Blast from the Past – Quiet Speculation: Doubling Season

(Editor’s Note: Article originally published on June 25, 2010. With all of the hype for speculation for the upcoming Extended season, Kelly’s original article is worth reading again. How have these predictions stood up to the test of time? You be the judge. -Chris)

Everyone’s been begging me to write about what I’ve been doing since the changes to Extended were announced, and up until this point, I’ve been busy actually swinging trades! The announcement came unexpectedly, and along with some Legacy changes, totally shook up the Extended format, which we anticipate will effect the Winter PTQ season. I was fortunate enough not to own ‘Goyfs or Shock Lands or anything else that was about to take a nosedive, but I did make a few mistakes when making my purchases. Thankfully, I made enough smart trades to make up for it.

I keep a spreadsheet, like any normal egghead would. It’s nothing fancy; it just lists the cards I bought, along with quantity, buy price, sell price, and other metrics (like price targets, notes, margin, etc.). I encourage anyone who speculates to do the same. It keeps your head straight and keeps things in perspective. The most important number is the “total” margin. If you focus on the transactions themselves you will become discouraged. Do I feel particularly good that I lost money on Ancestral Visions because I goofed? No. But when I look at my gross margin and see that it basically hasn’t changed, i don’t much care. It’s good to not get wrapped up in losses, as long as you stay abreast of your overall numbers.

I want to go through my list and talk about what I’ve bought, sold and why. I buy my cards from a select set of vendors online who I know to be reliable and deliver 100% of the time. I also keep tabs on when and how they update their prices, so when there are big spikes in the market, I know who will be quickest to update and honor their prices. I vastly prefer to sell to bots since the process is automated and instantaneous. There are times when a non-automated buyer will have a good price and I will sell to them, but bots are convenient and efficient. In many cases, saving time is worth more than making a few extra tickets.

I’m willing to be very transparent with my data here, in the name of journalism. This is a sample of my spreadsheet from when I did my Lorwyn-Shadowmoor buys in the wake of the Extended news. The categories are as follows.

| QTYp: Quantity Purchased | $Buy: Purchase Price (per card)| TargetPrice: Twice the $Buy* | $Spent: Total Expenditure | QTYs: Quantity Sold | $Sell: Sell Price (per card) | $Margin: Total Profit | %Margin: Percent Profit |

Card QTYp
Thoughtseize 4 $3.85 $7.70 $15.4 4 8 $16.6 107.79%
Bitterblossom 4 $8.50 $17.00 $34 4 19 $42 123.53%
Cryptic Command 4 $4.50 $9.00 $18 4 13.5 $36 200.00%
Mutavault 4 $7.00 $14.00 $28 4 14.1 $28.4 101.43%
Sunken Ruins 4 $2.75 $5.50 $11 4 7 $17 154.55%
Mistbind Clique 2 0.975 $1.95 1.95 2 2.5 3.05 156.41%
Mutavault 3 $6.00 $12.00 $18 3 14.1 $24.3 135.00%
Rugged Prairie 4 $1.75 $3.50 $7 4 2.75 $4 57.14%
Figure of Destiny 4 7 $14.00 28 4 11.5 18 64.29%
Twilight Mire 4 $2.50 $5.00 $10 4 4 $6 60.00%
Fire-Lit Thicket 4 0.9 $1.80 3.6 4 2 4.4 122.22%
Reveillark 4 1.15 $2.30 4.6 4 2.5 5.4 117.39%
Swans of Bryn Argoll 4 0.8 $1.60 3.2 4 1.1 1.2 37.50%
Windbrisk Heights 4 0.5 $1.00 2 4 2 6 300.00%
Vendilion Clique 4 5.5 $11.00 22 4 10 18 81.82%
Ancestral Vision 4 1.3 $2.60 5.2 4 1.15 -0.6 -11.54%
Murmuring Bosk 4 0.7 $1.40 2.8 4 2 5.2 185.71%
Mystic Gate 4 1.75 $3.50 7 4 3 5 71.43%
Wooded Bastion 4 0.9 $1.80 3.6 4 1.5 2.4 66.67%
TOTAL 225.35 242.35 107.54%

Thoughtseize was an easy flip. At just under $4, I knew it had legs to go to 10+. This was my first flip, and I have to admit I kind of get “the fear” when I make big trades like this. I bought FAR more than this little list, but these are some of the things I’ve already sold out of. I am very risk-averse, and if I can aim to hit my target of +100% every time, I am happy. There are cases when I have specific information or a specific hypothesis that leads me to believe a card can go higher, but to ask for more than a double-up is, in most cases, greedier than necessary. As demonstrated above, I made 108% on the Thoughtseize flip, which means that I’m above target already.

Bitterblossom was also an easy call, along with Cryptic Command. Blossom put over $40 in my pocket with 123% profit, and Cryptic Command made me slightly less money but with half the amount invested. I should note here that I was conservative with buying more than 4 copies of any one card unless it was super-cheap. That’s because I felt safer diversifying my assets, in case I made a major error predicting the market. While I am very confident in my ability to predict prices, it is prudent to ensure that you don’t get caught losing money on a bad deal. To that end, I tried to limit myself to 4 of a card. It is also easier to move a playset than it is to move 20, and less risk. I am happy to just double up every time, so as long as I can just do that, I have no real need to hit 300%+ home runs.

Margin-wise, Windbrisk Heights was my best trade by percentage. 300% margin is just filthy, but it’s tempered by the fact that I only made 6 dollars on 2. I have another playset that will flip for at least 2 each, so I’m pretty happy to make back my money plus $12 for almost no work whatsoever. That’s the key to this gig; while each transaction might not be a blockbuster, you will grind out the advantage over the long haul. I treat my MTGO bankroll like a brokerage account, and I don’t dip into it to play or anything. I even have a separate account for “business” and pleasure (where I keep my Pauper decks!).

In terms of sheer profitability, my best trade was undoubtably the $42 I made from Bitterblossom. $42 is not an insignificant amount of money, and considering that people in this part of the country are lucky to make $10 an hour, I feel like I’m above the curve! Unfortunately, deals like this don’t come along very often, but when they do, I am always sure to have the bankroll to take full advantage.

Bankroll management, just like in poker, is very important. I make it a personal habit to never extend more than 50% of my bankroll, just in case news like this breaks when I’m heavily committed elsewhere. I was fortunate to have cashed out almost everything I owned already in previous trades, but just to be safe I made sure to take all the quick flips I could. I don’t like being illiquid, and being forced to sell at the “wrong” time is the absolute worst.

You can see a few trades where I took a loss, or took well under 100%. The trades where I take a loss (namely Ancestral Visions) were probably not necessary, but I just didn’t want to hold them forever. I probably ought to have, but it’s a mistake that will cost me almost nothing either way. I can always just re-buy Visions if I have the urge. Selling Rugged Prairie at +57% was a conscious decision to free up money and lock in a profit. Not all the Filter Lands shot up in price as I expected, and 50% is still a very good margin for most retail operations, and they have overhead!

One of the reasons that I took some suboptimal deals is because I understand the timeframe of this format. When the news broke, cards shot up. Some are still climbing, like Reflecting Pool. I could easily take 50% on them right now ($6 to $9), but I want to squeeze 75% or more out. They’re going to be key to the format, so I don’t mind holding them a while. Once people realize Extended isn’t relevant for another 3+ months, prices will cool down a bit. If they cool enough, we might be able to do this entire dance all over again! Regardless, in 3 months I’ll want my money committed to Zendikar cards in anticipation of Shards leaving Standard, so I will take 50% guaranteed now rather than a risky 100% later.

Hopefully this sheds some light into how and why I do the trades I do. It’s all part of a bigger picture, so don’t think that every little trade is life-or-death. Keeping a ledger of what you’re doing helps with the big picture thinking. I’m really happy with the trades I’ve done so far, and I’m nowhere near done yet! I’m going to be looking at Urza’s Legacy, which is around the corner, and seeing if any new cards will shake up MTGO at all. See you guys in a few!

  1. This was very helpful, although I don’t have many tickets now with which to invest, I did buy 4 promo condemns for .8 total, upon seeing that they would be reprinted in M11. I assume it will take path to exile’s place, but since it’s been reprinted many times I don’t expect the value to be as high. however, what do you think of such a purchase?

  2. The note about bankroll management is the most important part of this column for speculators, second being to keep a ledger. Both are excellent points.

    Unfortunately I was off the grid last weekend and missed this party. Next chance for decent speculation looks like reacting to (or predicting) the first extended metagame shift – especially if the Fae dominate or at least prove popular.

  3. any piticular reason you didnt invest in secluded glens? Or scion of Oona?

    I personally emptied the 43 tics i had on 2 cryptic commands 6 mistbind cliques 4 scions 18 secluded glens 4 pools and walked away with 130+ tics from it.

    So granted i did exactly what you suggest not to but it also points out when you’re pretty sure on a card or a deck that’s going to rise that it can also payoff.(i’ll admit or go horribally wrong but in this case does ANYONE expect fae to NOT have a major turnout?)

  4. im trying to decide if i should sell a few spares (blossom, v clique, sunken ruins, cryptic) and get merfolk cards. any advice lord kelly?

  5. I actually did invest in Glens and Scions. I didn’t list everything on that list :) I made great money on both actually!

    Chris, I’m not sure what they’ll be at when you go to sell, but you also play rather than just trade (I don’t play at all!) I’d try to get an easy Double-Up on everything above a play-set, rather than get greedy.

  6. This has probably been asked several times before, but how is it possible to keep track on what season is about to become active (standard, ext and legacy)?
    I’ve been told about, but it does not tell what format is going to be played at the tournament.

  7. “I bought FAR more than this little list, but these are some of the things I’ve already sold out of. I am very risk-averse, and if I can aim to hit my target of +100% every time, I am happy”

    This is what a lot of my stock trading buddies do. They will brag about all their good trades while failing to mention their bad trades. Were the ones you did not mention profitable also?

  8. I am pretty sure that all speculation includes lemons. I for my part usually don’t buy tons of the same card but even with small scale trading such as “Rags to Riches” it became pretty clear to me that not everything can be a hit. Would be to easy then I guess.
    Heath has a good point though. People often tend to “forget” their negative experience and remember the lucky hits.

  9. Thats a good Idea to have a target price. I figured you just watch the prices go up and as soon as they slowed down or stopped going up you sold them.