Quiet Speculation: Wake, Rattle, and Roll

Welcome back to our little corner of the Magic universe, MTGO Academy readers! While I lack the fashion savvy of Mr. Rogers and his brilliant selection of sweaters and sweater-vests, I can do something that he cannot – make you money on MTGO. Who needs sweater vests when we can crochet our own attire from the piles upon piles of event tickets that we’ve earned in the last month? Extended season is in full boom, keeping card prices somewhere up in outer space, well past the moon. To say that they’ve gone crazy is an understatement. This week, we’re going to explore what will happen to Mirrodin cards in a few months, talk about some big wins we had in the last 2 weeks, and look ahead to see what else might be on the horizon.

You Win Some, You Break Even Some

I don’t believe in taking a loss. I like to wax poetic about diversification and EV and all of that because I really hate taking a loss. My fragile little ego can’t handle it. Also, it means losing money. And boy do I hate losing money. That’s why I’d rather sit on a card for 6 months than sell it at a loss. The reason is simple – unlike the equity markets in real life, which are based upon the real or perceived valuations of actual corporations, a Magic card will always have a non-zero value. The value may be low – fractions of a cent – but it will always have a baseline value. Since we mostly deal with rares when speculating, we’ve seen many rares have a theoretical minimum around $0.15.

Let’s use an example from last week – Sedge Sliver. The deck took a Top 8 slot in a PTQ and was never seen nor heard from again. If you bought 4 playsets at $0.15 a card, you were about $2.40 in the hole, since now you’re stuck with 16 stupid Sedge Slivers. Now, not every pick is a winner, and this one sure wasn’t. When deciding to sell out, look at a few factors:

1) What is the opportunity cost of not selling? In this case, you are losing the use of $2.40 every time you go to make a deal. Ideally, your bankroll is not tight enough for this to matter in the least. Therefore the opportunity cost is negligible. Compare this to the 10 copies of Nissa Revane on your account to understand what opportunity cost is really about.

2) How much of a loss are you taking? The worst you can do is zero out, which means that you lose all your money. Thankfully, no one has tried to use leverage on MTGO to buy cards on margin or short-sell cards. So, if the worst you can do is lose $2.40, why not write that off as a loss and try to get lucky?

3) What is the chance that the card will randomly spring to relevance? Well, with Sedge Sliver, another deck Top 8′ing with the card would generate a bit of hype. Slivers are popular with casual players, but this one doesn’t seem to be. Frankly, the odds are pretty low, but if we already consider the price of the cards as a loss, then the odds look a little better. Its hard to assign a percentage to the chance that Sedge Sliver will become relevant, but let’s say it’s a 10% shot. That seems sufficiently low considering that Sedge Sliver probably has no chance of being used in a tournament deck again. We know that when a card springs to relevance it goes from about $0.15 to at least $0.75. That’s a 400% profit on a 5-fold increase in price. Let’s simplify the math here: If I invest a dollar with 1/10 odds of getting $5 back and 9/10 odds of losing everything, that’s clearly a terrible gamble to make. Thus, with Sedge Sliver, it might make sense to just blow them out at whatever price I can and free up the tiny amount of money that they are occupying. It was tempting to factor in the EV of the play that caused us to buy Sedge Sliver in the first place, but this would be falling prey to the sunk cost fallacy. The truth is, had our original gamble come out in our favor – that is, Sedge Sliver went up right when the decklist was posted – we wouldn’t be figuring out the EV of holding on to our extra sets since we would have already flipped them at a profit!

If you really want to geek out, and I encourage you to do so, you can try to factor in the “secondary odds” into your purchase decision. For example, when buying a card like Nissa Revane, you can be reasonably sure that if the premise for your initial purchase doesn’t pan out, there are many other events that could occur to push her value up. You don’t have to do hard math to implement this principle, but just giving it some real thought can save you a lot of money.

Pass Me My Horn. It’s The One That Says “Bad MoFo” On It.

It’s that time again. Time to look back on last week and see where I made you guys money. Not to toot my own horn here, but we’ve been on a good run in the last month. Vendilion Clique was really good for anyone who bought it, as well as many of our other picks.

Bloodchief Ascension – Not the biggest star on the list, but you still made some money if you bought on the speculation that Adrian Sullivan’s deck would be popular. After speaking with him about the deck and reading about it, I cannot figure out why it hasn’t been more popular. At any rate, depending on when you got in, you made between 25-50%.

Living End – Look, it’s Hypergenesis 2.0! Living End shot from $0.15 up to $1.00+ in the last few days, so anyone who applied all the principles of my columns should have done well for themselves. 500% is a good amount of money no matter how small the initial investment was. Nevertheless, if you have a decently-sized bankroll and don’t need the money, you could keep a playset tucked away and sell the rest at huge profit. The forces needed to make the card jump beyond a couple bucks are probably not there, but it could be a calculated risk.

Hive Mind and Elvish Archdruid - Whiff. Hive Mind decks did see the surge in popularity as predicted, but it was the Pacts that drew the biggest gains. Elvish Archdruid has stayed around the $1 mark for a while now, further reinforcing that M10 rares aren’t as scarce on MTGO as they were in paper Magic. These cards haven’t lost any real value, they just haven’t gone anywhere, and as such, should be considered as losses.

Looking Ahead

With Worldwake just under 2 weeks away, now is a poor time to speculate on existing cards. Factual information that is material to the game and its assorted formats remains unknown, and as such, speculation would be baseless. I do want to discuss a few of the new cards spoiled thus far.

Admonition Angel – Totally insane. 6 for a 6/6 flier is already fine, but adding on the Landfall ability is just gravy. I don’t want to hear any “Dies to Doom Blade” crap either. Once you get Addy the Angel online with Emeria, the Sky Ruin, the game’s about over. Mono White decks have another tool with which to customize their late game. No money to be made here since she’ll probably live her life in the $10 range in paper and online.

Kor Firewalker – Sell your Ball Lightnings and Elemental Appeals. Why’d they have to go and print this card? Seriously, Bear-Claw is just awesome.

Jace the Mindsculptor – Anyone who thinks a free Brainstorm every turn isn’t good never played with Brainstorm and fetch lands in the same deck. The card is every bit as good as advertised, but cannot possibly sustain the $20+ price tag. Still, he’ll always be pricy.

Chain Reaction – So hard to judge this one, but initial thought experiments say that it’s the tool Red decks wanted to play a longer, more controlling game. Whether Red decks want such a tool remains to be seen, but keep a keen eye on Red’s new Wrath.

Comet Storm – EDH Instant Classic. Constructed irrelevant.

Dragonmaster Outcast – Oh look, it’s everything Scute Mob wishes it could be. Ranger of Eos is going to gain a lot of value with this card’s release. The fact that Ranger now fetches a dragon factory means that an entire archetype could spring up around the two cards. I’d rather buy them now and see them drop than to wait and see them double.

Harabaz Druid – This card set off all sorts of bells in my head when released. The newly-spoiled Hada Freeblade is a 1-drop ally that can have favorable synergy with Harabaz Druid, accelerating out the best allies on turn 3. Whether this will be enough to put Harabaz Druid and the Ally deck into the tournament arena is unknown. I expect Casual players to make decks involving the Druid and the 1U Milling ally. Unless they print some really great low-cost and high efficiency allies, the deck will be relegated to the Casual room and kitchen tables.

Joraga Warcaller – Serious potential since no one seems to respect Elves right now or play Wrath of God. I’m holding on to my Elvish Archdruids until WWK for this precise reason.

Omnath, Locus of Mana – Sadly, his subtype is not Locus. That would be ironic. This is the kind of card I love to hate. Speaking strictly from a tournament-centric point of view, he’s absolutely awful. First of all, he’s extremely vulnerable on his first turn on the board. If we assume he survives a turn or two, we’re stunting our board development each turn he grows. Using mana is supposed to make your board better, not worse. I don’t even want to think about him dying in combat after 3 turns of pumping. All that mana, gone to waste. Eldrazi Green decks might try to run him, but once you have that kind of mana and the Eldrazi Monument to protect him, you’ve probably already won. That being said, he’ll be a casual favorite for ages, and an instant classic. Just don’t expect to win a PTQ with him.

The New “Man-Lands” – We know 3 of the 5 rare lands right now, and they’re all pretty good. The R/G one is fairly unexciting, but can cause some trouble in the late-game. It’s not good enough for Jund to run, but the R/B version sure is. 1RB gets you a 2/2, which is probably fine on its own in Jund, but the ability to pump its power for colorless mana is a dream for the deck. Based on my experience, 2 of these will replace Dragonskull Summits in Jund. You really only want to see one per game, and the small mana hiccup it will cause will be rendered irrelevant by the ability to convert your mana into damage each turn in the late game. Many players will try to play this land like Treetop Village in pre-ZEN Jund, but that’s not the way to go. You want to set the game up such that the Lavaclaw Reaches are the absolute last card they have a chance to kill and alpha strike them out of the game. W/U’s Celestial Colonnade is also totally insane, since a free Serra Angel never really hurt Control decks. Here’s hoping the G/W one has lifelink, and the U/B one is sufficiently sneaky to suit its Dimir colors.

Worldwake is going to shake things up as all new sets seem to. While it is unlikely a new archetype will be born from the 149 card set, anything is possible. Leave a comment below with some of your recent trades, your opinion on selling out of an investment when you’re at break-even or lower, and your hopes for Worldwake. When we check in next, Worldwake will be a known quantity and we’ll be ready to dissect it and analyze it.

See ya then,

Kelly Reid