So you want to try MTG finance?
Great!
One of the first things you will have to decide is whether you want to buy and sell cards on MTGO or in paper Magic.
Today's article will go over the differences between the two markets.
Before we go into that, we need to first talk briefly about what creates a price.
Prices are determined by supply and demand. In other words, price is determined by how many of a card are available and how badly / how many people want it.
Differences between the online and paper markets will boil down to differences in the supply and demand between these markets. So what are these differences?
Supply:
The paper market is, from my understanding, orders of magnitude (at least 10 times) larger than the online market.
The paper supply is also more heavily affected by the quality of a set. For example:
In Khans of Tarkir, the fetchlands were worth a lot of money and therefore a lot of KTK packs were opened. Online, this effect is much less pronounced because the value of opening a pack is so rarely anywhere near the cost of buying a pack.
This is because the vast majority of packs on MTGO are used to enter drafts or sealed events.
Key Idea #1: the supply of the MTGO marketplace is highly related to the number of limited events that are firing for that set.
Key Idea #2: the supply of the paper marketplace is highly related to the quality of the set.
A final consideration is that if MTGO set prices ever get low enough, they will be redeemed for paper sets. This maintains a sort of price floor for the total value of a full set on MTGO.
Whenever a set is redeemed, it shrinks the supply on MTGO and increases the supply in paper.
Demand:
There are some very pronounced differences between the demand online and the demand in paper.
The vast majority of demand on MTGO comes from highly competitive constructed players.
If a card is not in a tier 1 or tier 2 deck, it is likely worthless!
The demand in paper is very different. Cards can increase in value based off of non-competitive formats like EDH or Frontier. In fact, the vast majority of Magic players are casual!
Key Idea #3: the demand of the MTGO marketplace is highly related to constructed playability.
Key Idea #4: the demand of the paper marketplace is highly related to both constructed playability and casual appeal.
Transactions Costs:
A key difference in MTG finance between online and paper comes down to transactions costs.
Transactions costs are all of the extra costs that go into buying and then selling a card.
For example: Let's say you buy a card at $5 and want to sell it when the price goes to $10.
Online, you will pay 5 tix for the card and then sell it for around 9.5 tix to a bot. You will make 4.5 tix profit.
In paper, you will have to pay shipping and/or pay a percentage based fee for whatever platform you are selling the card on. You will probably buy the card for around $5 and sell it for around $10 with a fee of about $2. Your profit will be about $3.
This is obviously an important idea to keep in mind. On MTGO, for example, you can make money buying cards for 0.01 tix and selling them for 0.50. You can't do this in paper!
Key Idea #5: the transactions costs on MTGO are much lower than in paper.
Market Depth:
If the main advantage of the online marketplace is transactions costs, the main advantage of the paper market is its depth.
For example:
Let's say you have bought 300 copies of a card for $5. The price is now $10 and you want to sell.
If you did it online, the price would drop to maybe 5 tix by the time you sold every copy. Let's say the average price you sell at is 7 tix.
You have made a profit of about 600 tix (2 tix per 300 copies).
Now imagine the same scenario in paper. The price might drop only $1 by the time you sold all 300 copies. Let's say you sold them for an average of $9.50. Let's add on $2 dollars transactions costs for shipping and fees.
In total you made $750 dollars ($2.50 per 300 copies).
So as you can see, there is a real advantage to doing big speculation in paper because the market is much bigger and will react more slowly to one individual's actions.
Key Idea #6: the market depth is much larger in paper
That's it for this article!
You should now know some of the big differences between speculating in the online and paper markets. I personally like to stick to MTGO, but for people with good reads on the paper market or with really big bank rolls it makes sense to go paper!
Thanks for reading!
-Luca
[[published_at: 16 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: Learn the differences between specs in paper and online]]
[[preview_image: http://gatherer.wizards.com/Handlers/Image.ashx?multiverseid=5705&type=card]]
Showing posts with label fundamentals. Show all posts
Showing posts with label fundamentals. Show all posts
Thursday, February 16, 2017
Sunday, February 12, 2017
Finance Fundamentals #2
In the last article, we talked about why most MTG finance articles are basically useless.
Ready to read another MTG finance article?
Great!
Today we are going to talk about how to make money through MTG finance. I'll give you a hint: it's not going to be easy.
There is a simple proof for why.
If it was easy, everyone would do it.
So let's get back to the main topic: how to make money.
Making money through MTG finance will require a high level of specialization. In other words, you will need focus!
Trust me. In the beginning, I dabbled with a little bit of this and a little bit of that. Extremely unfocused. I had very little success and made a lot of big mistakes.
Over time, I kept sharpening my focus, and it has been vital to my success.
So what do I mean by focus? What do I mean by specialization?
Warren Buffet refers to this idea as "building your moat."
[[card: Moat | set: MED]]
What he means is building up a skill through some personal competitive advantage so that no one can touch you.
For example:
I played soccer starting when I was 4 years old. I kept playing all year round until I was 16.
Now, let's say someone wanted to learn soccer. No matter how hard they trained, they would never be able to compete with me unless they trained for a decade straight.
This is a moat.
Don't be too discouraged just yet. The moats you will need to build for MTG finance will not take nearly as long.
So what does a moat look like for Magic?
Let's take my friend Kyle.
Kyle has been playing MTG forever. He has also been working at an LGS for at least 5 years.
He looks at prices every day and is an excellent player in formats such as EDH, Legacy, and Modern.
As it turns out, he is brilliant at investing in MTG, but he sticks to what he knows.
Does he try investing in online cards? No.
Does he try investing in Standard? No.
He has a deep understanding of the paper market, specifically for older formats.
This is the key to success. Stick to what you know.
For me, I stick to Standard specs on MTGO. That's it! I play a ton of Standard all the time and I've been messing around with the MTGO market for over two years.
I'm always tempted to try something new, and when I do I generally regret it!
So what do you know a lot about?
Maybe you work at an LGS and have a really good understanding of what casual players are looking for.
Maybe you know the ins and outs of your pet modern deck.
Maybe you are an MTGO grinder.
Maybe you play a ton of EDH.
When new cards come out, or there is otherwise a potential for a shift in prices, think about what you know that most other Magic players don't.
Then act on it.
-Luca
facebook.com/luca.ashok
[[published_at: 12 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: Learn the one key idea behind making money in MTG finance.]]
[[preview_image: https://canadianhighlander.files.wordpress.com/2014/01/moat.jpg]]
MTG Fundamentals #2 Resources
In the last article, we talked about goals in Magic. No matter what goals you have, you will need to understand how to win a single game. To talk about winning a game of Magic, we need to understand resources.
Magic is a game of resources.
What is a resource? I will define a resource as a quantifiable asset. (Something you have that can be counted.) Magic is a game of resources because whenever you make a decision, you are trading off between your different resources.
The options here are to either crack my vessel, cast harnessed lightning, or do nothing. Each option will affect my resources differently (as well as my opponent's).
The ultimate resource is the ability to continue playing the game.
You can think of it like the King in Chess. You lose this resource and you lose the game. Usually, it's when you run out of life.
If you are at 2 life and your opponent attacks with [[card_link: Goblin Guide ]], you can in essence trade your [[card_link: Lightning Bolt ]] for the ability to continue playing the game.
[[card: Lightning Bolt | set: M10]] [[card: Goblin Guide | set: ZEN]]
So what kinds of resources are there? Can we list them all?
I would hesitate to create an all-encompassing model for resources. Almost anything you can count can be thought of as a resource. Life, cards, lands or even something as specific as "the number of [[card_link: Void Shatter ]] left in a deck" can be considered resources.
[[card: Void Shatter | set: OGW]]
But which resources are useful to think about?
Time, or "tempo," is often referred to by Magic players, and for good reason. Many times in a game of Magic, you will purposefully trade resources to either slow the game down or to speed it up. At any moment in a game between two players, one will prefer extending the game and one will prefer shortening it. Understanding this idea is at the crux of "Who's the Beatdown."
Cards, or "card advantage" is another resource that is extremely useful to think about. Often times a game of Magic will end because one player has run out of cards to play from their hand. This is very roughly the concept of "card advantage."
Tempo and card advantage are the two most cited resources in Magic. For newer players, it will help to frame decisions through these three questions:
1. "Will this play help me do things in a timely manner?"
2. "Will this play help me get full value out of my cards?"
3. "How important in this game/matchup is timeliness versus getting full value?"
[[card: Ruinous Path | set: BFZ]]
This is a trade-off that comes up very often in Magic. With [[card_link: Ruinous Path ]], for example, you can choose to cast it for its regular cost (more timely) or for its awaken cost (full value).
Most experienced players, however, already understand tempo and card advantage very well. To these players, I suggest considering the full spectrum of resources and thinking about their relative importance. To a delirium deck, for example, the number of card types in its graveyard is a highly important resource. Similarly, to a vehicles deck, the number of artifacts in play is a highly important resource.
[[card: Ishkanah, Grafwidow | set: EMN]] [[card: Toolcraft Exemplar | set: KLD]]
Magic is a game of resources. In this article, I covered the concept of resources and introduced the most important resource: the ability to continue playing the game. In the next article, I will discuss how we use resources to preserve our most important resource or to remove our opponent's.
-Luca
[[published_at: 12 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: Learn what we mean when we say Magic is a game of resources.]]
[[preview_image: http://magic.wizards.com/sites/mtg/files/image_legacy_migration/images/magic/daily/li/li228_0u87kyj62f.jpg]]
Magic is a game of resources.
What is a resource? I will define a resource as a quantifiable asset. (Something you have that can be counted.) Magic is a game of resources because whenever you make a decision, you are trading off between your different resources.
The options here are to either crack my vessel, cast harnessed lightning, or do nothing. Each option will affect my resources differently (as well as my opponent's).
The ultimate resource is the ability to continue playing the game.
You can think of it like the King in Chess. You lose this resource and you lose the game. Usually, it's when you run out of life.
If you are at 2 life and your opponent attacks with [[card_link: Goblin Guide ]], you can in essence trade your [[card_link: Lightning Bolt ]] for the ability to continue playing the game.
[[card: Lightning Bolt | set: M10]] [[card: Goblin Guide | set: ZEN]]
So what kinds of resources are there? Can we list them all?
I would hesitate to create an all-encompassing model for resources. Almost anything you can count can be thought of as a resource. Life, cards, lands or even something as specific as "the number of [[card_link: Void Shatter ]] left in a deck" can be considered resources.
[[card: Void Shatter | set: OGW]]
But which resources are useful to think about?
Time, or "tempo," is often referred to by Magic players, and for good reason. Many times in a game of Magic, you will purposefully trade resources to either slow the game down or to speed it up. At any moment in a game between two players, one will prefer extending the game and one will prefer shortening it. Understanding this idea is at the crux of "Who's the Beatdown."
Cards, or "card advantage" is another resource that is extremely useful to think about. Often times a game of Magic will end because one player has run out of cards to play from their hand. This is very roughly the concept of "card advantage."
Tempo and card advantage are the two most cited resources in Magic. For newer players, it will help to frame decisions through these three questions:
1. "Will this play help me do things in a timely manner?"
2. "Will this play help me get full value out of my cards?"
3. "How important in this game/matchup is timeliness versus getting full value?"
[[card: Ruinous Path | set: BFZ]]
This is a trade-off that comes up very often in Magic. With [[card_link: Ruinous Path ]], for example, you can choose to cast it for its regular cost (more timely) or for its awaken cost (full value).
Most experienced players, however, already understand tempo and card advantage very well. To these players, I suggest considering the full spectrum of resources and thinking about their relative importance. To a delirium deck, for example, the number of card types in its graveyard is a highly important resource. Similarly, to a vehicles deck, the number of artifacts in play is a highly important resource.
[[card: Ishkanah, Grafwidow | set: EMN]] [[card: Toolcraft Exemplar | set: KLD]]
Magic is a game of resources. In this article, I covered the concept of resources and introduced the most important resource: the ability to continue playing the game. In the next article, I will discuss how we use resources to preserve our most important resource or to remove our opponent's.
-Luca
[[published_at: 12 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: Learn what we mean when we say Magic is a game of resources.]]
[[preview_image: http://magic.wizards.com/sites/mtg/files/image_legacy_migration/images/magic/daily/li/li228_0u87kyj62f.jpg]]
Saturday, February 11, 2017
Finance Fundamentals #1
Very quickly, I'd like to introduce myself. My name is Luca Ashok. I've earned 15 standard trophies and my constructed rating is 1958. I also invest. I have a large MTGO portfolio of about 15,000 tix. I studied math and economics at the University of Rochester and Stanford. This is why I like to write about theory.
There are a million ways to write about Magic, but I really like to stick to the fundamentals.
Here is why: I want to equip readers with ideas they can carry with them for years to come.
I could tell you about which card from Aether Revolt is most likely to appreciate in value, but what is the fun in that? There are a thousand articles all over the internet on that exact topic.
This article series is about powerful IDEAS. These are ideas that transcend any particular moment in time. In 5 years when a new Magic set comes out, you can use these ideas to make money.
This brings us to the topic of this article: The truth about MTG Finance Articles.
So what is it?
"Those who know don't talk. Those who talk don't know."
- Lao Tzu
To me, this is the fundamental issue with MTG finance articles. Let's take a step back for a minute and think about MTG strategy articles.
If you wanted to learn about MTG strategy, where would you go? Who would you listen to?
You would probably figure out who the best players in the world are and read their stuff. Who won the last Pro Tour? You'd want to see what he's doing.
Let's go back to MTG Finance.
Who are the best people at MTG finance? How would we even define BEST?
I would argue that the best people at MTG finance are the ones that are making the most money.
You might start to see the issue here. There is no MTG Finance Pro Tour! How the hell are we going to find these guys?
We don't. They lurk in the shadows.
Okay, so we can't figure out what the best people are doing. Maybe we are at peace with that.
But who are we listening to right now? Do we have a way of validating their advice?
We really don't!
None of the current writers of MTG Finance advice are held accountable for anything, and maybe that's the way it should be.
Still, we should be very aware of this fact. We need to be very careful about how seriously we take any information that isn't grounded in any kind of accountability.
There is one more concept I want to go over in this article. This is the idea of the value of a recommendation to buy a particular card.
Consider the following scenario:
Bob Smith writes an article about Hangarback Walker. Bob knows Hangarback is busted. He tells people they should buy it. He's not wrong.
Let's say at the time Bob writes his article, Hangarback is 5 bucks. Hangarback should really be around 10 bucks. (Bear with me here. Using some ideas from economics, there is some price that Hangarback should settle at once the market properly adjusts.)
Joe is the first person to read Bob's article. He buys 50 copies of the card.
The card goes up to $6.
Mary then reads the article and decides to buy 100 copies.
Hangarback goes up to $8.
A bunch more readers buy the card and the price is now up to $12.
The next person that takes Bob's advice is going to lose money!
And the card is still totally busted!
My point is this: timing is everything. You can buy the right card and lose money. So be very careful with specific financial advice.
Most times, if the information is public, it is already too late!
If you are going to profit off of someone else's advice you really need to ask yourself:
1. Why hasn't the person giving me this advice just bought all the copies himself?
2. Why haven't other readers pushed the price up to the correct price?
If you want a sustainable edge in MTG finance, you have to come up with your own ideas. You can't rely on advice from a public source.
Learn to fish! Don't be a fish!
Some food for thought.
-Luca
[[published_at: 11 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: The Truth About MTG Finance Articles]]
[[preview_image: http://www.zen-mama.com/wp-content/uploads/2015/02/upanga.jpg]]
There are a million ways to write about Magic, but I really like to stick to the fundamentals.
Here is why: I want to equip readers with ideas they can carry with them for years to come.
I could tell you about which card from Aether Revolt is most likely to appreciate in value, but what is the fun in that? There are a thousand articles all over the internet on that exact topic.
This article series is about powerful IDEAS. These are ideas that transcend any particular moment in time. In 5 years when a new Magic set comes out, you can use these ideas to make money.
This brings us to the topic of this article: The truth about MTG Finance Articles.
So what is it?
"Those who know don't talk. Those who talk don't know."
- Lao Tzu
To me, this is the fundamental issue with MTG finance articles. Let's take a step back for a minute and think about MTG strategy articles.
If you wanted to learn about MTG strategy, where would you go? Who would you listen to?
You would probably figure out who the best players in the world are and read their stuff. Who won the last Pro Tour? You'd want to see what he's doing.
Let's go back to MTG Finance.
Who are the best people at MTG finance? How would we even define BEST?
I would argue that the best people at MTG finance are the ones that are making the most money.
You might start to see the issue here. There is no MTG Finance Pro Tour! How the hell are we going to find these guys?
We don't. They lurk in the shadows.
Okay, so we can't figure out what the best people are doing. Maybe we are at peace with that.
But who are we listening to right now? Do we have a way of validating their advice?
We really don't!
None of the current writers of MTG Finance advice are held accountable for anything, and maybe that's the way it should be.
Still, we should be very aware of this fact. We need to be very careful about how seriously we take any information that isn't grounded in any kind of accountability.
There is one more concept I want to go over in this article. This is the idea of the value of a recommendation to buy a particular card.
Consider the following scenario:
Bob Smith writes an article about Hangarback Walker. Bob knows Hangarback is busted. He tells people they should buy it. He's not wrong.
Let's say at the time Bob writes his article, Hangarback is 5 bucks. Hangarback should really be around 10 bucks. (Bear with me here. Using some ideas from economics, there is some price that Hangarback should settle at once the market properly adjusts.)
Joe is the first person to read Bob's article. He buys 50 copies of the card.
The card goes up to $6.
Mary then reads the article and decides to buy 100 copies.
Hangarback goes up to $8.
A bunch more readers buy the card and the price is now up to $12.
The next person that takes Bob's advice is going to lose money!
And the card is still totally busted!
My point is this: timing is everything. You can buy the right card and lose money. So be very careful with specific financial advice.
Most times, if the information is public, it is already too late!
If you are going to profit off of someone else's advice you really need to ask yourself:
1. Why hasn't the person giving me this advice just bought all the copies himself?
2. Why haven't other readers pushed the price up to the correct price?
If you want a sustainable edge in MTG finance, you have to come up with your own ideas. You can't rely on advice from a public source.
Learn to fish! Don't be a fish!
Some food for thought.
-Luca
[[published_at: 11 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: The Truth About MTG Finance Articles]]
[[preview_image: http://www.zen-mama.com/wp-content/uploads/2015/02/upanga.jpg]]
MTG Fundamentals #1 Goals
[[published_at: 11 Feb 2017, 3:00 pm]]
[[category: article]]
[[preview_content: The first article in a series on strategy fundamentals. What are your Magic goals?]]
[[preview_image: http://magic.wizards.com/sites/mtg/files/image_legacy_migration/magic/images/cardart/MI/Dream_Cache.jpg ]]
Very quickly, I'd like to introduce myself. My name is Luca Ashok. I've earned 15 standard trophies and my constructed rating is 1958. I also invest. I have a large MTGO portfolio of about 15,000 tix. I studied math and economics at the University of Rochester and Stanford. This is why I like to write about theory.
There are a million ways to write about Magic, but I really like to stick to the fundamentals.
Here is why: I want to equip readers with ideas they can carry with them for years to come.
Like anything in life, if we are going to talk about HOW we are going to go about doing something, we must first think about WHERE we are trying to go or WHAT we are trying to accomplish.
We must first consider our goals.
What are your goals?
Are you trying to go undefeated at FNM? Are you trying to qualify for the Pro Tour? Do you want to improve your technical play?
Are you just trying to have as much fun as possible playing Magic? Are you trying to make some money playing Magic?
Your goals will greatly influence your ideal course of action, and so when discussing the fundamentals of Magic, we must first start with goals.
Aren't we just trying to maximize our chances to win each game of Magic we play? This is a tempting idea, but may not be entirely accurate. Consider:
You are playing a slow control deck and your opponent resolves a powerful spell that gives you about a 1% chance of winning the game. In order to go for the win, you would have to burn about 30 minutes off of the clock.
Do you really want to try to win this game of Magic at all costs?
No, but aren't we just trying to maximize our chances to win each MATCH of Magic we play? Another even more tempting idea, but it still doesn't give us the full picture. Consider:
You are guaranteed a spot in the top 8 and you are playing in the last round of the tournament where seeding doesn't matter. You are paired against an amazing matchup, but if you win, you will knock this deck out of the top 8.
Do you really want win this match at all costs?
No, but aren't we just trying to maximize our chances to win each TOURNAMENT of Magic at all costs? This question is actually not so straightforward.
Sometimes maximizing your chance to win this tournament can hurt your chances of winning more in the future. There is a wonderful article written by Gerry Thompson that goes over this idea.
For some players, it will pay dividends to prioritize learning over short-term tournament results.
So before we continue on this journey covering the fundamentals of Magic, I want each reader to really think hard about their goals. What are you trying to accomplish?
Clarity in your goals will lead to clarity in your actions.
As you can see by the examples I've used in this article, coming up with goals is not so simple. You may have to think hard and spend a bit of time. This time will be well spent, however.
You need to plant the right seeds to reap the rewards you seek.
The fundamentals are simple but don't mistake their simplicity for a lack of importance. Professional athletes practice the fundamentals every day. Why shouldn't we?
-Luca
[[category: article]]
[[preview_content: The first article in a series on strategy fundamentals. What are your Magic goals?]]
[[preview_image: http://magic.wizards.com/sites/mtg/files/image_legacy_migration/magic/images/cardart/MI/Dream_Cache.jpg ]]
Very quickly, I'd like to introduce myself. My name is Luca Ashok. I've earned 15 standard trophies and my constructed rating is 1958. I also invest. I have a large MTGO portfolio of about 15,000 tix. I studied math and economics at the University of Rochester and Stanford. This is why I like to write about theory.
There are a million ways to write about Magic, but I really like to stick to the fundamentals.
Here is why: I want to equip readers with ideas they can carry with them for years to come.
Like anything in life, if we are going to talk about HOW we are going to go about doing something, we must first think about WHERE we are trying to go or WHAT we are trying to accomplish.
We must first consider our goals.
What are your goals?
Are you trying to go undefeated at FNM? Are you trying to qualify for the Pro Tour? Do you want to improve your technical play?
Are you just trying to have as much fun as possible playing Magic? Are you trying to make some money playing Magic?
Your goals will greatly influence your ideal course of action, and so when discussing the fundamentals of Magic, we must first start with goals.
Aren't we just trying to maximize our chances to win each game of Magic we play? This is a tempting idea, but may not be entirely accurate. Consider:
You are playing a slow control deck and your opponent resolves a powerful spell that gives you about a 1% chance of winning the game. In order to go for the win, you would have to burn about 30 minutes off of the clock.
Do you really want to try to win this game of Magic at all costs?
No, but aren't we just trying to maximize our chances to win each MATCH of Magic we play? Another even more tempting idea, but it still doesn't give us the full picture. Consider:
You are guaranteed a spot in the top 8 and you are playing in the last round of the tournament where seeding doesn't matter. You are paired against an amazing matchup, but if you win, you will knock this deck out of the top 8.
Do you really want win this match at all costs?
No, but aren't we just trying to maximize our chances to win each TOURNAMENT of Magic at all costs? This question is actually not so straightforward.
Sometimes maximizing your chance to win this tournament can hurt your chances of winning more in the future. There is a wonderful article written by Gerry Thompson that goes over this idea.
For some players, it will pay dividends to prioritize learning over short-term tournament results.
So before we continue on this journey covering the fundamentals of Magic, I want each reader to really think hard about their goals. What are you trying to accomplish?
Clarity in your goals will lead to clarity in your actions.
As you can see by the examples I've used in this article, coming up with goals is not so simple. You may have to think hard and spend a bit of time. This time will be well spent, however.
You need to plant the right seeds to reap the rewards you seek.
The fundamentals are simple but don't mistake their simplicity for a lack of importance. Professional athletes practice the fundamentals every day. Why shouldn't we?
-Luca
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