Long-Term Investments

In the world of Magic finance, there are some topics that continually come up over the years. Some of these—such as the reserve list and reprint policy—usually resurface when Wizards makes a move that seems to skirt the rules in some way. Others—such as this week’s topic—are focused more on the investment side of Magic. As a trader, I make the majority of my short-term money from buying and selling collections while at the same time picking up cards that I believe have the potential to spike in the foreseeable future. That is of course a fine way to pay the bills, but what do you do if you are looking to approach Magic from a long-term investment point of view? Since it seems a few other writers have been discussing this lately, I figured I would throw my hat into the ring as well.

This article truly stemmed from a Twitter conversation this past week on my way to Origins. I noticed Chas Andres (@chasandres) had started a Tumblr or Q&A session about Magic finance in which has asked people to submit questions for him. My interest was piqued, so I took a look at what had been asked and noticed this question along with Chas’s response.

In your opinion, if someone were to begin "banking" money into cards considered to be safe investments, would you steer that person towards Legacy staples like dual lands, etc., or would you recommend a different path at this time?The first thing I would tell them is that it would probably be better to invest using more traditional means—a good mutual fund, for example, is likely to outperform random Magiccards and be safer besides.If they were dead set in investing in Magic, the safest bet is in NM Alpha/Beta cards. These were from a time before Magic was a manufactured collectible, and will retain value long after the game stops being played.

After that would come diversification—investing in Magic as a whole rather than one specific card. For example, I’d rather own playsets of everything than a whole lot of one card. Not only is this more stable, but it’s more fun—you get to use the cards, too!

Lastly, if someone were asking for the single card to invest in with the lowest risk and highest possible reward, I’d recommend Zendikar fetch lands. These are blue chip cards that are low right now and have room to grow. It is unlikely they will be reprinted soon, either.

After inquiring as to what Chas meant when he said Magic was a risky long-term investment, we began a debate which revolved around how Magic has been on a twenty-year rise while the economy has been in a recession. Given our drastic difference in opinions on this subject, I felt the need to further investigate the topic.

I have done articles before on long-term investing, but most of those were in regards to Legacy staples, and I used “long-term” to describe anything over a few years’ time. This time around, I want to talk about the state of the game in five to ten years and what we can expect from the cards barring some sort of catastrophic world event.

Long-Term Plans
When you look at investing in comparison to Magic, you can see a trend between stocks and cards. Using these similarities, it is easier to draw conclusions about the future of various items within the game with what past knowledge you have. I am well known for investing in what are called penny stocks. Penny stocks are usually high-risk, low-liquidity stocks that are traded off the major exchanges. These types of stocks can occasionally yield high profit margins if one takes off, but they also have a far higher chance of becoming completely worthless. In the world of Magic finance, this can be compared to a bulk rare in some ways. Take for example a card like Splinter Twin, long considered completely worthless before suddenly spiking overnight, giving anyone invested in the card a huge profit. For every five calls I make, I would say on average only two to three of them ever make any waves, and of those, only one becomes a major player. In Magic, unlike the stock exchange, a rare will never become completely worthless because every rare has a value. If you can snag your calls close to the bulk rate, the risk becomes so minimal it is almost nonexistent at times.

This type of investing is all well and good if you are plugged into the market and have your entire workday to investigate trends and troll Magic Online for decklists. Commonly, though, the better way to look at Magic in terms of investing is for the long term. If we look back at the beginning days of Magic and follow price trends through the current date, we can see a picture that is the epitome of what our exchange wishes it could be. Up until now, prices have been on a steady incline with a few small dips around periods of Magic’s lull points such as Seventh Edition. Overall, you can draw a very nice clean scatter point on the game’s iconic cards and major players that have continued an increase since the mid-nineties.

So, what are these major players that have held such great value over time? As I am sure you can imagine, Alpha/Beta/Unlimited cards such as Power 9 and dual lands have been at the top of this curve since the game became truly competitive in nature, and even more so with the resurgence in Eternal formats. Some of the other price trends may surprise you, though—similar to sleeper stocks, these have flown under the radar all the while gaining value at an equal, or in some cases a greater, rate than both duals and Power 9.

One of the best investments I can ever suggest if you are looking to use Magic within your portfolio is sealed product. Buying old boxes on eBay and stashing tem away for a few years can prove to be a smart investment as long as you have some self-control and don’t want to bust into them. Unlike individual cards, boxes are relatively easy moves because there is not as much concern with condition since the cards are still sealed.

Beyond boxes of actual sets, I suggest anyone who is looking to make a relatively low-cost/high-margin investment should buy into the Duel Decks series and other products such as the From the Vaults series. If you take a look at the price of these relatively new items, it is quite interesting at how much value they have gained. Sealed product that sat on the shelves for months at MSRP five years ago can now be found on eBay for ten times the original asking price. If you compare this to a midlevel stock with some sense of security, you can see the difference. This means that on average, you have a 200% return on investment each year with exponential growth. I am not saying you should buy cases and cases of each of these sets, but making the relatively low investment of $20 to $30 every few months can surprise you in a few years’ time.

One of the most surprising investments does not even come in cardboard form. Magic paraphernalia such as life counters, dice, and a multitude of other items have seen similar price trends to some of the most highly regarded cards in this game. A Duelist life counter, which could be bought for cheap back in the mid to late nineties, can fetch up to a $100 in today’s market. Even the more recently printed Jace, the Mind Sculptor life counter can fetch $30 to $40. Keeping an eye out for these types of things allows you to not only diversify what you are investing in within this stock, but also creates a pretty sick collection of this game’s history.

There are plenty of other niche collectibles within this game that have grown over time, but discussing them all would take far more than just this one article, so I will progress. In the conversation with Chas, he mentioned that investing solely in Magic, or any one stock, was a fool’s play. On this, I completely agree with him. Diversifying your investments is always important—you never know what can happen in the future to any one particular company or industry. I do not, however, agree that Magic has been riding a twenty-year high that is likely to crumble soon. There is no precedence for this accusation nor is there any proof that would lead me to believe this is true. I feel Magic is just as safe of an investment as it was five years ago, and five years before that. There have been dips and spikes in the market, but these anomalies have evened themselves out to provide a fairly stable footing for any investor. The best part about using Magic as one of your investment opportunities is that you can also diversify within the actual stock. Investing in multiple areas within Magic can in and of itself be a safety net. If you have all your money in Duel Decks and they decide to reprint them, you may be a little sour, but the same holds true for almost any aspect of the game. In case you haven’t gotten this point yet: DIVERSITY IS KEY!

Well, that’s all I have this week in regards to long-term investing. If you are as interested in this topic as I am and want to discuss it more in depth, feel free to begin a conversation in the comments or contact me on Twitter. I feel the growth of this game has just begun, and I expect a healthy market for years to come.

Before I part, I want some opinions on other topics you would like to hear about: What controversial or less-discussed topics within the realm of Magic finance would you like to see discussed? I want to see what the community feels is important within our niche of this game and why you feel it is so important. Thanks for your time, and I hope you not only learned something but enjoyed yourself while doing so.

@CryppleCommand

Ryan Bushard

Check out this week’s episode of Brainstorm Brewery for more information and discussion on long-term investing and more!