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.
According to www.dictionary.com, "a self-fulfilling prophecy is a prediction that causes itself to be true due to the behavior (including the act of predicting it) of the believer." I have noticed alarming increases in card price movement after Internet personalities and websites share Magic: The Gathering speculations publicly. An article on Quiet Speculation, by Sigmund Ausfresser, highlighted the dangers of buyouts and price retracing. My takeaway from his article is that artificial demand, fueled by hype, will not hold price increases in the long-run. A recent MTG finance related YouTube video published by The Mana Source has received over 77,000 views since June 11, 2019. The suggested MTG speculations were not all original ideas. In fact, multiple cards in the video were previously recommended by other individuals. Following the release of the video, I researched price movements for the Return to Ravnica Supreme Verdict and Core 2019 Scapeshift MTG cards. I wanted to see if these card prices were affected each time an online article or video suggested others to buy them. Information from MTG Stocks was used to gather historical data on average price changes for Supreme Verdict and Scapeshift.
Return to Ravnica Supreme Verdict
On May 6, 2019, Travis Allen recommended Supreme Verdict in his weekly article at MTG Price. Allen also co-hosts the MTG Fast Finance podcast. The average price of Supreme Verdict on May 6th, 2019 was $4.80. Two days later, Rogue Deckbuilder's Rogue Roundup #14 also recommended Supreme Verdict as a speculation. His video had over 3,600 views as of June 11th, 2019. The average price of Supreme Verdict remained at $4.80 on May 13th, 2019. Over the next week, the average price increased to $4.93. On May, 26th, 2019, The Mana Source published a video highlighting Supreme Verdict as one of the 10 best cards to buy now. The next day, the average price of Supreme Verdict jumped to $5.06.
One event worth noting is the Star City Games Modern Open in Louisville, KY held over Memorial Day weekend. Two copies of Supreme Verdict were in a Blue/White Control top 8 deck list for the Modern Open and Classic. This deck has been a top contender for some time and commonly plays two Supreme Verdict. In addition, Modern Horizons spoiler season was happening before and after the event. It was common knowledge that the set could dramatically change the Modern competitive landscape. Modern players were waiting for the full spoilers of Modern Horizons before making changes to existing decks. While the results of a large event and spoilers can greatly affect card prices, I believe these events had a small impact on the price of Supreme Verdict.
By June 3rd, 2019, the price of Supreme Verdict increased to $5.49. Later that week on June 4th, 2019, Rogue Deckbuilder published a video where he agreed with The Mana Source that Supreme Verdict was a good speculation target. Prices continued to climb to the current average price of $5.68 as of June 10th, 2019. The average market price for Supreme Verdict increased 18.3% in 5 weeks. Within a week following The Mana Source's video, the average price of Supreme Verdict jumped 12.9% out of the overall 18.3% average price increase during the noted time period.
Return to Ravnica Supreme Verdict Weekly Average Price Movements 5/6/19 - 6/10/19
Core 2019 Scapeshift
On April 11th, 2019, an article published by Quiet Speculation highlighted Core 2019 Scapeshift as a speculation target. The average price for Scapeshift on April 8th, 2019 was $8.24. By the following Monday, the average price increased 8.6% to $8.95. A few days later on April 20th, 2019, a Reddit user posted about Scapeshift on the MTGFinance subreddit. They claimed to have purchased multiple copies of Scapeshift, specifically the Morningtide version, and asked others for input. The post attracted 5 comments and 15 upvotes. On April 22nd, 2019, the average price of Scapeshift had increased again to $9.50. I was unable to find any other mention of the card as a speculation target between April 21st, 2019 and May 18th, 2019. However, the average price continued increasing to $10.54 on May 13th, 2019. By May 20th, 2019, the average price of Scapeshift was $11.14 or a 35.2% increase in 6 weeks.
During Memorial Day weekend, multiple copies of Scapeshift appeared in top 8 decks for the Star City Games Louisville Modern Open and Classic. I believe these event results had a minor impact on the price of Scapeshift for the same reasons mentioned about Supreme Verdict.
The Mana Source published a video recommending Scapeshift as a speculation target on May 26th, 2019. The following day, the average price of Scapeshift was $11.43. Nine days later, Rogue Deckbuilder published his video also agreeing with The Mana Source's recommendation for Scapeshift. As of June 10th, 2019, the price of Scapeshift was $14.43 or a 74.8% increase in 9 weeks. It is also worth noting that the average price of Scapeshift increased 36.0% during the 15 days following The Mana Source’s video.
One theory for Scapeshift maintaining an upward price movement between April 21st, 2019 and May 18th, 2019 is if Modern Horizons spoiler cards were leaked early. Content creators and online personalities received spoiler cards for Modern Horizons before their assigned reveal date. If this information was shared privately, it could give someone an advantage on buying copies of a relevant or synergistic card. One theoretical example could be leaked information regarding Wrenn and Six, a Planeswalker revealed on May 25, 2019. The card has some synergy with Scapeshift. Individuals with early knowledge of Wrenn and Six could buy copies of Scapeshift before new demand drives up the price.
Core 2019 Scapeshift weekly Average Price Movements 4/8/19 - 6/10/19
Analyzing and Interpreting the Data
Both Supreme Verdict and Scapeshift have some inherent demand as competitive MTG cards. Each card is used in established Modern decks. In addition, the cards see play in the Elder Dragon Highlander multiplayer format. Prices will naturally change over time based on player demand and speculation. Players do purchase cards found in top deck lists after major tournaments such as Magic Fests, Mythic Championships, and Star City Games Opens. However, the dramatic price increases over a short period of time appear to be driven by additional factors.
What stands out to me most about the historical price movement is the velocity of price increases. The largest average price increases for both cards from one week to the next occurred after The Mana Source published a speculation video. While I am unable to know the amount of people that read written articles, it is clear how many views a YouTube video receives. If 0.5% of the 77,000 views for The Mana Source’s video resulted in 1 purchased copy of Scapeshift, that would equate to 385 copies leaving the market. On June 13th, 2019, TCGPlayer had 252 copies of Scapeshift for sale across all sets and editions. If all 252 copies were bought on TCGPlayer, regardless of price, a triggered price spike would likely occur. TCGPlayer’s copies only account for 65.5% of the demand for 385 copies. Players would have to search other online vendors for any remaining copies to purchase. I believe this simple example illustrates the amount of influence a YouTube channel can have on MTG Finance when they amass as many subscribers as The Mana Source.
Rogue Deckbuilder’s videos received thousands of views as well. Based on the price trends, I believe that a non-zero number of viewers purchase his recommended speculations. The same logic can be applied to the articles found on MTG Price and Quiet Speculation. Any time someone with an audience publishes their speculation targets, there is a chance that a viewer will purchase a recommended card. The sample size presented is small as I highlight only two examples of card price movements. However, the price movement related to online videos and articles is compelling. My conclusion is that as audiences grow for an individual's MTG related financial content, there is a possibility that a self-fulfilling prophecy could occur.
Risks Associated with Self-Fulfilling Content
There are risks associated with following the advice given by others regarding speculation targets. As seen in the price movements for Supreme Verdict and Scapeshift, the individuals buying cards after information becomes public risk paying an inflated market price. Those who already own cards prior to a price spike have the best opportunity to maximize profits. If any of the individuals that published content surrounding the mentioned cards held copies prior to Memorial Day, they would have made double-digit profit margins selling copies in June. In addition, they would likely have the first chance to sell or buylist at the highest price because of already owning the cards. Other individuals that buy recommended speculations from online vendors must wait for their cards to arrive in the mail or visit a local hobby store. I personally assume any time a content creator or individual publicly recommends an MTG speculation target, they already own multiple copies of that card and want to see it increase in value.
There is additional risk for buying cards after a price spike due to price retracing. The individuals who bought and sold the cards last have a higher likelihood of losing money. I touched on price retracing surrounding the buyout of Queen Marchesa in a previous article. The average market price for the card prior to its buyout was $19.99. After the buyout, the average price moved to $38.97 on April 8th, 2019. Any individuals who already owned the card could have sold it for a healthy profit or buylisted to Card Kingdom for $24.00. As of June 13th, 2019, the average market price of Queen Marchesa is $28.08 with a buylist price of $12.00. When factoring 20% of the sale price as fees and shipping, the net price for selling a Queen Marchesa online now is $22.46. This means that any copies purchased for the average market price after April 6, 2019 will lose money when sold today.
*The information in this article is of my own knowledge and opinion. It is meant for informational purposes only. I am not a registered financial professional or trying to act as one.*
Card rarities in Magic: The Gathering comprise of common, uncommon, rare, and mythic rare. Typically, each pack of cards contains 10 commons, 3 uncommons, and 1 rare or mythic rare. Over time, players accumulate piles of commons and uncommons that are deemed unplayable in most formats of the game. These piles of extra cards are called bulk cards. Players often sell local gaming stores (LGS) a mix of 1,000 commons and uncommons (bulk) for $3.00 to $5.00 in store credit or cash. An LGS will either organize the bulk cards for single selling or re-sell it at a higher price. For example, one of my LGS buys 1,000 bulk cards for $3.00 in store credit. They will then sell a bundle box quantity (about 550 cards) of unsorted bulk for $5.00.
Why Pick Bulk?
Sifting through unsorted bulk cards is a time consuming process. However, there is some incentive for players to look through boxes of unorganized cards. An LGS will buy a collection of cards from a player, but not have the time to go through every box of bulk cards. These unchecked boxes can end up on shelves for players to look through and purchase. Even though these boxes were labeled as bulk, there are many commons and uncommons in MTG worth multiple dollars each. My favorite website to see valuable bulk cards by set is MTG Dawnglare. You can search by format and MTG set to find commons and uncommons worth a $1.00 or more. Newer can also contain valuable cards that players often overlook. For example, Reliquary Tower from Core 2019 sell for about $3.00 each. You can buylist them to a vendor for $1.50 each. Finding just four copies of Reliquary Tower in a bulk box will offset the $5.00 spent on 546 other cards. A few good pulls from an unsorted box will allow you to essentially get the rest of the cards for free. Any value gained from the remaining bulk cards can net a profit.
Beyond earning a profit, some players pick bulk because they want to build their card collection. It is much cheaper paying $0.01 per card in the example above than buying single commons and uncommons for $0.10 or more. Your time spent picking bulk can save money by acquiring cards you want at a discount. Players interested in the Pauper or Elder Dragon Highlander (EDH) formats may find bulk picking a great opportunity to save money.
My Tips for Effective Bulk Picking
1. Knowledge of the Most Played Commons and Uncommons in Constructed Formats
Part of successfully picking bulk is knowing what you should pull out of a card box. The most played cards are usually worth more than others of similar rarities. A great place to start is with MTGGoldfish's format staple lists. To maximize value, I would focus on the Modern and Legacy card lists. I have found better returns on older cards than most Standard legal commons and uncommons.
2. Knowledge of the Most Played EDH Cards by Color
EDH is a popular format with a very large card pool. EDHREC has top played card lists by color, artifact, and land. I recommend grabbing guild signets, tri-color lands, and strong blue cards as a starting point. You should also familiarize yourself with the list of top commanders. This list will help you focus on gold cards that share multiple colors. Currently, I have found Gruul (red and green) as the least popular color combination.
3. Reference a Buylist or MTG Dawnglare When Picking Bulk
It is very helpful to pull up a vendor buylist or MTG Dawnglare when picking through bulk. I like to sort prices by MTG set on vendor buylists. This helps me focus on cards that are worth enough money to sell. I try to take cards that will generate $0.08 or higher in store credit. Otherwise, I believe the return is not worth the time and effort after shipping costs. In addition, I use MTG Dawnglare to quickly see a list of valuable cards by set. If I come across a set with no commons and uncommons worth over $1.00, I will skip it entirely. For example, Theros only has Burnished Hart and Grey Merchant of Asphodel that I would consider pulling. Instead of spending time going through a box of Theros, I will just skip it and move on to another set. I also use this strategy for sets that have valuable cards in one color. Avacyn Restored has one chase uncommon called Blood Artist. If I come across this set, I will only look at the black cards in it.
4. Focus on Uncommon Rarity Symbols
Every MTG set beginning with Exodus uses colored rarity set symbols on cards. Commons cards are black and uncommon cards are silver. When sorting cards, I recommend looking for silver uncommon cards. I generally skip through all commons unless I recognize the artwork or the card name. The reason for doing this is because very few common cards hold value. It is a waste of time trying to look at every single card in a box. An exception to this rule is when I come across old sets like Zendikar, Fifth Dawn, and Dissension. Common cards can be worth a few dollars from these sets. I will also take my time looking through Modern Masters sets.
5. Make Piles of Cards From Sets Without Rarity Symbols
It is hard for most players to remember rarities of cards from sets like Fourth Edition, Ice Age, and Visions. These sets do not contain rarity symbols on the cards. Some players overlook this trait and put rare cards in their bulk boxes. I strongly encourage you to set cards aside from these sets and check their values. Once you get a good sized stack, you can quickly reference a vendor buylist or MTG Dawnglare. I often find valuable cards, including Reserved List cards, in bulk boxes that are from sets prior to Exodus.
6. Take Cards You Want to Play for Personal Use
If you enjoy playing MTG and want to build a personal collection, you should take cards to keep as well. I personally take cards for EDH and older formats that are commonly played. When I recently came across a bulk box of Zendikar commons, I set aside copies of Expedition Map and Journey to Nowhere for personal use. I keep around 15% of my bulk box pulls for playing in various MTG formats.
7. Know Shipping Costs When Buylisting Bulk to Online Vendors
You should have a good gauge for the cost of mailing bulk cards to online vendors. A Reddit user reminded me that USPS sells small flat rate Priority Mail boxes for $7.90 shipped. These boxes hold around 400 cards regardless of weight. You can send an entire box of bulk across the country to an online vendor for about $0.02 a card. I could have saved money using this method with my last bulk buylist of 300 cards. I mailed a bundle box across the United States as a First Class package for $15.00. The price per card to mail was $0.05. I would have made a much higher profit margin had I thought about other shipping alternatives.
Picking bulk can be a profitable and rewarding way to build your MTG card collection. I believe setting thresholds and knowing what to pull will improve your efficiency and profitability. Keep in mind that your time has a value attached to it. Some may find picking bulk to be worth the effort to supplement MTG spending. Others may like the experience of finding valuable cards in a box of 3,000 cards. I personally enjoy looking through old cards and finding new options for EDH decks. Whatever your reason is for looking though bulk, I hope my tips improve your next picking experience.