until then, my suggestion is to use all of your perks on improving speech. There are also potions that improve your ability to get better buy prices from vendors, though the effect only lasts for 30 seconds at a time.

Oh, wait. NOT Skyrim. Uh, let’s start with an odd, poor spec choice I made last spring in the wide, wide, world of Commander.

[card]Command Tower[/card]

Bought in at: $1.99/ea
Sold at: N/A
Current Retail: $1.99/ea

One of the most interesting days in speculation is when a new card first comes up for sale on a large retail site.

For the first day or two after a card is spoiled, the only purchasing option available to people are eBay pre-sales. And often there aren’t too many of these available that early on. Most are only available in Chinese, and nearly all are 5-day auctions instead of the more attractive buy-it-nows.

The first window to really buy, then, is when sites like Channel Fireball and Star City first test the water on expensive cards. They’ll put up 30 or so copies for something like 50% over the average eBay closing value and then keep raising the price until they stop selling out. This is what leads to overhyped planeswalkers rising in value before they’ve even hit the streets.

I also like using this window to purchase sets of common and uncommon foils that I believe will see Standard play. Usually foils will start out at 2 times the regular price of a card, and there are some great deals to be had before the pimp price settles. This has been less true over the past year, but there are still bargains to be had: I picked up the foil [card]Dismember[/card] for my cube, for example, for something like $3.

One of the cards I identified early on as a potential bargain was [card]Command Tower[/card]. The way I had it drawn up in my feeble brain, this was the one card from the Commander pre-cons that absolutely HAD to go into every single multicolor Commander deck ever created. Seriously, there isn’t a single deck in the format that won’t want to play this save the small number of single-color builds.

And unlike something like [card]Sol Ring[/card], there are no other sources for this card other than dismantled Commander pre-cons. For every [card]Command Tower[/card] added to a deck, a pre-con has to be bought and torn apart. I assumed, therefore, that this would be one of the best mid to long term speculation targets available.

The minute they went on sale at major retailers, I pounced. I bought a stack of them at $2 each, and as expected they sold out immediately. On most sites, they hit $4-$5 within the next couple of days.

Unfortunately for my wallet, though, quite a few factors contributed to the card’s slow drop in value.

First, mana fixing isn’t first on the minds of many Commander players. Sure, the guys who run fetches and duals snagged their copies, but many casual Commander fans are perfectly ok running the fixing packages they’re already used to.

Second, the Commander pre-cons were bursting with value and there were a roughly infinite number of them printed. This card always had a pretty low ceiling, as you could always just buy one of the decks and get 99 other cards along with it, but the fact that these have never been sold out and they’re full of awesome things has helped depress the price.

I also underestimated the number of people who play with a Commander deck for a while, get bored with it, and then dismantle it in order to build their next one. Since I keep my casual decks around basically forever, I need a roughly infinite number of these. Most people only need two or three.

That said, I don’t think I’ve ever seen a [card]Command Tower[/card] sitting in a trade binder. If you want one, you generally have to buy it. I wouldn’t call this spec a total bust, as I’ve used or can trade all of the [card]Command Tower[/card]s I have, but I certainly won’t be speculating on any cards from future Commander pre-cons. (If you are, though, I recommend [card]Homeward Path[/card].)

[card]Olivia Voldaren[/card]

Bought in at: $5.50/ea.
Sold at: $13/ea.
Current Retail: $15/ea.

Olivia’s rise is a great example of why Twitter is an essential tool for Magic speculation.

On the morning of the first day of Worlds, chatter about Olivia started up right away. Patrick Chapin, we learned, won round one easily on the back of a game 2 Olivia. That prompted me to write this:

@chasandres Chas Andres
Early reports out of Worlds show Olivia Voldaren as a possible breakout card. It’s a mythic, will hit $15 overnight if it’s the real deal.

I bought in quickly, having identified a few qualities in Olivia that made her attractive to me as a speculation target.

1) She’s a casual favorite and a lord in Magic’s most current popular tribe. These are the sorts of cards that randomly hold value for years and end up being among the 4-5 priciest in a given set. The fact that she was still holding strong at $5+ months after release boded well for getting back out if the spec flopped.

2) She’s a mythic rare. With supply so much lower, Mythics are infinitely more desirable as speculation targets, Their ceiling is far higher than a rare in a recent set.

3) She was too new to have an established price point yet. People didn’t think, “Oh man – I have to get four copies of [card]Etched Champion[/card] before they go up” the way they did with Olivia, even though the Champion had a better weekend. Established cards take longer to rise in value, generally, while exciting, new cards can be the subject of boundless optimism.

This is part of the same rule that anyone serious about fantasy sports understands – people will overpay for rookies with potential and ignore the proven veterans that usually provide far greater value by season’s end.

4) She showed up in a deck designed by one of the most beloved pros and innovators, More than seemingly anyone else, casual/FNM folk LOVE playing Chapin’s decks. Whenever he rolls out new tech, it’s important to pay attention.

Of course, my decision to buy in was based on VERY little information. I had no idea if Chapin’s Olivia was a maindeck 4-of, or a sideboard 1-of against Illusions or something. There was also a chance he’d start to lose.

Not surprisingly, I found a lot of people on Twitter who disagreed with my decision to move in early.

@drew_levin Drew Levin
@chasandres @[email protected] @mtgmedina Save your money and buy Inferno Titan instead. I love watching the lemmings, but this is sad.

@mtgmedina Jonathan Medina
@chasandres @drew_levin I’ll just buy em at half price next week and sell them for the inflated price, no risk there. 😉

I’m not mentioning these people to point and laugh at them – I’ve had more than my share of misses as well. The point I’m trying to make is that speculation is an inexact science at best and a blind stab in the dark at worst. Good, intelligent people are wrong about these things – it just so happened that I was right on this occasion.

Olivia also showcased one of the best things about buying speculation targets from a reliable store like Channel Fireball. Because I knew that I was guaranteed to get my cards, I was able to sell them while the hype machine was going at full tilt. By that night, Olivia was sold out at $20 on this site, and copies were impossible to find anywhere.

I listed my sets for around $13/card on eBay the following morning. My hope was to capitalize on irrational demand before the price settled down and the large stores were back in stock. I drove up to Worlds that night, and all of my Olivias had sold before I arrived in San Francisco. Since then, the retail value on this card has dropped back down to a more reasonable $15.

[card]Leveler[/card]

Bought in at: $0.25/ea.
Sold at: $4/ea.
Current Retail: $4/ea.

The spike on this card happened when Magicthegathering.com spoiled [card]Laboratory Maniac[/card] during Innistrad preview week. Not only was [card]Leveler[/card] an obvious go-to combo piece, the article even spelled out the interaction for its more, uh, simple readers.

While I figured the chances of this one being a viable combo in Legacy were quite small, I hoped that it would probably be cool enough to inspire a bunch of casual brewing. I also knew that the risks involved with speculating on this guy were exceptionally low. At $0.25/card, the worst case scenario still meant that I could bulk them out at $0.15 and lose only $0.10/ea plus shipping. That’s a pretty insignificant loss compared to the upside if this combo was even tier-3 in an eternal format.

My goal, however, wasn’t to wait around and find out. I wanted to get out as quickly as I could, hoping to capitalize on the hype before Innistrad even hit the shelves. Essentially, I wanted to do the same thing here that I did with Olivia a couple months later. Because most of my copies were coming from unreliable retailers, though, I only listed about half of my sets and hoped for the best.

Unfortunately, the demand for this card never materialized. I only managed to sell one or two sets at $4/card over the next month, even though they were sold out pretty much everywhere. Well, they’re available all over now, and I still have dozens and dozens of them left.

Of course, even though the combo went absolutely nowhere, Leveler still retails for $4. I only spent about $0.25 each, and I can get a buck apiece or more for the rest of ‘em on buylists. This spec may not have been the windfall I was hoping, but even though the card was a bust it was still a successful buy. The risk was low enough that the payout was more than acceptable.

[card]Paradigm Shift[/card]/[card]Divining Witch[/card]

Bought in at: $0.25/ea.
Sold at: N/A
Current Retail: $0.70 – $2.

The day after [card]Leveler[/card] disappeared from store shelves across the internet, two new targets were identified by (I believe) Doug Linn over at Quiet Speculation. Doug’s point was sound: if [card]Laboratory Maniac[/card] is actually going to make it in Legacy, it won’t be using [card]Leveler[/card] as a combo piece – it’ll be using one of these two cards.

Just like with [card]Leveler[/card], I knew that the risk here was small. At $0.25/card, I wouldn’t be losing much money if this spec paid off. If it did, though, it would pay off huge – both of these cards are from small, old sets, and if either had ended up being a Legacy staple the price would have hit $20 overnight.

Of course, there was a risk involved with these that wasn’t present with [card]Leveler[/card], and that’s what ended up making this purchase much more of a bust.

[card]Leveler[/card], remember, had been suggested by Magicthegathering.com. Casuals all over were already trying to make the deck work, and the card was in the public eye thanks to the article and the immediate price spike. While these two cards might be better, they were also virtually unknown by the community save a small group of speculators. That meant that the only way I was likely to make money on this spec was if the combo actually worked.

So even though these two cards are better than Leveler at making Lab Maniac a viable win condition, it’s Leveler with the significantly higher price tag.

[card]Daybreak Ranger[/card]

Bought in at: $0.50 – $2/ea
Sold at: $2/ea.
Current Retail: $1.50/ea.

Of all the specs in this article, this one hurts the most.

The murmurs about [card]Daybreak Ranger[/card] started about a week before the set’s release. Brian Kibler made a cryptic tweet that he had purchased 200 copies of an Innistrad bulk rare, and everyone spent about 35 seconds trying to figure out what it was before moving on to this really awesome video where a cat catches a bat in mid-air.

Then, one night, two articles showed up on Star City Games – one by Brian Kibler and one by Brad Nelson – showcasing [card]Daybreak Ranger[/card] as an amazing and underrated card that would surely see significant Standard play.

This was big. Two well known and well like pros coming to the same conclusion about a brand new card sent my spec senses into overdrive. I had missed the boat on [card]Spellskite[/card], but I’ll be damned if I was going to miss it here. I bought all the Rangers I could for under $2, and then bit the bullet and bought some at $2 as well. I figured it would hit $5 overnight, leaving me enough room to make a reasonable profit. Then I’d really cash in if it hit $7-$8.

I knew that a long-term spec on a large set rare was a poor plan, but I figured I’d have time to get out while the hype was high. Also, at the time we didn’t really know if transform card rares appeared at the same frequency as regular rares. If they were, say, twice as rare, there was a chance this thing could bust past $10.

I was right about the first part of my prediction – the card did go to $5 pretty much overnight. Much like [card]Leveler[/card], though, the market never materialized. Those who wanted them picked them up cheap, and everyone else shrugged at a card that needed both green and red mana to use. I managed to get out of about half of my sets for $2/card on eBay, but the rest are still sitting on my shelf.

I do think that this card was massively harmed by both being in a large set and needing a second color to use the activation. I also bought in too greedily – Kibler bought his 200 for $0.25/card and probably made a tidy profit off the transaction. At $2, the margins were too small and the risks were too great. I was blinded by the fact that two well-known pros were both publically extolling the virtue of the card the same night, which has historically meant a can’t-miss speculation target.

But it did.

[card]Amulet of Vigor[/card]

Bought in at: $0.25 – $0.50/ea.
Sold at: $1.50 – $2/ea.
Current Retail: $1/ea.

Anyone who follows me on Twitter knows that this card was a particular baby of mine.

A week and a half before PT Philly, a quick perusal of the Modern decklists on Magic Online showed the sheer dominance of [card]Vesuva[/card]-based ramp strategies. With Modern prices having gone nuts over the previous two months, I knew that any surprise tech at the tournament would likely have the same huge, immediate bubble – and I could cash in.

[card]Amulet of Vigor[/card] has always been on the verge of broken, and it certainly fits the image of the kind of card that just needs the right pieces to really come into its own. Rumors started trickling in that Amulet-based [card]Vesuva[/card] decks were almost a turn faster, and I knew that I had to jump in. I purchased over a hundred of these as quickly as I could, and waited for the results to trickle in.

Even though [card]Amulet of Vigor[/card] was far from the breakout card of the event, I still feel vindicated by this pick. Several of the Amulet decks did remarkably well in the Modern portion of the event, but their pilots missed the cut due to poor Limited performance. While none of them made the top 8, a few of them came very close.

After the event, Amulet was sitting at $5 retail but none of my auctions were selling. I ended up bulking out the rest to store buylists between $1.50 and $2 each, netting me a modest profit before the card sank in value following the ban of [card]Cloudpost[/card] later that month.

[card]Disrupting Shoal[/card]

Bought in at: $0.50/ea.
Sold at: $8/ea.
Current Retail: $5/ea.

Oh man, this was a sweet one.

Unlike Amulet, [card]Disrupting Shoal[/card] was part of the breakout strategy at PT: Philly and formed the backbone of Modern’s hottest deck. I found out about the card, like most things, from cryptic floor tweets coming from the event. The evening before the matches started, multiple sources said that [card]Disrupting Shoal[/card] was the ‘hot card that none of the dealers had in stock.’ With playsets available online for around $2 total, I ordered about 50 copies of this bad boy.

Unfortunately, the big online stores were already out of these, and I was forced to use…less reputable vendors. One of the problems you’ll find when you want to make a speculation is that 95% of Magic dealers online will only let you purchase four copies of a card, no matter how many they have in stock. With shipping ranging from $2-5 per order, this can often make speculating on low value cards incredibly annoying. I was happy paying $2 for a set of [card]Disrupting Shoal[/card]s, but with $3.99 shipping tacked on to it? No thanks.

I recommend that anyone serious about speculating develop a relationship with multiple retailers that allow you to purchase many copies of a card and are good at honoring sales. Bookmark these retailers and use them whenever you encounter ‘out of stock’ issues at your favorite site.

I also suggest keeping a blacklist of dealers that you’ll never shop at. Speculation is risky enough – you’ll probably spend hundreds of dollars on bulk rares that will never go anywhere along with the cards that actually do rise in price. This is fine, it’s part of the game, but it really stings when a vendor holds your order for a week and a half in order to see for themselves if the price goes up. If you buy from these people, you’ll end up paying the bill on all your misses and getting all of your wins stolen from you.

I bring this up in this section because on retailer in particular, MTG Fanatic, treated me extremely poorly over an order of [card]Disrupting Shoal[/card]s. They held it in limbo for days, reduced my order down to 4, and then cancelled it completely. Not only did they refuse to sell me the cards, but their email to me when I asked them for an explanation told me in no uncertain terms that they felt I was attempting to take advantage of them and to take my business elsewhere.

There are two schools of thought about speculation among small online retailers – those who believe in honoring their contracts with buyers no matter what, especially those who buy massive quantities of cards, and those who feel cheated that evil, quick-triggered speculators can get good deals on cards that are rapidly rising.

Regardless, there is no excuse for poor customer service, and as a speculator it’s important for you to find and patronize only those who want your business. To me, it’s telling that the big stores don’t limit sales and go the extra mile for customer service – that’s the attitude you need to be successful in the first place.

Anyway, uh, [card]Disrupting Shoal[/card]. This card was wildly in demand the week after the tour, and my sets sold almost immediately at $8/card on eBay. I used some of the money to take my girlfriend out to a nice dinner and squandered the rest on [card]Daybreak Ranger[/card]s or something.

Quick Hits

– I bought a fat stack of [card]Manriki-Gusari[/card]s for about a quarter each during the Legacy GP in May that was full of [card stoneforge mystic]Stoneforge[/card]-based equipment battles. They currently retail anywhere between $0.50 and $2, and I’ve found little demand for any of my copies.

– I bought in on [card]Tezzeret, Agent of Bolas[/card] at then-current retail ($20-25) when he was proving himself right after the release of Mirrodin Besieged. I was able to get out pretty easily around $28-$30 – a small profit that was probably not worth my time on such an expensive spec.

– [card]Kalastria Highborn[/card] was one of my better spec targets this year. I wrote about her in this column when she was around $2-$3, and picked managed to get around $7 each in trade for all of mine a couple weeks later. I wish I had bought more sets than I did.

– Probably my best Magic finance deal of the year was selling all of my shocklands and a bunch of other Modern staples to Channel Fireball a couple weeks after the inception of the format. Always, ALWAYS sell into hype.

– The two biggest out-of-nowhere speculation hits of the year? [card]Spellskite[/card] and [card]Blazing Shoal[/card]. Sadly, I missed the boat on both.

Lessons Learned

Two years ago, there were very few speculators. If you wanted to hit on a winning spec, you had far more time to buy in. The downside, however, was that the price of any given card was slow to rise. Player demand had to increase to the point when retailers started noticing that they could charge more and still make sales. [card]Disrupting Shoal[/card] would have still gone up, for example, but [card]Leveler[/card] would likely not have.

Now, any card with hype on it goes through a spec bubble. All the stores will sell out within 12 hours, and the price will double as supply dries up immediately. The higher price only remains if players actually want the card and demand increases.

If a card is ‘real,’ it’s very easy to get out of your spec. It’s still almost always right to get out immediately, while demand is at its highest, but if you don’t you will likely still have buyers for weeks to come.

If a card isn’t, your only hope is to try and sell to a store that’s frantically trying to buy back stock or to another speculator who is behind the curve or still believes in the spec.

No matter what, selling as quickly as possible is generally the right plan.

The great thing about speculating on cards with hype attached to them is that you’re still likely to make money on them even if they are misses. If the price is low enough and the card is old enough, it will generally settle at a far higher retail price than it was at before. This is why I am still satisfied with my Levelers, even though the card was a huge bust.

To take this to the extreme, Ryan Bushard, the finance writer on Gathering Magic, bought a car from the profits he made speculating on [card]Death’s Shadow[/card] and [card]Plow Under[/card].

This sort of day trading mentality is even better utilized on MODO, where transaction fees and shipping costs are minimal. I would go deeper into this if I had any sort of MODO expertise at all, but I spent too much time at work to play with rapid market fluctuations on Magic Online. Needless to say, as quickly as you’re selling IRL, you should be eight times quicker online.

Some of you, I’m sure, will point out that I’ve been focusing exclusively on short term speculation – nabbing cards right before they start to perform as a way to make fast cash. Equally valid is the long spec – buying cards that you expect will go up months or even years from now.

But that’s an article for another day.

Right now I have a dragon to fight.

Until next time –

– Chas Andres

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