Market Watch – Making Money with MTG

Jeremy Fuentes
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In case you read my Regionals report, let me clear some stuff up before I start, since many people don't read the article discussion threads and I've caught a little flak about it lately. Here is what I wrote in the discussion thread regarding the report:

"Just a note from the author (me). I don't REALLY think I'm the best Magic player you've never heard of. The figure of speech was meant as more of an attention grabber, similar to ‘the prettiest thing you've never seen' or ‘the nicest place you've never been.'

I hope you don't think I'm some cocky bastard who's just bitter about not making T8, because I'm not. Just to clarify, its like, you are probably the best Magic player I've never heard of. We are all probably the best Magic player no one's heard of... that is, until someone hears about us...." I know many players who are better than me who I'm positive you've never heard of, but you very very soon will. One was Luis Scott-Vargas, a local guy, most recently known for his Top 3 at Nationals. Another is Kevan Emami, probably the best and most consistent limited player I've met (and winner of the Mountain View Kobe PTQ). Watch out for them, because they will be in the money much sooner than I. But I digress…

Moving on, here is a little bit about my “market watch” background. I know Riki will probably be shaking his head at me for this, but I'm not listing off my tournament history, just trying to give this article some credibility from an investor perspective. I am a recent graduate from Santa Clara University with a degree in Business Finance. Ever since I was in Junior High, I have been following the stock market (mostly just the stocks of the companies my aunts and parents worked for). Early on, I learned the concept “buy low and sell high” and learned to follow different securities rise and fall in value as a response to different occurrences. Along the way, I also learned that these rules worked not only for stocks, but for pretty much anything you can buy/ sell/ trade. I applied this concept to comic books, cards, and all the little collectibles that teenagers could get their hands on, to try to turn a profit.

When I began to play Magic several years ago (when Onslaught was the new block), my natural habit of following and analyzing prices and trends was taken to a new level. I love following prices and looking for trends and watching to see what cards show up in Top 8's and monitor how their prices change. To add to my obsession for market watch, for the past 2 years I have been working part time at my good friend's card and collectible store (Pro Star Sports and Gaming, Great Mall- Milpitas, Ca. Stop by if you're ever in the area and ask for me!) Being in charge of the Magic department there really opened my eyes to a lot of the little buyer behaviors that Magic players have. I noticed that, however cliché it may be, every store is different and each customer unique. Learning your market and demographic is the first step you need to take in order to set your trade binder up for high turnover.

The market for Magic cards, just like any other security, is unique and follows consistent rules. For example, premium foil cards are always generally 2x normal cards while foreign regular cards usually pull 1.5x value. Good rares are worth more than crap rares, usually by a lot (more than 2-3x). These are rules that everyone knows. But to be a good investor, you have to play the market based on the additional assumptions that not everyone necessarily knows. For example, play this scenario out. If Store A sells Card X for $4 and Store B sells it for $5, everyone would buy it from Store A. Everyone with logic would buy the card at Store A because it is simply cheaper (barring all other variables). But, pretend you just find out that Store C will buy the same card from you for $7, whether you buy the card from Store A or Store B, you can sell it for more than you bought it for. Obviously you get more from the A-C transaction, but in the event that A runs out, you can still buy from B and make a profit. This is called an arbitrage. Technically speaking, and arbitrage is “the purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy” ( Watching for arbitrages and trends and then playing them appropriately is the best way to capitalize on any financial situation. Though I cannot convince your local shop to buy your Phytohydra for $2 more than you paid for it, I can give you some Insight on a few things people don't know, and give you the same kind of edge in your trades and transactions.

Here are a few general things I've learned that can help you. Please keep in mind that these are simple guidelines to help you, and though they will never be 100% accurate 100% of the time, following them could help you net those extra dollars you need to pay for your next draft.

1) If you want to come out on top, you have to follow the market. If you do not follow card prices, you will never know if something is a good deal or not. I know it sounds simple, but I see and hear stories left and right about people who get ripped on trades or sales because they did not know the value of their cards. Knowing current values is the easiest way to find an arbitrage and make a profit.

Though, knowing the current value of your cards is important if you don't want to be at the short end of that stick, at the same time you need to know the value of the cards you are trading for if you want to get the best deal and come out on top. Knowing current prices is the easiest way to come out ahead in trades and purchases because once you see a gap between your known value and the value given from someone else, it is an instant profit. In connection, do not be afraid to pick up a card if it is at a discount even if you don't need it. Just because you don't need a Goblin Welder that someone is selling for $3 does not mean you can't pick it up and trade it to your Type 1 friend at $7-8 for something you DO need.

The best references for card values is checking eBay finished auctions (and taking a general average of the most recent ones). Some card trading sites (NOT retail sites, trading sites) have resources that list out prices for singles and they are good resources as well (since they are basically a compilation of the average internet prices of said cards, including eBay). I use these as my references (as opposed to card value magazines, etc.) for a few reasons. First of all, I know that the finished auctions are current. Secondly, they provide a real life quote as to the value of the cards I am interested in. If I decide I don't want the card anymore, I know what I can instantly sell it back for. Keep up to date and seek as many resources as you can find to get a good overall view of the value of your cards.

2) Be wary of Future Value. Obviously you need to know the current value of your cards if you want to be successful in trading. However, one thing that I do not think people regularly think about is future value of cards. I'm not talking about, “I think Blood Funnel has a lot of potential, so I'm not going to trade it to the kid who values it at $2 because it could be worth $3 someday!” I'm talking about, “Umezawa's Jitte looks pretty good. I have no idea why they are less than $4 each on eBay, I should pick some up!” (And I know most of you are knocking yourselves in the head over that one. I personally remember opening a Foil Jitte from a box and groaning, as that was our “waste of a foil rare”.) Keeping a broad, but watchful eye out to the market and market trends is vital if you want to make the most of your trades and purchases.

Let us review a few important points about future value. First of all, Season is key. When Hero's Demise first came out in Betrayer's of Kamigawa, everyone thought the rare was junk. Passing it off as a $1 rare, no one paid it any mind. That is, no one paid that card any mind until Block season rolled around. Who would have known that the “Suckier than Terror” Rare would have risen to $2-4 value in trade? Of course it may not sound like much on a per unit basis, but think of how nice you would feel if you were the person who came to our store and traded for 6 Hero's Demise @ $5 store credit?

Another thing to keep in mind is Rotation, most importantly Rotating OUT. Plow Under, originally from Urza's Legacy, was reprinted in 8th Edition and became a key piece in MGA and BG Rock decks in MIR/ CHK Standard (after the Ravager bannings). Before Regionals, the card held a very steady $7-9 cash value. I even remember buying a playset for $30 shipped, thinking I got a good deal. However, once the 9th Edition spoilers fully released, my sets of Plow Under were nowhere to be found and I panicked to get rid of them. Keep in mind as well that there were no major open Standard tournaments coming up (such as PTQ's or Regionals), so no one really needed to pay $8 for a Plow Under. The combination of a lack of tournaments and the upcoming rotation dropped the demand and hence killing the price of Plow Under. Sad to say, I still have 6 of them in my binder.

Moral of the story? Though it is not necessarily wise to unload every single card rotating out of Standard, I would advise you to get rid of the hot rares BEFORE they rotate out (whether it be Season or rotate out of legality). Though a certain card may still be good in Extended, you can sell it at the current hot price, and rebuy them at a lower price once Extended season comes back around. This reversal of traditional concept still works as it simply becomes sell high, then buy low. As much as possible, you want to look at the power rares in your trade binder and think, “How much longer will I able to sell/ trade this card at this high price?” If your instinct says it will not be good in the upcoming Standard or that it will not hold its' value come Extended season, dump it.

3) Watch for the Power Uncommons. This is the first “insider tip” I will give you that I think most people have not caught on to yet. Though they may not be so hot in the trade market, power uncommons can net you decent profits in cash markets. If you check out your local shop you could find most uncommons for about $0.50. However, Cruel Edict and Tidings, for example (which can only be found in 9th Edition and Portal) usually sell for an average $2-4 in cash, and over this past Regionals season we saw Flames of the Blood Hand reach close to $6 on eBay. What is the moral of the story this time? Watch out for power uncommons when you rip packs and draft! The $0.50 you think you're tossing in the trash or writing on as a proxy can net you a decent rare online! Plus, foils usually pull more than the regular 2x as they are harder to find and just as played as foil rares.

However as always, there's a catch. As with every investment, there is a lot of speculation involved. You can't go out and buy every single uncommon in every set hoping to turn a profit on all of them. To be honest, though many uncommons are playable, few reach “Power Uncommon” status and even fewer ever come about like Flames of the Blood Hand did this past season. Unless you already know it is a proven card (like Tidings or Cruel Edict), be careful in your speculations and follow the rest of the rules. Watch for deck trends and tournaments coming up to help predict the future values of your power uncommons.

4) EBay does not ALWAYS have the best prices. Believe it or not, eBay does not always have the best prices for Magic cards. Though the Internet in general DOES have great prices for singles most of the time, with a little browsing and digging you may find your local shop may be selling the same cards at equal or better prices.

Consider this situation. You want to pick up Ghost Council of Orzhova. Your shop has the card for $7 or $8. EBay averages $5 for the card. So which do you pick? First consider shipping. Shipping costs for singles on EBay range from $1-3. Though many shippers give discounts for multiple auctions won, you would have to buy a number of cards in order for the shipping cost to amortize and justify buying the cards online. Also consider the waiting time. The Time Value of Money rule says that a dollar in hand today is worth more than a dollar in hand tomorrow. You can say the same thing for cards. Why wait a week for your card to come in the mail when you can have it in your hand, or better yet in your deck, today? Is it worth the $0.50-1.00 you might save? This rule is often justified with commons and uncommons too, as you could buy a playset of 9th Edition Llanowar Elves from EBay for around $3 and pay $1-3 for shipping OR buy the playset from a local shop for $4.

Please don't take this the wrong way either. Though I am in favor of supporting small business, I am not advocating this just because I work at a shop. It's just that I believe it is a common misconception among many players that cards are ALWAYS cheaper online. However, this is far from true as many local shops try hard to keep their prices competitive with Internet stores and EBay. In either case, supporting your local shop would not be a bad thing.

5) Keep your emotions in check when trading. This does not mean leave your MORALS at the door, simply your emotions. You may have a few cards in your collection that have some special sentimental value. Maybe it was the card that won you a tournament or the first rare you ever opened in a booster or something. Those are nice things to keep. But too many people nowadays have binders full of good cards that they are not willing to trade because of “sentimental value.” It's not until you get to the back pages (and by that I mean, the sucky pages that no one wants to look at) of the binder that they're willing to give up a card. If you want to keep all your cards in your binder and never trade, that's fine, but don't bother pulling out a “trade binder” if nothing in it is for trade. You will be quickly “black-listed” and talked about and no one will ever want to trade with you.

On another note, it is ok to be nice when you trade. In fact, it is always better to be nice than to be a jerk. But be careful about being too nice. If you always trade even, then you will never come out ahead. This means if the person you are trading with is happy but you know you are ahead, then its ok. I always keep some Unhinged or foil lands in my binder to throw in when I know I'm ahead in a trade, just so I know I'm not ripping anyone off completely. On the same token, if you are always trying to be nice and giving away too many cards you certainly will not get far. Just because one guy has a fat binder and lots of cards you want does not mean you should overtrade or overpay for them. You always want your trading partners to come out happy if you want to trade with them again, but it is more important to make sure that you are benefiting from the trade. Breaking even should be your last resort.

I hope that this helps you guys. We all know Magic is addicting and can sometimes be very costly, but keeping these tips in mind next time you visit your local shop for FNM or play a big PTQ could help you come out ahead and lower your overall costs for this habit.

If you guys want to read more articles like this with more tips or something on a similar market value topic, post in the discussion thread and I'll try to include it in my next article. Until next time, keep your eye out to the market!

-Jeremy Fuentes

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