Scent of a Gamer

From the computer to the tabletop, this is all about games. Updated each week-end.

Magic finance 101

Magic finance is the term applied to the practice of buying individual Magic: the Gathering cards and then later selling them for more than was paid.

Easier said than done, but there it is.

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Magic: the Gathering cards are typically sold in booster packs which contain 10 commons, 3 uncommon, and 1 rare or mythic rare card. Many people would rather simply buy the individual cards they want rather than hope to open them randomly.

This creates a thriving secondary market for cards, which covers everything from individual deals between players to small stores to massive online resellers who open thousands of boxes per set released.

Money is there to be made, but often people will end up losing money, either by buying a card at the height of its demand, or else being unable to efficiently sell the cards they want to move.

They key to a successful approach is to identify cards with the potential to increase in price later, along with a channel to sell those cards profitably. The second part of this is where I see most people stumble. Anyone can open a mythic rare that later ‘spikes’ to $20 or more due to one or more demand factors, but can they move that card profitably? Often they cannot.

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Don’t enter without an exit strategy

It’s important to know how you will sell before you buy.

Typical sales channels include:

  • Ebay or other online clearing houses such as TCG player
  • The buylist of a major online retailer
  • In person or to a store or dealer

These channels can behave quite differently, and come with their own risks and challenges. Ebay and TCG player come with the risk of deadbeat buyers who will happily take your cards but may not trouble themselves to pay. Major online retailers will pay reliably, but selling to them means accepting their buylist prices, which could be 60% or more below the card’s selling price. Dealing in person requires keeping a level head and knowing what deal you will or won’t accept.

Once you have an idea of your exit it’s safe to enter, or as we say, take up a position. The time to sell is when a card is in high demand. The time to buy is when it isn’t. If there’s a card everyone is talking about; sell it to them. If there’s a card nobody wants, and you think it has a decent likelihood of rising, then it’s time to buy.

 

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You make your profit when you buy, and your cashflow when you sell

When you buy, the price you pay locks in your profit; any profit or loss is based off this price. When you sell, you are giving yourself the cashflow necessary to make future purchases.

While you should not expect yourself to never make a mistake, you should also consider past examples to what makes a card rise in price, and why people didn’t want it before then.

Join me for Finance 102 where I look at typical demand drivers that affect a card’s price.

2 comments on “Magic finance 101

  1. Bookstooge
    December 23, 2017

    I dipped my toes into this world when Battle for Zendikar came out and some other random boxes that I’ve bought as well. I always sold the high demand cards on Ebay. BFZ taught me that cards are in high demand for about a week before the price dips.
    Wizards decision to make booster boxes unlimited really hurt the secondary market but I’m sure it helps their bottom line.

    Also, they’re returning to basic sets next year. Still having 4 releases, but I’m already planning on buying a full set of mtg2019, or whatever naming convention they planon using.

    • davekay
      December 24, 2017

      The return of core sets will be interesting. They never sold as well as blocks, but they provided Standard with much-needed (but un-glamorous) balancing cards.

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