I am pleased to announce that I will be hosting a panel at the 2019 Queen City Anime Convention in Charlotte, NC. My panel on traveling to Japan is scheduled for Saturday, August 10th at 11:00 a.m. in Panel Room 2. You can visit the convention website for more information regarding guests, panel scheduling, and other weekend activities.
Cost Plus World Market is a retail store that sells items across multiple categories including furniture, gifts, decor, food, and wine. One of the many draws to World Market is their wine and beer offerings. Unlike other wine retailers, World Market offers a discount when purchasing a minimum of four or more bottles of wine. This deal can include any bottles in the store or a specific style of wine such as rosé. Typically, the discount is 20% off the current price of a bottle. A few times a year, World Market will offer up to 30% a case of wine.
On July 7th, 2019, Ashley and I visited World Market and bought a couple bottles of wine with a 20% discount. Some of the bottles we got were on sale as well. The pricing on the receipt made the deal appear too good to miss. However, I wanted to compare the final price per bottle against a low-cost competitor.
The large retail wine competitor in my city is Total Wine. They carry a large variety of wine bottles from all over the world. I like Total Wine because they almost always have what I am looking for or carry an applicable substitute. The only time I have issues at Total Wine is when I walk in without a plan and get lost roaming the endless aisles.
While not all wines carried at one store can be found in another, I was able to find pricing for three bottles purchased at World Market. These bottles were Line 39 Cabernet Sauvignon 2017, Santa Julia Reserva Malbec 2017, and Masciarelli Montepulciano 2016. We have had the Line 39 and Santa Julia before, but the Masciarelli was one Ashley wanted to try.
The Line 39 Cabernet Sauvignon 2017 at World Market was on sale for $11.74. After applying the 20% discount, the final price came to $8.99. According to Total Wine's website, this wine is available at my local store for $7.99. The total savings would have been $1.00 at Total Wine.
The Santa Julia Reserva Malbec 2017 had a price of $13.99 at World Market. With the 20% discount, the final price came to $11.19. Total Wine sells this bottle for $10.99. However, my local Total Wine did not have it in stock. The potential savings at Total Wine would have been $0.20 cents.
The Masciarelli Montepulciano 2016 was on sale at World Market for $12.49. The final price after applying the 20% discount was $9.99. My local Total Wine sells this bottle for $8.99. I would have saved $1.00 if I went to Total Wine to purchase this wine instead of World Market.
If I had visited Total Wine to purchase these bottles, I could have potentially saved $2.20. While one bottle was not in stock at Total Wine, I would have easily found something else at the same price point. World Market offers a small selection of wines by varietal and region compared to Total Wine. Ashley and I typically have few other options when searching for a specific varietal and price point at World Market. Due to the large selection at Total Wine, we likely would have purchased one or none of the same bottles from World Market. This is because we do not always purchase bottles that we already enjoy. We like to try new regions and brands on occasion.
I believe the biggest takeaway is that World Market's wine discounts are not as favorable as they appear. The prices for each bottle of wine at Total Wine were lower. While Total Wine may not carry every brand or bottle, they offer plenty of options at multiple price points. However, there are still a few reasons I would continue to buy wine at World Market. If my local World Market is more conveniently located, I would continue to shop there. In addition, saving $2.00 is not always worthwhile when time is a factor. I also would continue shopping at World Market if they carried a bottle I enjoyed that was not available at Total Wine. The ability to re-buy something you enjoy is important. Going forward, I will pay more attention to wine prices and where I can purchase my favorite bottles.
Over a 10 week period, I bought and sold 33 different Magic: The Gathering cards. In a previous article, I recapped some of the hits and misses after selling a majority of the cards. The final cards I was holding were likely to lose money and lower the overall profit. I ended the speculation test after attending the Star City Games Summer Convention in early June, 2019. This event was an opportunity to sell off any remaining speculations without incurring shipping costs or seller fees. In the final article of this series, I will review the overall performance and my thoughts regarding the test. A copy of my updated speculation sheet is available here.
I believe it is important to understand how to evaluate and measure performance. One method of evaluating an investment is by comparing its performance against a similar investment. However, I do not have specific information on the performance of other MTG speculation portfolios. Another option is to compare the performance of an investment against other investment opportunities. In my Masters of Business Administration program, we often use the S&P 500 market index as a benchmark for comparing an investment's performance. While the S&P 500 is not a collectibles market index, it is an alternative investment to MTG cards. I will use this market index to evaluate my speculation test performance.
The speculation test ran from April 3, 2019 to June 10th, 2019. An article on Seeking Alpha used a Monte Carlo simulation model to predict a 2.38% increase for the S&P 500 over the second quarter. Using this forecast as a baseline, I should expect my speculation test to achieve a profitable return higher than 2.38%. Otherwise, it would be a potentially better alternative to put $188.11 in a S&P 500 market index fund. I would like to note that this assumption does not account for the time it takes to buy and sell cards. Personally, I would goal a higher return than 2.38% to account for the additional opportunity cost of my time.
Between April 3, 2019 and June 10th, 2019, the S&P 500 increased by 13.33 points for a 0.05% gain. When looking at the entire second quarter, the S&P 500 increased 93.13 points for a 3.3% gain. The S&P 500 did not beat the forecast for my speculation test's time period, but it did beat the forecast for the entire second quarter. I will compare my speculation test results against the total quarter gain of 3.3% for the S&P 500.
Overall Performance Results
The speculation test consisted of cards bought for purchase, personal use, and with a promotional discount. I will share the overall performance results including and excluding certain cards to show their impact on net profit.
Overall Performance Including All Cards with and Without the Promotional Discount
The total purchase price for all cards was $188.11. The net profit of all cards was $20.06 or 10.7%. By adding in the credit card kickback of $2.71, the adjusted net profit is $22.77 or 12.1% A promotional discount of $6.56 was applied to Queen Marchesa and Lux Cannon. Adding back the promotional discount results in an adjusted total purchase price of $194.67. The adjusted net profit changes to $13.50 or 6.9%. Applying the credit card kickback of $2.71, plus 1.5% of $6.56, the net profit adjusts to $16.3 or 8.4%.
Overall Performance for Sold Cards
The purchase price for only cards sold was $166.64. The total net sales for the group of cards sold was $186.70. This sales total resulted in a net profit of $20.06 or 12.0%. Adding in the $2.39 credit card cash rebate at 1.5% results in a total net profit of $22.45 or 13.5%. This was my maximum return when looking at only cards that were bought and sold. By excluding the credit card kickback and removing the promotional discount of $6.56, the adjusted net profit is $13.50 or 7.8%. Adding in the credit card kickback, plus 1.5% on $6.56, results in an adjusted net profit of 15.98 or 9.2%.
Reflection of Overall Performance
Using the lowest calculated net profit margin of 6.9% (or 8.4% with credit card kickback), the speculation test performance beat the S&P 500 return during the same time period. In addition, I was able to earn enough money from the sales and kickback to cover my initial investment. The kickback of 1.5% helped raise profit margins by offsetting some of the purchasing costs. In totality, net profits and kickback covered the costs of the MTG cards I bought to keep.
One important component I have left out is the consideration of time. I spent many hours researching, buying, shipping, and selling cards. The amount of money I profited was not enough to make even half of minimum wage. If I had bought multiple sets of each card, I may have been able to make enough profit to cover my investment of time. I believe it is important to rationalize the amount of potential profit per hour of time. In the future, I would consider speculating on more expensive cards and purchasing sets that could sell for $25.00 or more on Ebay. Another point to consider is how much time it takes in other investments to produce the same amount of profit. Buying and selling shares of index funds over the Internet through a brokerage firm is less time consuming than handling MTG cards. While it is hard to compare the various investment risks, I do not have to worry about shares of index funds getting lost in the mail.
Market Watch provides statistical performance for the S&P 500 for various time periods. Looking the one year performance for the S&P 500 on July 7th, 2019, the index gained 9.27%. I believe this percentage is important as it sets a general benchmark for holding long-term speculations. If I was purchasing singles to hold for a year, I would only consider cards that had the potential to earn a net profit higher than 9.27%. Otherwise, I would consider investing my money in the S&P 500 index.
Regardless of the speculation test results, I had fun buying and selling MTG cards for a profit. There is a feeling of accomplishment calling a speculation target correctly. I also enjoyed compile data together to determine if a card was a strong speculation target. While my choices were not always right, I did have more success than failure.