Traderous Instinct – Thinking Long Term

Let me tell you about the worst trade I ever made.

My Waterloo

It was at the Scourge prerelease in the spring of 2003, and I was a junior in high school.

I had just lost my fourth round of the day to a player with triple Rock Jockey, so my spirits were low. (Admittedly, though, Rock Jockey isn’t the worst creature in the world when your opponent is seventeen years old and his entire deck is based around trying to accelerate into his Dragon Mage with, uh, no actual acceleration.)

Anyway, I was wandering around the convention room floor when I spotted a guy in the corner holding a battered cardboard box. After asking him if he wanted to trade, I discovered that the box contained his entire collection, which was mostly made up of cards from Legends, Arabian Nights, and Antiquities.

It wasn’t long before one card in particular caught my eye:

Falling Star

This was easily the funniest card I had ever seen! Yeah, Chaos Orb was probably cooler, but that was a bit more of a known quantity. It was also like a hundred bucks, so I knew the chances of me trading for one were pretty slim.

Falling Star, on the other hand, was trading at a much more reasonable $15. I had instant visions of becoming so good at flipping the card that I could take out one, two, even three goblins in a single bound. In the months that followed, I became so attached to the card that I took a sharpie and wrote “FALLING STAR FALLINATES YOU” on three copies of Disciple of Malice so that I could put a proxied playset in any deck I wanted.

Needless to say, I had to have the card.

The price I paid?

 

Underground Sea 

Of course, the trade wasn’t so bad at the time. A Revised Underground Sea was only worth $20, so my value lost that day was right around $5. Heck, I probably made a worse trade than that last weekend!

What really stings, of course, is the value of those two cards now. A NM Revised Underground Sea sells for over $90 now, while Falling Star can be had on this very site for a mere $4.49.

I’m sure most of you have made similar deals in the past. Even if you haven’t, you’ve probably experienced the pain of losing value on cards that you decided to hold on to even if you weren’t running them in a deck at the moment.

Today we are going to think about Magic cards as a long term investment. After all, if you’re reading this the chances are good that you’ve already played Magic longer than you thought you were going to and spent WAY more money than you planned to. Why not have your collection pay for itself one day?

“Magic is a GAME, Not an Investment!”

How many times have you heard THAT line before?

This was an especially popular line during the kerfuffle over the banned & restricted list where some folks wanted dual lands to drop from the sky like candy while others wanted their Tundras to hit the $1,000 mark. Since part of the fun of a collectable card came is the collecting bit, it stands to reason that a small percentage of people will begin to, y’know, collect a whole lot of cards.

Think about your collection. What do you suppose it’s worth?

Then think about the amount of cash you currently have in your bank account.

How close are those two numbers?

Game or investment? Can’t it be both?

A Brief History Lesson

If you bought one share of Wal-Mart (WMT) stock on Jan 1, 2006, you’d have been able to get it for close to $46. You could sell it today for around $54 – a modest and respectable 15% gain. (Not accounting for inflation, fees, etc.)

If you bought one share of Tundra (TND) on Jan 1, 2006, you’d probably have paid around $20 for the card. Today, it is worth about $70 – a 350% gain.

Of course, this is a little bit of comparing apples to oranges. We can certainly find stocks that gained 350% or more over the past five years. You could have bought Apple stock for $50 in 2006, and sold it this morning for $300 – that’s a 600% gain in a company that was a fairly stable investment back then.

In fact, Apple stock reminds me a lot of Wasteland. You could have gotten the card for $5 in 2006 and sold it for $30 today.

Magic has actually been one of the best investments of the past 15 years and has weathered the recession absurdly well. While some bubbles did burst back in the Chronicles days, almost all the Eternal staples have either gone up or stabilized over time.

But does that mean that you should cash out your 401K and buy into Moxen and Loti? Let’s find out.

Back to the Future

In order to think about the value of Magic cards over the long term, it is important to start looking at the evolution of the game over a larger time period than we normally would.

While it is easy for time lords to shift their temporal frame of reference at will, we humans are much better equipped to appreciate the day-to-day minutia of things than the big picture.

In order to snap you out of your present-centric viewpoint, allow me to escort you on a brief journey to the future.

Your Magic Portfolio – December, 2011 (One Year Out)

By late 2011, Standard will consist of Scars block, Magic 2012, and the first set of Shake block. Zendikar, Worldwake, Rise of the Eldrazi, and M11 will all be gone.

That means no more Titans (probably), no more Eldrazi Green, Valakut Ramp, Jace, the Mind Sculptor, Fauna Shaman, Lotus Cobra, or fetchlands.

Since Scars will have long since stopped being drafted, many of the cards that are currently sinking in value will be scorching hot. Koth, Mimic Vat, Ratchet Bomb, Venser, Lux Cannon, Hand of the Praetors…some of these cards will be close to worthless, while some will have doubled or tripled in price.

Think about Malakir Bloodwitch vs. Goblin Guide. Both cards were $5 rares from Zendikar this time last year. Today, though, it will cost you $9 to buy a Guide whereas Bloodwitches are nearly bulk rares.

Barring some weird reprints, the cards that were defining Standard but are too slow for Extended will have taken a massive hit. Meanwhile, cheap, efficient, and format-defining cards that rotated in September will just be starting to heat up again.

People will be telling you to sell your Lotus Cobras and Abyssal Persecutors in April and May, and by December it’ll be too late to pick them up again for Extended at the significantly cheaper rate they’ll be selling for in the dog days of summer.

Extended will have lost Lorwyn and Shadowmoor, pushing the Jund staples into the limelight as they will now be a year older and have gotten that much harder to acquire.

If you are mostly a Standard player and you stopped playing Magic today, your collection will be worth about half of what it’s worth now – maybe less.

Unless Wizards releases a new format (over-Extended?) designed to supersede Legacy, Eternal staples will have risen in value even more. Sensei’s Divining Top will probably be a $10 card. Aether Vial will be at $15. Force of Will might hit $50.

The release of the new commander decks will have also helped some of better-but-not-completely-broken casual cards gain value as well. Bribery, for example, is still selling for $4.99 here on ChannelFireball, but it’s out of stock. It’s been slowly gaining value for years, and I suspect the days of seeing it available for less than $8 are nearly over.

Your Magic Portfolio – December, 2012 (Two Years Out)

The landscape of Standard will be entirely unknown by December of 2012. We will be playing with the entirety of Shake block, M13, and the first set of Hook block. Shards of Alara will have rotated out of Extended, leaving us with Zendikar as the oldest set in the format.

Will SCG still be running Opens in late 2012? Will our own ChannelFireball have entered the fray with a tournament series as well?

This is largely what will determine the value of Eternal cards, as Wizards as has always treated Legacy as a much less important format than sealed, draft, Standard, and Extended. If Legacy is as widely played in two years as it is today, expect increases from the usual suspects as well as Eternal staples that are getting further and further away from having seen print. (Think Jace, the Mind Sculptor, Tarmogoyf, and Goblin Guide.)

Your Magic Portfolio – December, 2015 (Five Years Out)

Five years from now, both Standard and Extended will be made up of entirely unknown sets. Wizards doesn’t even have code names that far out.

After five more years, how will power and price creep affect Legacy? Will any of tomorrow’s decks be recognizable today?

To put it in perspective, five years ago we were cracking Ravnica packs and beating in for five with Meloku tokens. There was no EDH – casual play was either 60 card constructed or 250-card 5-color behemoths.

So yeah, that was a while ago, but it was certainly not forever ago. Some of you weren’t playing back then, but I bet a ton of you were.

The Last Five Years

Let’s take a break from the future for a moment to look at what trading was like in late 2005. This might help us understand what our collection might be worth in 2015.

First of all, Standard rares didn’t go for more than about $20 tops in 2005. This doesn’t mean there wasn’t rampant speculation, though!

When Ravnica was spoiled, the EV of the set was through the roof. The shocklands were up near $20 each, and they stayed there for their entire run through Standard. Glimpse the Unthinkable started as a $15 card before falling into the single digits for years and then settling into the $13 price tag it has now. Doubling Season began its life as a bulk rare and could have been had for a buck or two in trade for years.

Of course, everything felt powerful after Kamigawa block, which had a few very high-impact cards mixed in with the chaff. Umezawa’s Jitte was the most format warping card at the time, and it was omnipresent in all aggro strategies. Jittes traded very well, and you couldn’t find them for under $18 anywhere.

The other expensive cards from Kamigawa block were Kokusho, Cranial Extraction, and Pithing Needle, all of which traded for $15 or more. Kokusho never saw much constructed play, but he was a must-have in all black based casual decks. The other two were very widely played in constructed.

Nearly all the other constructed staples were closer to $5, like Meloku, Keiga, Heartbeat of Spring, Glare of Subdual, Damping Matrix, and Kodama of the North Tree.

Some casual favorites like Traumatize had broken the $5 after years of slow inflation, and Wrath of God and Birds of Paradise were still trading between $10 and $15 as they had for years.

Sensei’s Divining Top could be had for $1.

So what does this all mean?

For starters, if you invested in the most expensive Standard tournament staples back then, there’s a good chance that some of your cards will have still held value. Umezawa’s Jitte isn’t worth too much less today than it was then. Nor is Chrome Mox from Mirrodin. The Ravnica duals have held half their value despite not being playable in any format right now.

Of course, that was when the top cards were near $20 – not the $50 they regularly reach now. Mythics have changed the game, and we are still a few years away from knowing what will happen to in demand yet out of print Legacy mythics.

Reprints have also had a massive affect on the value of many cards.

Kokusho got one in From the Vault: Dragons. Traumatize got one in M10 and M11. Pithing Needle got one in Tenth Edition and M10. In all cases, the value of those cards collapsed.

The value of a card has everything to do with supply vs. demand. If the supply goes up and the demand does not, the card’s price will tank. That’s why Scars cards are all going down right now – the supply grows each time anyone cracks a pack to draft.

In the case of casual cards, it doesn’t take much.

Darksteel Colossus got a reprint as a mythic in M10, and it went from a $10 casual card to a $2 casual card in a matter of weeks.

So what did go up?

Between 2005 and 2010, it would have been correct to invest in Legacy cards. Dual Lands, City of Traitors, Force of Will, Aether Vial, Sensei’s Divining Top, Show and Tell, and all the rest were Magic’s big gainers.

Armed with this knowledge, let’s pay another visit to 2015 and see what we can discover what Magic will be like in five years.

The Dark and Scary Future

There’s another thing you have to think about when you think about the future – something we haven’t brought up yet:

The rest of your life.

In December 2005, I had just turned 20. I was going to college in Boston and I played Standard at Your Move Games every Friday night. My obligations mostly involved making sure I did my homework, (not hard), kept my grades up (also not hard), and having a good time.

In December 2010, I am 25. I live in the San Fernando Valley and work at CBS. I live in an apartment with my girlfriend of nearly four years that we rent together. I still play Magic every Friday night, but it is draft instead of Standard. My obligations now involve making sure that I make enough money to sustain my entire life.

In December 2015, I will have just turned 30. So much of my life then is unknown to me now. Will I have made it onto a television writing staff? If not, will I still be trying? Will I still be living in LA? Will I be married? Will I own a house? Will I be thinking about starting a family? Will I still be playing Magic on Friday nights?

While I no longer see a future entirely without Magic, I do expect that the game will have a smaller role in my life in five years. When you are thinking about putting real money into cards for the long term, it is important to think critically about what your future relationship with the game is going to be.

What’s Next for Magic?

Five years from now, I think that the Magic scene will be more fractured than ever. The rest of our culture has begun moving into smaller social circles, and I expect Magic to follow the trend. I imagine the gulf between ‘competitive’ and ‘casual’ will widen, and fewer people will be stuck in between.

A new generation of tournament grinders will probably still be PTQing and shooting for the brass ring because as long as the game is active it will attract many of the most competitive people on earth. Beyond that, though, I see a gradual decline of people who are “casually competitive” and more people who are “coolly casual.”

Magic’s wave of original adopters – those who either played Revised and Ice Age in elementary and middle school or were taught later by peers who had – will be in their early thirties in five years instead of their mid to late twenties. While some of those guys will either quit or keep grinding, I expect that there will be a large influx of people who will want to keep playing Magic…just not every week.

Thus, I see a large influx in the popularity of formats like EDH and cube draft. These are formats where you don’t have to keep up with the latest tech. Instead, you can put all of your favorite cards in a pile and pretty much play them forever. If you build a good enough EDH deck or a good enough cube, it shouldn’t ever be obsolete.

We’re seeing this phenomenon start now in the Eternal formats. I would guess the age of an average Legacy player is at least five years older than that of an average Standard player. While some of this has to do with the price and limited access of the format, I believe a lot of it also has to do with the culture that the Eternal players have adopted.

I also suspect there will be an influx of collectors. These will be people who played Magic when they were younger, but soon stopped having time for the game because their career got in the way. Armed with a well paying job, they will now decide to collect sets (or playsets) of all the Magic cards they can.

My Long Term Predictions

Were I to invest in Magic over the next five years, this is what I would buy:

The staple cards for Commander

Cards like Solemn Simulacrum, Mind’s Eye, Sol Ring, Nevinyrral’s Disk, Woodfall Primus, Eternal Witness, Austere Command, Teferi, and Gilded Lotus will always be in demand.

Set foils of popular cube cards

Especially for older sets. Think foil Ravnica shocklands, Karmic Guide, Mystic Snake, Sword of Fire and Ice, and Bloodbraid Elf.

The Power Nine

The power nine are the Magic equivalent of blue chip stocks.

Unlike Legacy, Vintage hasn’t had a huge jump in popularity so these cards have been remarkably stable in value for years. A piece of power now won’t cost you too much more than it did five years ago.

Wizards doesn’t and probably won’t ever support too many Vintage events since the bar of entry is so high. Beyond that, most independent tournament organizers run non-sanctioned proxy Vintage events when the format does get played. This allows for a lower bar of entry, but it also means that it is possible to play this format competitively without power.

Of course, these cards do have something going for them that no other cards do: mystique and aura. Owning the a Black Lotus is like owning a piece of history, and as long as the game has fans these cards should hold a very respectable value.

I do expect the gap between black-bordered and white-bordered power to increase over time as collectors seek the best possible copy of these iconic cards.

Sealed booster boxes of popular sets

Ravnica booster boxes sell for $120. Urza’s Saga boxes go for more than $300. While it’s true that boxes from most newer sets still don’t break $80 or $90, I expect that to change in the future as more and more people will be interested in drafting their favorite nostalgic formats.

Sealed boxes are also the best investment for the day Magic actually does die. Expect these to double or triple in value overnight if Wizards ever announces that they are done printing cards.

You can still get at least $70 for a sealed box of Spellfire – a card game that wasn’t even all that popular. A box of Reflections II, the most popular set from Decipher’s old Star Wars CCG, sold on eBay last week for over $200.

Those games didn’t even have a draft format!

Strong buy: Rise of the Eldrazi. Perhaps the best contained, one-set draft format ever. Boxes of the set are going for $60-$70 on eBay right now, and they should be worth twice that in five years.

Reserved list rares that are playable but not too expensive right now

Wizards has said they will never print another dual land ever again.

Of course, that doesn’t mean duals are going to keep going up in price forever. They’re expensive now because they’re must-have cards in a very popular format. If Wizards either bans them in Legacy as degenerate mana fixing or usurps the format, they will go down in price. I cannot see Wizards continuing to support Legacy as-is if Underground Sea hits $200 – they will do something about it.

But if, say, Illusionary Mask hits $200? I think they’ll be ok with that. After all, Moat and Tabernacle didn’t break the format.

Reserve list cards to keep an eye on:

 

I’m not saying all of these cards will go up in value, and some (like Moat, Survival, and Tabernacle) will probably go down in value over the next year or so.

But it’s important to know that none of the above cards will ever be printed again. So if one of them starts breaking a format, it has the potential to double or triple in value.

Pick of the Week 12/13: Goblin Guide – Zendikar

Since I am writing this article just hours before the start of Worlds and the dawn of a new tournament season, I figured I’d spend the week talking about a good long term investment: Goblin Guide.

I’ve already mentioned Goblin Guide twice in this article, and that’s because I’m really enamored with him right now. He’s just so good at what he does! Red mages know what I mean when I say that RDW in Standard usually plays out one of two ways: the Goblin Guide way or the no Goblin Guide way.

Not only is he excellent in Standard, but he sees regular play in both Extended and Legacy. He is probably the best aggressive one-drop creature of all time.

Just about a week or two ago, dealers began pricing him closer to $10 than $5 – you can find him on this site for $9. And while I don’t recommend picking him up for that price, I do want to clue you in on the fact that he recently went up in value. So don’t trade yours away at $5, and if you can pick up a few copies near the old price point, do so. I don’t see him going down in value for years to come.

Until next week –

– Chas Andres

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