Spandex City is a hobby store specializing in comics, collectibles, and trading card games. They are located at 2914-A Mt. Holly-Huntersville Road in Charlotte, NC. The shop doubles as an ice cream parlor; carrying a selection of ice cream flavors for a milkshake, sundae, or cone. When visiting Spandex, you will find a few pinball machines and tabletop play space as well.
Spandex is a great place for local comic enthusiasts to purchase new issues and related memorabilia. They can backorder any available comics for customers who missed a new release. In addition to comics, Spandex sells booster packs, boxes, and related trading card game merchandise. You can buy sealed product from the latest set of Pokémon and Magic: The Gathering.
If you are interested in planning Pokémon or Magic: The Gathering with other players, Spandex offers multiple events each month. You can check their store calendar (link) to see a list of upcoming events by day. The staff at Spandex do a wonderful job running events for participants of all ages.
One of the main reasons I visit Spandex is because of their employees. Their manager, Jeremy, is a great person that goes out of his way to ensure each customer has a positive experience. He remembers customers by name and invites them back for a future visit. The other employees at Spandex follow his lead by offering the same level of customer service. I recommend visiting Spandex for all your super hero and trading card game needs in North Charlotte.
MAGIC: THE GATHERING FINANCE PART 2: Analyzing Speculation Targets and Lowering costs for Collectible Trading Cards
Forecasting price movement of a specific trading card is not a simple task. Business professionals use forecasting models, historical pricing, and qualitative information to make assumptions about the future. Graduate school taught me that a blended forecasting approach is better than using one singular method. While you may not have access to professional forecasting software, there are free sources of information available related to Magic: The Gathering. This information can help you forecast future price movements for MTG card speculating. I am currently running a test on speculating MTG cards. My choices and information can be found in this spreadsheet.
I like using MTG Stocks to see historical pricing movement, recent price spikes, and track speculations. You can create a free account to watch cards, inventory your speculations, and view the most commonly played cards by format. They have nice, interactive graphs showing price movement over time.
Another great resource is MTG Goldfish. They also provide graphs of price movement over time. However, the most important information they offer is spread percentages and buylist prices. I highly encourage you to read this article on MTG Goldfish that explains the metrics available. The format staple lists on MTG Goldfish can help you understand the demand for certain cards across multiple constructed formats. I like reviewing these lists for speculation targets with slow to medium growth potential. MTG Goldfish regularly updates their front page when there are product announcements and spoilers for new cards.
Ebay Sold Listings
Before I purchase a card for speculating, I always check its previous sale prices on Ebay. On Ebay, you can search for a specific card and filter to sold listings. You should check the conditions and previous prices paid to understand a realistic sale price. I compare the sold Ebay pricing with buylists to better understand the spread and demand.
EDHREC is a great source for understanding the general demand of Elder Dragon Highlander (Commander) cards. When speculating on EDH cards, I recommend looking at how many decks a card is currently used in. Also, check if a card is a recommended option for the most popular commanders. For my speculation test, I looked at cards in 8,000 or more decks. You can consider cards in less decks as well.
Another way to understand the demand of a card is to look at vendor buylists. Generally speaking, vendors offer about 50% of a card's market value as a cash payment. For cards higher in demand, they may offer cash prices between 60% and 75% of their market value. For example, Card Kingdom was offering $10.00 cash for a Guilds of Ravnica Watery Grave on April 20th, 2019. Their sale price for the card was $14.99. The cash buylist price is 67% of their retail price. I like cards with high buylist ratios because it gives me the opportunity to liquidate closer to my initial investment amount. In addition, the buylist acts as a safety net against my speculations. I can generally get my investment back as store credit to buy other cards.
The sources I listed are not the only options available on the Internet. There are plenty of other pricing and historical information sources you can use. If you find other accurate information for forecasting future card prices, feel free to try it out.
Analyzing the Data
It is challenging turning quantitative and qualitative data into actionable decisions. I used a few different methods to identify speculation targets. I will cover a couple methods that you can try as well.
Identifying Arbitrage Opportunities
One of the best ways to turn a quick profit is finding arbitrage opportunities. Arbitrage is when you buy an item at one price and immediately sell it for a higher price. The easiest application of this in MTG finance is purchasing cards at a price lower than a vendor's buylist price. You need to account for transaction fees and shipping to determine your overall profit from arbitrage. I took advantage of an arbitrage opportunity by purchasing copies of Queen Marchesa through Google Express. The website offered a 20% discount for first time customers. My final paid price was considerably lower than a vendor's buylist price. Another tactic is digging through bulk boxes at local hobby shops. You may find cards for 0.50 cents that you can buylist or sell for considerably more. Locally, I have found bulk foil boxes more lucrative than bulk rare boxes due to foil multipliers. Try to pick bulk rares and foils in near mint condition to maximize returns.
Cards with buylist spreads around the single percentages are prime targets for speculating. On April 21th, 2019, Chaos Warp 2017 had a spread of 7% and a buylist price high of $2.00. This card is in over 33,000 EDH decks on EDHREC. On TCGPlayer, a vendor was selling a near mint copy for under $2.00 plus $0.76 in shipping. If you can find other cards from this vendor at similarly low prices, you may be able to turn this into an arbitrage opportunity. While Chaos Warp 2017 is inexpensive, applying the same method for cards worth more money can net a larger profit.
Interpreting card price trends is more subjective than spreads or arbitrage opportunities. You need to carefully study demand and pricing shifts to make a decision. Blending qualitative and quantitative information can net better results than strictly looking at historical pricing data. I like finding cards that have bottomed out in price, but recently seen an uptick. I also like cards with upward progression over time (Chaos Warp 2017). This tells me that if the card continues seeing upward momentum, I could turn a profit. I will walk you through my approach for identifying Tithe Taker as a potential short-term speculation.
Identifying a Speculation Target: Tithe Taker
I saw the new Standard Challenger Decks and their deck lists on MTG Goldfish. Historically, card prices included in these decks have crashed. However, these decks did not include all of the cards found in tier one deck lists. One card missing from the United Assault deck is Tithe Taker. As players buy the United Assault deck, they will likely want to pickup the missing pieces found in competitive deck lists. Tithe Taker is an obvious and affordable inclusion. I also saw on MTG Goldfish that the spread was 11% (April 16th, 2019) with a slight uptick in price. If I can fine cheap copies of Tithe Taker, I may be able to sell a few sets at a higher price. Since this is a Standard card, I want to be in and out of it quicker than cards from other formats. I checked TCGPlayer and found copies at or lower than buylist pricing for sale. I was able to capitalize on other low spread prices from a vendor and bought multiple cards. When I made my purchase, the average price of Tithe Taker on April 16, 2019 was $1.86 according to MTG Stocks. The average price of Tithe Taker increased to $2.16 on April 21, 2019. Since these cards were all low price pickups, I will need to sell the Tithe Takers as a set on Ebay or buylist them with other cards to a vendor. I actually buylisted three Tithe Takers to Card Kingdom on 5/1/19 for $5.13. This was a healthy 62% profit of $1.96.
In this example, you can see that I used quantitative and qualitative information to make a decision. The qualitative data was my assumption that new Challenger Decks would drive related card prices upward. The quantitative data consisted of reviewing price trends and buylist spreads. I combined my qualitative assumption with the quantitative data and decided it was a good purchase opportunity. I searched for the lowest price available and bought a few copies.
You should try to minimize your total costs associated with buying and selling MTG cards. Any cost incursions will hurt your profit margins. Optimizing a pool of cards on TCGPlayer can lower your shipping costs. Purchasing enough cards from a vendor to receive free shipping is a good idea as well.
I recommend taking advantage of TCGPlayer kickback events and Ebay promotions. These special events can help lower your overall costs purchasing cards. Another way to earn kickback is through Ebates. Depending on the Ebay category, you can earn up to a 2% cash rebate from MTG related purchases through Ebates.
You may have noticed in my speculation sheet that I added a column for credit card cash back. When possible, I recommend purchasing MTG cards with a credit card that offers a 1.5% cash back. The 1.5% can offset transaction costs or be used for purchasing more MTG cards. Other credit cards with generous points programs are also good options. Just make sure you pay off your monthly balance in full to avoid interest charges.
While my goal is to turn a profit from speculating MTG cards, there is still a risk that I will lose money. I will update the speculation sheet information and review selling transactions at the end of May. It will be interesting to see if I can turn a profit from selling cards over the next month.
*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.*
Magic: The Gathering Finance Part 1: An Introduction and Analytical Test For Speculating on Collectible Trading Cards
Magic: The Gathering finance has become a hot topic among players interested in earning a profit from buying and selling collectible trading cards. Trying to understand a collectibles market driven by supply and demand is not always easy. Thankfully, there are resources available on the Internet to help with navigating the dynamic market. The popularity of MTG finance has risen thanks to MTG finance related podcasts and YouTube channels such as MTG Fast Finance, Cartel Aristocrats, and Alpha Investments. One of the points made by many of the podcast and YouTube personalities is that they understand speculating comes with inherent risk. There are plenty of stories and videos of people trying to invest in MTG products to turn a profit, but come up short.
Speculating involves long and short trading. A long trade is when you buy a trading card today with the intention of selling it later at a higher price. This type of speculation is more common than shorting in MTG finance. You can conceptually make a short bet on a trading card by selling it today with the intention of buying it back later at a lower price. I recently buylisted a copy of Vivien Reid from Core 2019 to an online vendor for $24.00 on March 13, 2019. The current selling price for a near mint copy on April 17, 2019 is $18.99. After free shipping and sales taxes, I will come out ahead if I purchased it back.
In my opinion, one of the issues with the MTG financial market is the imbalance of long and short trading. Think about how many articles and videos you have seen recommending to buy a card instead of selling a card. It is common knowledge when a Standard card will lose value from rotating, but there is much more uncertainty surrounding the timing of a reprint. Often times, people will buy cards that work well with a new reprint by betting that demand for a complete deck will rise. An imbalance in market trading can also give rise to market manipulation. Unfortunately, the MTG market is susceptible to manipulation through card buyouts. It does not take a large sum of money to buy all of the quantities of an older card from online vendors and websites. A buyout will drive up the price of a card to around the last known purchase price. Sometimes, these buyout price changes are temporary and the card will retrace back to a level close to its pre-buyout price. More often than not, the prices will hold at the new price or somewhere between the two. It is even easier for a group of people to work together and target a specific card. I encourage you to be aware of buyouts and how they may impact your decision making.
I am taking on the challenge of understanding the feasibility for an average player to make money on collectible trading cards. My goal is to maximize the cash return from speculating. I plan to use any profits to offset my recent, non-speculative purchases. This multi-post series will use a real-life speculating test to understand the barriers of entry, costs associated with speculating, outlets to sell products, and tactics for spotting trends in the market. I will analyze different steps in the process of buying and selling cards through public transactions across multiple websites. While I believe it is possible to make money speculating, my hypothesis is that the potential profit margin will not be worth the investment of time for the average player.
Speculation Spreadsheet Available
To begin my MTG speculation test, I purchased almost $200 in MTG trading cards from TCGPlayer, Toy Wiz, and Ebay. My speculation choices did not come from any form of paywall related to a website, Patreon, or insider information. I made choices based on information available to anyone with Internet access. I created an Excel spreadsheet to track my buys and costs associated with acquiring different MTG cards. You can download a copy of my speculation spreadsheet here. I encourage you to use it and follow price changes throughout this test.
Understanding Upfront and Selling Costs
Before analyzing my speculation picks, I wanted to understand the upfront costs of acquiring MTG cards. The fees associated with shipping and sales tax greatly impact the profit margins associated with speculating. When purchasing cards over the Internet, I incurred an average of 10% in additional costs between shipping and state sales tax. These costs were spread among the cards in each relevant transaction. Not only do I have to sell these cards later at a higher price, but I also have to cover the 10% fee hurdle.
Another cost incurred was my time to research and buy MTG cards. I spent a total of four hours researching and finding the lowest prices available. There is an opportunity cost of spending time purchasing cards instead of working another job or meeting up with friends. Opportunity costs exist in many forms of financial investing. When you decide to save money for retirement instead of spending it today, you are making an opportunity cost decision. This test will mainly focus on the cost of time versus potential profits in sales dollars. How much money do you expect to make for investing X hours of time on speculating? This is a question you should ask yourself before investing in MTG cards.
The third cost associated with speculating is when you sell a card. While different selling platforms have various fees, Ebay charges a 10% to 12% fee for sold listings. In addition, PayPal charges a $0.29 base fee plus 2.9% of the transaction. While the Paypal fees can vary based on your account and sales volume, I am using fees that an average person would pay. Shipping an item with a stamp, hard case, and envelop will run you 55 cents plus materials costs. If you need to use a padded envelop with tracking, PayPal offers a discounted rate starting at $2.67. I added all of these costs together and came to an average of 25% of my final sale price per card. This percentage can fluctuate depending on the sale price of a card and distance it needs to be shipped. If you sell a card at $50, the fees will be a lower percentage than another card sold for $20 assuming both were shipped with tracking and no insurance. I found that selling a card for $7.50 on Ebay is the lowest sale I can make to mail with a stamp. Anything lower than $7.50 will cost me higher than 25% of the final sale price in fees. I would be better off pooling multiple copies of a card together as one transaction, buylisting, or selling locally. As for tracking, my lowest sale price for Ebay is $25. I should only mail cards sold over $25 with tracking and a padded envelop. One other risk of selling online is shrinkage from becoming lost in the mail or buyer discrepancies. At a minimum, you should expect a loss of 1% of your total transactions. For example, if you average $20 per card across 100 transactions, you will incur $20 in unforeseen losses. Keep in mind that shrinkage affects your bottom line profit margins.
My overall transaction costs were estimated at 35% of the total MTG card costs when buying and selling online. These costs decrease when using a vendor buylist, but you should expect a lower cash offer than if you sold cards directly to a buyer. Also, I did not add in a cost for the time it takes to research, purchase, or sell cards. You should try to find ways to lower transaction costs by receiving free shipping from online orders, buying cards locally from other people, and taking advantage of discount promotions whenever possible.
In part 2, I will explain the benchmarks surrounding my card choices and the expected hold periods. I will also touch on different ways to lower transaction costs and purchase prices.
*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.*